Decoding Digitalization: Insights from Small- and Mid-Sized Enterprises

Digitalization is fundamental for SMEs aiming to enhance competitiveness and performance amid today’s rapidly evolving technological landscape. However, research on SME digitalization remains limited, with scarce theoretical frameworks and empirical studies. Employing an inductive approach, this study addresses this gap through qualitative content analysis (QCA) of interviews with 124 SME executives spanning diverse industries in Germany. The results show that SME managers’ major understandings of digitalization cover the conversion of analog into digital data, data processing, storage, and transfer, as well as process optimization. The respondents see process optimization and enhancements in communication and interconnection as the main opportunities of digitalization. By contrast, information, data, and cyber security risks are seen as the most pressing risks. SME managers mention big data and AI and enterprise application software as typical digital technologies.