The Non-Linear Impact of Digitalization on the Performance of SMEs: A Hypothesis Test Based on the Digitalization Paradox

While digitalization offers new opportunities for small- and medium-sized enterprises (SMEs), it also introduces the phenomenon of the “digitalization paradox”. This paper develops a theoretical model comprising digitalization, digital technology–business alignment, external social capital, and SMEs...

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Bibliographic Details
Published in:Systems (Basel) 2024-04, Vol.12 (4), p.139
Main Authors: Chen, Xinqiang, Zhang, Xiu-e, Cai, Zhiwen, Chen, Jiangjie
Format: Article
Language:English
Subjects:
Administrative expenses
Alignment
Analysis
Automation
Boundary conditions
Business models
Business performance management
Customer relationship management
Digital technology
digital technology–business alignment
digitalization
Digitization
external social capital
Hypotheses
Innovations
Nonlinear theories
Paradoxes
Product lines
Regression analysis
Small & medium sized enterprises-SME
Small and medium sized companies
Small business
SMEs’ performance
Social capital
Strategic planning
Technology application
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Summary:While digitalization offers new opportunities for small- and medium-sized enterprises (SMEs), it also introduces the phenomenon of the “digitalization paradox”. This paper develops a theoretical model comprising digitalization, digital technology–business alignment, external social capital, and SMEs’ performance, rooted in strategic alignment theory (SAT) and social capital theory (SCT). The necessary data for the study were obtained by distributing questionnaires to 352 small and medium-sized enterprises engaged in digital practices in China, and hierarchical regression analysis was employed to investigate the impact of digitalization on the performance of SMEs and its boundaries of influence. The results indicate an inverted U-shaped relationship between digitalization and SME performance, with both digital technology–business alignment and external social capital serving as positive moderators. Specifically, digital technology–business alignment and external social capital both enhance the positive impact of digitalization on the performance of SMEs and mitigate its negative effects. The findings enhance comprehension of the “digitalization paradox” and offer new insights and solutions for SMEs to navigate the opportunities and challenges of digitalization.
ISSN:2079-8954
2079-8954
DOI:10.3390/systems12040139