The relationship between digital transformation strategy and the performance of SMMEs in South Africa

• In Event: Nonprofits Harnessing Digital Transformation and New Technology

Abstract

The growth of small businesses is in the best interest of most nations, as there is evidence that Small Micro and Medium Enterprises (SMMEs) are the major drivers of economic growth employment creation, poverty alleviation (Hewitt & Van Rensburg, 2020). Due the nature of SMMEs (limited size, limited resources, poor infrastructure, poor access to finance and credit) they eounter many challenges which lead to high failure rate. In this digital age, there is evidence that implementation of digital transformation by SMMEs could improve business performance (Mitroulis & Kitsios, 2019). To achieve such performance, Mitroulis and Kitsios (2019) argue that SMMEs should not only focus on adoption of technology, rather the deployment of suitable strategies to drive the technology adoption. Because SMMEs are exposed to growth challenges, they are also exposed to factors that affect digital transformation strategies which could ameliorate their performance.
In this study, we aim to review the factor that promote/hinder transformation strategies. We also explored available opportunities/benefits for SMMEs that deploy the digital transformation strategies. Underpinned by Rogers (2016)’s theory, we deployed qualitative method, interviewing ten SMMEs that have been operations for over one year.
We found factors that affect digital transformation strategies for SMMEs to include level of technology application, internet availability, power supply, and managerial skills. We also found that SMMEs that deploy digital transformation have competitive advantage within the SMME cycle, with increased business value, innovation, and creativity, as well as high level of customer integration into their businesses. We recommend that for South African SMMEs to improve performance, they need to deploy digital transformation as part of their business strategies, where all aspect of the business will be integrated to ensure customer satisfaction, increased number of new customers, innovations, employee’s performance, increased relevance in the market, etc., instead of adopting business on strategies that solemnly focus on financial performance.

References

Hewitt, L. M., & Van Rensburg, L. J. J. (2020). The role of business incubators in creating sustainable small and medium enterprises. The Southern African Journal of Entrepreneurship and Small Business Management, 12(1), 9.
Mitroulis, D., & Kitsios, F. (2019). Digital transformation strategy: A literature review. Paper presented at the Proceedings of the 6th National Student Conference of HELORS, Xanthi, Greece.
Rogers, D. (2016). The digital transformation playbook: Rethink your business for the digital age: Columbia University Press

Authors

• Euphemia Godspower-Akpomiemie, The Wits Business School

• Dieketseng Rasenyalo, Wits Business School