Building early digital transformation readiness in manufacturing-related SMEs: the role of strategic orientation and internal capabilities in a regional emerging-economy setting

Purpose This study examines how manufacturing-related small and medium-sized enterprises (SMEs) build early digital transformation readiness (EDTR) under resource-constrained conditions in a regional emerging-economy setting. Drawing on the literature on digital transformation capabilities, it analyses how strategic orientation, perceived barriers, technological knowledge and human capabilities development (HCD) interact in shaping early Industry 4.0-related digitalisation trajectories. Design/methodology/approach The study tests a moderated mediation framework in which perceived barriers mediate the relationship between strategic orientation and EDTR, while technological knowledge and HCD moderate this process. The model uses survey data from 136 manufacturing-related SMEs in one Mexican municipality, with a robustness analysis of the manufacturing subsample. Findings Strategic orientation was associated with greater perceived barriers, which in turn were associated with lower EDTR. However, this negative indirect association was contingent on internal capabilities. Technological knowledge attenuated the association between strategic orientation and perceived barriers, while HCD attenuated the negative association between barriers and EDTR. Practical implications SMEs in comparable manufacturing-related settings may benefit from treating early digital transformation as a gradual capability-building process. Managers may benefit from strengthening technological knowledge and HCD before pursuing more advanced digitalisation, while using strategic orientation to identify and prioritise barriers. Policymakers may complement technology-focused initiatives with training, advisory and capability-building programmes. Originality/value The paper contributes to the literature by suggesting that the implications of strategic orientation for EDTR depend on perceived barriers and internal capabilities. It offers a capability-based explanation of early digital transformation in manufacturing-related SMEs by showing how technological knowledge and HCD condition different stages of the indirect process through perceived barriers in a regional emerging-economy context.