ENABLERS AND BARRIERS OF MANAGING AND SUSTAINING DIGITAL TRANSFORMATION

Abstract

Digital transformation strengthens micro, small and medium-sized enterprises (MSMEs) to
rethink the way they make decisions and apply technology in meaningful and sustainable ways.
The aim of this study is to investigate the main barriers to MSMEs’ sustainable digital
transformation, given their global importance and function as the backbone of any economy
through various statistical data. We apply the concept of sustainable digital transformation
(SDT), which refers to the process of digitalizing the economy in a long-lasting, green, and
organic way by building on its key strength: innovative companies and their business
ecosystems. The study is based on a representative survey of 425 Latvian MSMEs, which was
conducted in the spring of 2021. We combine a survey of MSMEs with a qualitative comparative
analysis. These study identified seven barriers to sustainable digital transformation for MSMEs,
which can be classified into three levels of importance. We found that the most important
barriers to MSMEs are IT security issues and the shortage of specialists in the external labor
market. Furthermore, we discovered that some barriers differ depending on company attributes,
such as the number of employees, revenue, and the ability to implement digital transformation
independently. However, the barriers were evaluated similarly by company owners and
managers. These findings can help MSMEs’ managers and owners, policymakers, and
practitioners understand which barriers are impeding MSMEs’ sustainable digital transformation.