Digital Transformation Capabilities and Business Performance of Small and Medium Enterprises: Empirical Evidence from Hanoi, Vietnam
TL;DR
The results demonstrate that overcoming the "digitalization paradox" in small enterprises depends heavily on executive leadership commitment and strategic clarity, which ensure that technology investments effectively translate into cost efficiency, market expansion, and financial health.
Abstract
This study investigates the direct empirical impacts of digital transformation capabilities—specifically technology infrastructure, human resources, and strategic governance—on the business performance of small and medium-sized enterprises in Hanoi, Vietnam. Utilizing a quantitative research design, primary survey data were collected from 132 SME decision-makers in June 2026 and analyzed using multiple linear regression via IBM SPSS Statistics. The findings confirm that all three capability dimensions significantly enhance SME performance, with digital strategy and governance emerging as the primary determinant, surpassing technological infrastructure and workforce competencies. These results demonstrate that overcoming the "digitalization paradox" in small enterprises depends heavily on executive leadership commitment and strategic clarity, which ensure that technology investments effectively translate into cost efficiency, market expansion, and financial health. Overall, this research advances the dynamic capabilities perspective by establishing the hierarchical importance of strategic governance in emerging-market SMEs.