Digital Transformation and SME Performance: A Systematic Literature Review

• Chloe Harrison

  Author

This systematic literature review examines the relationship between digital transformation and firm performance within small and medium-sized enterprises. Synthesizing 94 peer-reviewed documents published between 2010 and 2025 from multiple academic databases and international organizations, this study integrates empirical, theoretical, and bibliometric evidence to address three interrelated objectives: to map the evolutionary trajectory of research on SME digital transformation; to identify the technological, organizational, and environmental determinants of DT adoption and their differential impact on operational, financial, market, and innovation-related performance outcomes; and to develop an integrative research agenda grounded in dynamic capabilities theory. Findings indicate that digital transformation positively influences SME performance across multiple dimensions, with effect sizes and mechanisms moderated by organizational culture, regulatory environment, and absorptive capacity. Cluster analyses of existing literature reveal five dominant research domains—business readiness, technological infrastructure, value chains, digital ecosystems, and socio-environmental implications. The review identifies critical gaps related to the absence of a standardized definition of SME digital transformation, the limited use of longitudinal methods, and the underrepresentation of developing economies. This study contributes to theory by extending the dynamic capabilities framework to SME contexts, and to practice by offering a consolidated framework for policymakers, SME managers, and digital service providers pursuing sustainable and resilient digitalization strategies.

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