Determinants of digital technology adoption in innovative SMEs

Abstract

Despite the increasing adoption of digital technology, small and medium enterprises (SMEs) continue to lag behind larger firms. This study integrates the technology, organization, and environment (TOE) framework with Rogers’ diffusion of innovation (DOI) theory to investigate the factors influencing SMEs’ digital technology adoption. Data from 419 SMEs was analyzed using partial least squares structural equation modelling (PLS-SEM), followed by artificial neural network (ANN) analysis to rank the importance of the variables identified.

The PLS-SEM results show that technological, organizational, and environmental factors directly impact adoption. The supported variables include adoption costs, top management support, human resources, digital culture, and trading partner pressure. Some factors indirectly impact adoption through top management support. This study also found that SMEs’ international orientation moderates the relationship between digital culture and adoption behavior. The ANN results identify that the most important predictors, ranked from the most to the least influential, are digital culture, international orientation, top management support, trading partner pressure, human resources, and adoption costs.

This research contributes to the theoretical discourse on technology adoption by integrating the TOE framework with Rogers’ DOI theory. It highlights that no single TOE element functions in isolation. The findings provide practical guidance for SME managers, stressing the need to improve organizational factors, such as, human resources, digital culture, and top management support. Governments may use these findings to identify ways to support SMEs’ digital technology adoption, particularly by offering subsidies to reduce costs, which remain a barrier.