A Review of Digital Transformation Drivers and Barriers for SMEs in Malaysia
Abstract
ital transformation has become an essential driver of business growth and competitiveness, particularly for small and medium enterprises (SMEs) that operate within Malaysia’s rapidly evolving digital economy. Despite government initiatives and increasing awareness of Industry 4.0, many SMEs continue to face challenges in adopting digital technologies effectively. This study conducts a structured literature review to synthesize existing research on the drivers, barriers, and outcomes of digital transformation among Malaysian SMEs. Guided by the Unified Theory of Acceptance and Use of Technology (UTAUT) and the Theory of Planned Behavior (TPB), the review integrates key dimensions of digitalization—strategy, readiness, culture, and capability—and identifies customer value as a mediating construct that links internal efforts to business performance. The findings reveal that strategic alignment, strong digital readiness, and supportive organizational culture significantly enhance customer value and overall competitiveness, while barriers such as limited financial resources, digital skills gaps, and cultural resistance continue to impede progress.
Downloads
References
Abu Hasan, N., Ali, A., & Rahman, M. (2022). Customer loyalty and value creation in SMEs: A Malaysian perspective. Journal of Small Business and Enterprise Development, 29(3), 412–430. https://doi.org/10.1108/JSBED-08-2021-0332
Ahmad Rosli, N., Abdullah, N. H., & Osman, S. (2022). Long-term impact of digital adoption on SME performance in Malaysia. Journal of Entrepreneurship and Business, 10(2), 85–99. https://doi.org/10.17687/JEB.1002.2022.85
Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179–211. https://doi.org/10.1016/0749-5978(91)90020-T
Aly, H. (2022). Digital transformation, development and productivity in developing countries: Is artificial intelligence a curse or a blessing? Telecommunications Policy, 46(5), 102303. https://doi.org/10.1016/j.telpol.2022.102303
Annarelli, A., Battistella, C., & Nonino, F. (2021). Digital business models for sustainability: The role of digital capabilities. Sustainability, 13(17), 9866. https://doi.org/10.3390/su13179866
Anshari, M. (2022). Digital transformation and SMEs: Opportunities and challenges. International Journal of Business and Society, 23(2), 445–460. https://doi.org/10.33736/ijbs.4567.2022
Braun, V., & Clarke, V. (2019). Reflecting on reflexive thematic analysis. Qualitative Research in Sport, Exercise and Health, 11(4), 589–597. https://doi.org/10.1080/2159676X.2019.1628806
Charbonneau-Genest, S., & Gamache, S. (2023). Revisiting the theory of planned behavior for digital adoption: Evidence from SMEs. Journal of Business Research, 158, 113652. https://doi.org/10.1016/j.jbusres.2022.113652
Duerr, S., Holotiuk, F., Wagner, H. T., Beimborn, D., & Weitzel, T. (2018). What is digital organizational culture? Insights from exploratory case studies. Proceedings of the 51st Hawaii International Conference on System Sciences, 5126–5135. https://doi.org/10.24251/HICSS.2018.642
Eller, R., Alford, P., Kallmünzer, A., & Peters, M. (2020). Antecedents, consequences, and challenges of small and medium-sized enterprise digitalization. Journal of Business Research, 112, 119–127. https://doi.org/10.1016/j.jbusres.2020.03.004
Firican, G. (2023). Building a data-driven culture in organizations: Key enablers and barriers. Information Systems Management, 40(2), 120–134. https://doi.org/10.1080/10580530.2023.2172758
Haq, I. U., & Huo, B. (2023). Digital strategy and SME performance: Evidence from emerging economies. Technological Forecasting and Social Change, 191, 122481. https://doi.org/10.1016/j.techfore.2023.122481
Hussain, W., Ismail, N., & Ahmad, R. (2022). Barriers to digitalization in Malaysian SMEs: Evidence and policy implications. Asian Journal of Technology Management, 15(1), 67–82. https://doi.org/10.12695/ajtm.2022.15.1.5
Ismail, S. (2022). Customer value creation as a mediator between digitalization and performance in SMEs. International Journal of Productivity and Performance Management, 71(5), 1819–1836. https://doi.org/10.1108/IJPPM-06-2021-0364
Jordaan, Y., & Badenhorst, C. (2022). Customer value creation in the digital economy: Implications for SME competitiveness. Journal of Retailing and Consumer Services, 64, 102789. https://doi.org/10.1016/j.jretconser.2021.102789
Kádárová, J., Kádár, G., & Holková, D. (2023). Strategic frameworks for SME digital transformation. Procedia Computer Science, 219, 194–203. https://doi.org/10.1016/j.procs.2023.01.134
Kwarteng, A., Boateng, H., & Osei, R. (2023). Digital transformation and SME sustainability: Evidence from sub-Saharan Africa. Journal of Small Business Management, 61(2), 350–371. https://doi.org/10.1080/00472778.2021.2009461
LaBerge, L., O’Toole, C., Schneider, J., & Smaje, K. (2020). How COVID-19 has pushed companies over the technology tipping point—and transformed business forever. McKinsey Digital Report. Retrieved from https://www.mckinsey.com
Lassnig, M., Mayr, H., & Reiner, G. (2018). Assessing SME readiness for digital transformation. International Journal of Production Research, 56(6), 2103–2115. https://doi.org/10.1080/00207543.2017.1365687
Martins, P. (2023). Strategic adaptability in SME digital transformation: Lessons from evolving markets. Journal of Business Strategy, 44(4), 321–332. https://doi.org/10.1108/JBS-07-2022-0130
Meyendorf, R., Koch, M., & Schmidt, P. (2022). Industry 4.0 and the digital revolution in SMEs: Trends, drivers, and implications. Technological Forecasting and Social Change, 178, 121604. https://doi.org/10.1016/j.techfore.2022.121604
Moher, D., Liberati, A., Tetzlaff, J., & Altman, D. G. (2009). Preferred reporting items for systematic reviews and meta-analyses: The PRISMA statement. PLoS Medicine, 6(7), e1000097. https://doi.org/10.1371/journal.pmed.1000097
Muhamad, M., Rahman, N. A., & Ghazali, Z. (2020). Government initiatives for SME digitalization: Effectiveness and challenges. Journal of Entrepreneurship, Business and Economics, 8(1), 47–72.
Okfalisa, O., Winarno, W., & Arifin, Z. (2021). Readiness of SMEs for digital transformation: An empirical study. Journal of Small Business and Enterprise Development, 28(7), 987–1005. https://doi.org/10.1108/JSBED-05-2020-0180
Rajala, R., & Hautala-Kankaanpää, M. (2022). Digital resilience of SMEs during crises: Evidence from COVID-19. Small Business Economics, 59(2), 765–783. https://doi.org/10.1007/s11187-021-00572-0
Reis, J., Amorim, M., Melão, N., & Matos, P. (2020). Digitalization: A literature review and research agenda. Journal of Business Research, 123, 252–265. https://doi.org/10.1016/j.jbusres.2020.01.053
Rozak, A., Susanto, A., & Yuniarto, T. (2023). Building digital culture in SMEs: Evidence from Southeast Asia. Asia Pacific Journal of Innovation and Entrepreneurship, 17(1), 63–81. https://doi.org/10.1108/APJIE-06-2022-0065
Snyder, H. (2019). Literature review as a research methodology: An overview and guidelines. Journal of Business Research, 104, 333–339. https://doi.org/10.1016/j.jbusres.2019.07.039
Tong, X., & Gong, H. (2020). Digital divide in SMEs: Evidence from Malaysia. Journal of Asian Business and Economic Studies, 27(4), 487–503. https://doi.org/10.1108/JABES-04-2020-0040
Ursavaş, Ö. F. (2022). Applying UTAUT to SMEs: Exploring digital adoption in emerging markets. Information Systems Frontiers, 24(2), 451–465. https://doi.org/10.1007/s10796-021-10154-y
Venkatesh, V., Morris, M. G., Davis, G. B., & Davis, F. D. (2003). User acceptance of information technology: Toward a unified view. MIS Quarterly, 27(3), 425–478. https://doi.org/10.2307/30036540
Wang, Z., Wu, J., & Zhang, Y. (2023). Digital capabilities and firm performance: The mediating role of innovation. Technovation, 122, 102627. https://doi.org/10.1016/j.technovation.2022.102627
Wu, J., Ma, Z., & Wang, Y. (2022). How digital capabilities drive open innovation: Evidence from SMEs. Journal of Business Research, 142, 22–34. https://doi.org/10.1016/j.jbusres.2021.12.023
