A Model of Digital Transformation and SME Competitive Advantage Based on the Technology Organization Environment Framework
Keywords:
Digital Transformation, SMEs, Competitive Advantage, TOE FrameworkAbstract
This study aims to develop a model of digital transformation and SME competitive advantage based on the Technology Organization Environment Framework. The study focuses on how SME actors in Banjarnegara Regency, Central Java, Indonesia, understand technological needs, build organizational readiness, respond to environmental pressure, and convert digital practices into competitive advantage. This research used a qualitative approach with a multiple case study design. Data were collected from 20 informants, including SME owners, operational managers, digital marketing staff, MSME mentors, and local business community actors, through semi-structured interviews, field observation, and documentation from September to November 2025. The data were analyzed using thematic analysis supported by the interactive model of Miles and Huberman. The findings reveal five main themes: digital transformation as a response to market pressure, technology adoption as a gradual business routine, organizational readiness as a key internal condition, environmental pressure as a driver of adaptation, and competitive advantage as an outcome of digital learning. The study shows that SME competitive advantage does not emerge automatically from technology adoption. It develops when digital tools are aligned with owner commitment, employee capability, customer trust, service quality, and local market dynamics. This study contributes to the TOE Framework by offering a process-based qualitative explanation of SME digital transformation. The findings also provide practical and policy implications for designing staged, realistic, and capacity-based digital transformation programs for SMEs.
References
Ahmed, S. K. (2024). The pillars of trustworthiness in qualitative research. Journal of Medicine, Surgery, and Public Health, 2, 100051. https://doi.org/10.1016/j.glmedi.2024.100051
Ahmed, S. K., Mohammed, R. A., Nashwan, A. J., Ibrahim, R. H., Abdalla, A. Q., Ameen, B. M. M., & Khdhir, R. M. (2025). Using thematic analysis in qualitative research. Journal of Medicine, Surgery, and Public Health, 6, 100198. https://doi.org/10.1016/j.glmedi.2025.100198
Alam, M. K. (2021). A systematic qualitative case study: Questions, data collection, NVivo analysis and saturation. Qualitative Research in Organizations and Management: An International Journal, 16(1), 1–31. https://doi.org/10.1108/QROM-09-2019-1825
Alfarizi, M., Widiastuti, T., & Ngatindriatun, N. (2024). Exploration of technological challenges and public economic trends phenomenon in the sustainable performance of Indonesian digital MSMEs on industrial era 4.0. Journal of Industrial Integration and Management. https://doi.org/10.1142/S2424862223500045
Anatan, L., & Nur, N. (2023). Micro, small, and medium enterprises’ readiness for digital transformation in Indonesia. Economies, 11(6), 156. https://doi.org/10.3390/economies11060156
Bahtiar, H., Rabbany, L. R., Bele, Y. F., Husna, M., & Matulessy, G. S. (2025). Digital transformation towards sustainability: Challenges and opportunities for Indonesian MSMEs. Jurnal Ekonomi dan Bisnis, 28(1), 131–150. https://doi.org/10.24914/jeb.v28i1.13935
Birkel, H., & Wehrle, M. (2024). Small- and medium-sized companies tackling the digital transformation of supply chain processes: Insights from a multiple case study in the German manufacturing industry. IEEE Transactions on Engineering Management, 71, 13711–13726. https://doi.org/10.1109/TEM.2022.3209131
Brodeur, J., Pellerin, R., & Deschamps, I. (2022). Collaborative approach to digital transformation (CADT) model for manufacturing SMEs. Journal of Manufacturing Technology Management, 33(1), 61–83. https://doi.org/10.1108/JMTM-11-2020-0440
Cheng, S., Fan, Q., & Dagestani, A. A. (2024). Opening the black box between strategic vision on digitalization and SMEs digital transformation: The mediating role of resource orchestration. Kybernetes, 53(2), 580–599. https://doi.org/10.1108/K-01-2023-0073
Dörr, L., Fliege, K., Lehmann, C., Kanbach, D. K., & Kraus, S. (2023). A taxonomy on influencing factors towards digital transformation in SMEs. Journal of Small Business Strategy, 33(1), 53–69. https://doi.org/10.53703/001c.66283
Faiz, F., Le, V., & Masli, E. K. (2024). Determinants of digital technology adoption in innovative SMEs. Journal of Innovation & Knowledge, 9(4), 100610. https://doi.org/10.1016/j.jik.2024.100610
Fauzi, A. A., & Sheng, M. L. (2022). The digitalization of micro, small, and medium-sized enterprises (MSMEs): An institutional theory perspective. Journal of Small Business Management, 60(6), 1288–1313. https://doi.org/10.1080/00472778.2020.1745536
Hoang, H. (2024). Navigating the digital landscape: An exploration of the relationship between technology organization environment factors and digital transformation adoption in SMEs. SAGE Open, 14(4). https://doi.org/10.1177/21582440241276198
Holl, A., & Rama, R. (2024). SME digital transformation and the COVID-19 pandemic: A case study of a hard-hit metropolitan area. Science and Public Policy, 51(6), 1212–1226. https://doi.org/10.1093/scipol/scae023
Jewapatarakul, D., & Ueasangkomsate, P. (2024). Digital organizational culture, organizational readiness, and knowledge acquisition affecting digital transformation in SMEs from food manufacturing sector. SAGE Open, 14(4). https://doi.org/10.1177/21582440241297405
Kahveci, E. (2025). Digital transformation in SMEs: Enablers, interconnections, and a framework for sustainable competitive advantage. Administrative Sciences, 15(3), 107. https://doi.org/10.3390/admsci15030107
Kraus, S., Schiavone, F., Plé, L., & Kailer, N. (2022). Digital transformation in business and management research: A bibliometric analysis. International Journal of Information Management, 63, 102466. https://doi.org/10.1016/j.ijinfomgt.2021.102466
Kurniawati, E., Idris, I., Handayati, P., & Osman, S. (2021). Digital transformation of MSMEs in Indonesia during the pandemic. Entrepreneurship and Sustainability Issues, 9(2), 316–331. https://doi.org/10.9770/jesi.2021.9.2(21)
Lu, H., & Shaharudin, M. S. (2024). Role of digital transformation for sustainable competitive advantage of SMEs: A systematic literature review. Cogent Business & Management, 11(1), 2419489. https://doi.org/10.1080/23311975.2024.2419489
Mandviwalla, M., & Flanagan, R. (2021). Small business digital transformation in the context of the pandemic. European Journal of Information Systems, 30(4), 359–375. https://doi.org/10.1080/0960085X.2021.1891004
Maroufkhani, P., Wagner, R., & Wan Ismail, W. K. (2022). Digital transformation in SMEs: A systematic literature review. Sustainability, 14(3), 1493. https://doi.org/10.3390/su14031493
Matarazzo, M., Penco, L., Profumo, G., & Quaglia, R. (2021). Digital transformation and customer value creation in Made in Italy SMEs: A dynamic capabilities perspective. Journal of Business Research, 123, 642–656. https://doi.org/10.1016/j.jbusres.2020.10.033
N’Dri, A. B., & Su, Z. (2024). Successful configurations of technology organization environment factors in digital transformation: Evidence from exporting small and medium-sized enterprises in the manufacturing industry. Information & Management, 61(7), 104030. https://doi.org/10.1016/j.im.2024.104030
Priya, A. (2021). Case study methodology of qualitative research: Key attributes and navigating the conundrums in its application. Sociological Bulletin, 70(1), 94–110. https://doi.org/10.1177/0038022920970318
Zhang, X., Xu, Y., & Ma, L. (2022). Research on successful factors and influencing mechanism of the digital transformation in SMEs. Sustainability, 14(5), 2549. https://doi.org/10.3390/su14052549
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
