Digital transformation in SMEs : drivers, challenges, and the impact of emerging technologies on decision-making and management control

Abstract

This study contributes to the fields of performance and strategic management by addressing the implications of digital transformation (DT) in small and medium-sized enterprises (SMEs). Drawing on theories of management control systems (MCS), organizational control (OC), organizational dynamics, workforce development, and decision-making, it delves into the drivers, challenges, and impacts of emerging technologies on management operations.

The study presents a comprehensive theoretical framework for facilitating DT in SMEs, integrating MCS, OC, decision-making processes, organizational dynamics, and employee capabilities with digital expertise. This framework provides a structured approach to understanding the factors influencing DT and its organizational implications.

Through a combination of empirical research and literature analysis, the study sheds light on the workforce and organizational implications of DT in SMEs. It underscores the role of digital transformation in reshaping management control systems and decision-making processes, providing insights into the challenges and opportunities that SMEs encounter during this transition.

The research introduces four key propositions aimed at facilitating the implementation of DT in management operations in SMEs. First, it suggests that managers are evolving toward collaborative leadership, emphasizing human-centric approaches and interpersonal interactions to drive organizational success. Second, decision-making processes are becoming more decentralized, enabling prompt and accurate decisions and fostering greater engagement with MCS and OC. Third, while automation enhances efficiency by streamlining routine tasks, it also creates role polarization and intensifies the demand for digital skills, raising concerns about agility and adaptability in existing workforce development paradigms. Finally, the study underscores the enduring relevance of human intuition and contextual judgment, suggesting that digital tools and AI should augment rather than replace human decision-making—thereby offering a more balanced view than current efficiency focused narratives.