Institutional Fragility and E‐Business Adoption: A Study of <scp>SMEs</scp> in a Conflict‐Affected Economy

ABSTRACT This study examines e‐business adoption among SMEs in Yemen, a conflict‐affected and institutionally fragile economy. Drawing on a mixed‐methods design, it combines Partial Least Squares Structural Equation Modelling (PLS‐SEM) with qualitative interviews to analyse how war and firm size moderate the effects of key adoption drivers and barriers. The findings identify government readiness as the most constraining factor, with institutional breakdown weakening the conditions required for e‐business adoption. Cost emerges as the least barrier, particularly for larger firms with greater absorptive capacity. Awareness did not show a significant direct effect on e‐business adoption; however, war significantly moderated the relationship between awareness and adoption, indicating that conflict conditions shaped how awareness translated into adoption outcomes. Firm size enhanced the influence of organizational readiness and competitive pressure but did not mitigate institutional constraints. The qualitative data highlight the adaptive behaviors SMEs develop in response to infrastructure collapse and governance failure, revealing a shift from competitive logic to survival strategies. This research contributes to technology adoption theory by demonstrating how conflict reconfigures institutional, organizational, and environmental conditions, necessitating revised frameworks for digital transformation in fragile states.