Sustainable Digital Transformation in Small and Medium Enterprises (SMEs)

Abstract

Small- and medium-sized enterprises (SMEs) play a vital role in the global economy, yet they have been profoundly affected by the disruptions caused by the COVID-19 pandemic. In response, many SMEs have accelerated their digital transformation efforts, using technology as a key driver of innovation to enhance sustainability, competitiveness, and product and service customization. However, there remains limited understanding of how effectively SMEs are adopting digital technologies to support sustainability goals. This study conducts a systematic literature review to explore the intersection of digitalization and sustainability in SMEs. The analysis is structured around three core domains: the technological components of digital transformation, sustainability based on the triple bottom line (economic, environmental, and social dimensions), and SME-specific business characteristics. The review identifies key technological advancements, particularly those aligned with Industry 4.0, that enable SMEs to achieve sustainable development. It also examines the role of corporate strategy, organizational structure and culture, leadership, and workforce capabilities in driving digital and sustainable innovation. The study highlights gaps in the literature and suggests avenues for future research. Overall, the findings offer valuable insights for policymakers and SME stakeholders aiming to align digital transformation strategies with sustainability objectives, contributing meaningfully to the achievement of the Sustainable Development Goals (SDGs).