Digital Transformation Study in SMEs : Systematic Literature Review (SLR)

Bagus Setiawan1, Sudarmiatin2, Budi Eko Soetjipto 3

1
Doctoral Program in Management Science, Faculty of Economics and Business,
Universitas Negeri Malang, Indonesia
2,3
Faculty of Economics and Business, Universitas Negeri Malang, Indonesia

*Coresponding author : bagus.setiawan.2204139@students.um.ac.id

ABSTRACT

The development of digital technology has affected all aspects of life including SMEs.
SMEs in the digital era have developed well, but the reality of digital transformation
does need a process of adaptation and not all business fields are able to adjust to
digitalization. The purpose of this study is to know and map concepts related to digital
transformation that affect Small and Medium Enterprises (SMEs) through a systematic
literature review then find a better understanding of current knowledge. The systematic
process has resulted in the final count of 10 journals from Emerald Insight. The method
used is PRISMA, which is further studied and the results analyzed qualitatively. The
results of a review in 10 (ten) journals by reviewing literature from the last month,
showed that the majority gave a good response in the digital transformation process and
some in addition mentioned enough or less. This means that there are differences in
process improvement and capabilities in terms of digital development and traditional
production.

Keywords: Digital Transformation, SMEs

INTRODUCTION

In the framework of national development, increasing the capacity and quality of

human resources of the Indonesian people is carried out in a sustainable manner and
based on national capabilities by utilizing technology and knowledge knowledge.
National development covers all aspects of citizens' lives, where the community is the
main actor and the government has the obligation to direct and accompany and protect
to support all national development efforts. The role of society in national development
is illustrated in Micro, Small and Medium Enterprises (SMEs). SMEs has an important
strategic role because the existence of SMEs is quite dominant in the economy,
especially in Indonesia. A large number of industries in every sector of the economy
have the potential to absorb labor and increase gross domestic product (GDP) is very
dominant.
On the other hand, Indonesian people are faced with a digital era where
technology is developing very fast and is all digital. In this digital era, humans generally
have a new lifestyle that cannot be separated from all electronic means. Technology is a
necessity that can help most human needs. Technology has been able to make it easier
for humans to do any task and work. Technology has a role as important as this is what
brought human civilization into the digital age. The digital world not only offers great
opportunities and benefits to the public and business interests. But it also provides
challenges to all areas of life to improve quality and efficiency in life. The rapid
development of technology that penetrated all lines of people's social life not only
changed the order of social life, community culture but also the economy and business.
The development of digital technology has affected all aspects of life including
SMEs. SMEs of the digital age have developed a lot well. SMEs can easily run their
business online by opening an online store, marketing products through apps and social
media. When not leveraging digital marketing, it is difficult for SMEs to compete with
large competitors in the market in terms of costs involved and expertise in creating
conventional marketing strategies, for example through print media. In the digital era,
marketing SME products can be through the right website design, marketers can reach
target consumers with a wider reach and with better service guarantees, and at relatively
more efficient costs. To succeed in the digital era, SMEs also need to manage their
marketing strategies by utilizing digital technology. Moreover, Micro, Small and
Medium Enterprises (SMEs) in the era of the Covid-19 pandemic certainly have very
big challenges for SMEs to survive, so it is imperative for SMEs to follow the
digitalization of SMEs that add to online sales patterns through the marketplace as a
solution for micro, small and medium enterprises (SMEs) to survive and support the
economy Indonesia in the era of the Covid-19 pandemic.
 There is a lot of research on Micro, Small and Medium Enterprises (MSMEs)
that have gone towards digitalization. Research conducted by Tundung, et al. (2021) on
the Impact of Social Media Marketing for the Sustainability of Indonesian SMEs:
Lessons from the Covid-19 Pandemic shows that the adoption of internet/e-business
technology can be explained by perceived feasibility, perceived ease of use, and cost. In
addition, it has linkages between internet/e-business technology, social media
marketing, and SME sustainability. However, variable costs fail to indicate the
implementation of social media marketing by SMEs. Research conducted by Tatik, et al
(2022) which examines the development and testing of SME website quality
measurement scales (SMEs-WebQ): Evidence from Indonesia that provides managerial
recommendations to SME managers who want to improve their websites while
increasing their competitiveness in the digital business era.
Research on digitalization and the role of digital transformation has been widely
conducted. However, there is still a limited number of articles discussing the topic in the
form of Systematic Literature Review (SLR). Therefore, this research was made using
the literature study method and by reviewing previous research, which aims to fill the
research gap by providing a comprehensive analysis of Micro, Small and Medium
Enterprises. In this study, there are four formulations of problems raised, namely: 1)
Distribution of journals that discuss SME digitalization 2) How is SME digitization, 3)
What factors affect SME digitalization, and 4) What types of research, data collection
techniques and research tools are used to research SME digitalization?

LITERATURE REVIEW

1. Digital Transformation
Digital transformation is the integration and collaboration of digital
technologies or digitalization into all areas of business, fundamentally changing
the way companies operate and creating value for customers (Rudder, 2019).
Digital transformation introduces digital technologies and solutions as well as
digitization of operations and processes that were previously analog or
traditional (Rantala, 2018). The purpose of digital transformation as a step in
transforming resources in the process of value creation and organizational
structure change. Digital transformation utilizes digital technology from the
 level of planning and solution solving. There are many reasons businesses
undertake digital transformation, but the most likely reason is related to survival
issues. The pandemic has impacted the imperative ability of organizations to
adapt quickly to raw material supply chain disruptions, time-to-market mobility
pressures, and rapidly changing customer expectations into critical value that
must be created.
2. Micro, Small and Medium Enterprises (SMEs)
SMEs (Micro, Small and Medium Enterprises) are business entities that
continue to be a concern and are always prioritized by the government.
According to Law Number 20 of 2008 article 1 concerning SMEs, Micro, Small
and Medium Enterprises are:
a. Micro enterprises are productive businesses owned by individuals and/or
corporate business entities that meet the criteria for micro enterprises as
stipulated in the Law.
b. Small business is an independent productive economic enterprise, carried out
by individuals or business entities that are not subsidiaries owned,
controlled, or part of medium or large enterprises that meet the criteria for
small businesses as referred to in the Law.
c. Medium enterprises are productive economic enterprises that stand alone,
carried out by individuals or business entities that are not subsidiaries or
branches of companies owned, controlled, or part of small businesses or
large businesses with total net worth or annual sales proceeds as stipulated in
the Law. The form of SMEs (Micro, Small and Medium Enterprises) can be
individual companies, partnerships, such as corporations and CVs, or
companies.

RESEARCH METHODS

This research uses the concept of systematic literature review (SLR) which
discusses the digital transformation of Micro, Small and Medium Enterprises (MSMEs).
Literature review research is a process and activity that has the aim of collecting data
from various literature (books and journals) to compare the results of two or more
studies (Nowell et, al, 2014). The purpose of this study is to obtain a theoretical basis
that can support the solution of the questions being studied and dissect various theories
relevant to these questions, especially examining the digital transformation of Micro,
Small and Medium Enterprises in this study. A thorough literature study summarizes
several research studies determined based on a particular theme. A literature search will
be conducted on April 20, 2023. The data used in this study are secondary data obtained
not from direct observation, but obtained from the results of research that has been
conducted by previous researchers in the Emerald Insight Journal.

Secondary data sources obtained are articles from nationally reputable journals
with predetermined themes. The literature search in this literature study uses the
Emerald Insight database. The search for publication articles on search engines (Search
Enginug) above uses keywords, namely: "Digital Transformation Study in SMEs".
Search process or search process is used to obtain relevant sources to answer problem
formulation / Research Question (RQ) and other related references using Search Engine
Dimensions (https://www.emerald.com/insight/ ). From the identification results, more
than 4000 articles were obtained from Emerald Insight. Furthermore, article filtering is
carried out according to access criteria, year, type of content and abstract analysis. As a
result, 40 article titles were obtained. From the title of the article, then filtered based on
the feasibility of the topic of digital transformation through abstract analysis, the results
of ten articles were obtained. For more information, it looks like in the following image:

more than 4000 articles Emerald Insight

599 only content I have
access to
433 only open access articles
231 the year of the
article is irrelevant
202 articles last six month
51 earlycite article
151 references for relevance screening

40 references for relevance abstrak

10 references retrieved and reviewed

 Figure 1. Article Filtering Flowchart

RESEARCH RESULTS

1. Problem Statement 1
How is the distribution of journals that discuss Digital Transformation in
SMEs?
The results of the selected article review answer the formulation of problems
regarding the distribution of journals that discuss digital transformation in
SMEs with the following results:

Table 1. Journal Distribution on digital transformation in SMEs

No Journal Name Journal Link Indexation Sum

1 The TQM (Total https://www.emerald.com/ Emerald 2
Quality Management) insight/1754-2731.htm Insight
Journal
2 International Journal of https://www.emerald.com/ Emerald 1
Physical insight/0960-0035.htm Insight
Distribution &
Logistics
Management
3 Information Technology https://www.emerald.com/ Emerald 1
& People insight/0959-3845.htm Insight
4 Journal of Business & https://www.emerald.com/ Emerald 4
Industrial Marketing insight/0885-8624.htm Insight
5 Journal of Knowledge https://www.emerald.com/ Emerald 1
Management insight/publication/issn/ Insight
1367-3270
6 Journal of Research in https://www.emerald.com/ Emerald 1
Marketing insight/1471-5201.htm Insight
and Entrepreneurship
 Table one shows the distribution of ten (10) articles evenly distributed in six
journals as shown in the table above.

2. Problem Statement 2
How is Digital Transformation in SMEs?
The results of the selected article review answer the formulation of problems
regarding digital transformation in SMEs with the following results:

Table 2. Digital transformation process in SMEs

No. Digital Researchers and Research Title Object of

Transformatio Years Research
n Process
1 Good Simone Exploring usage, 282 respondents of
Splendiani expected benefits travel agents in
Early Mauro and perceived Italy
Francesca Rivetti usefulness of social
Tonino Pencarelli media in travel
(2023) agencies: an
empirical
investigation in
Italy
Luigi Mersico From knowledge Sinergia, an
Elisha Carloni broker to solution innovative small
Roberta, provider in Italian consulting
Bocconcelli and the Industry 4.0 firm
Alessandro setting: the
Pagano (2023) innovation path of
A Small Consulting
Firm
Sarah Schönherr, Organisational 30 tourism
Robert Eller, learning and organizations that
Andreas are members of the
No. Digital Researchers and Research Title Object of
Transformatio Years Research
n Process
Kallmuenzer and sustainable executive
Mike Peters Tourism: The development
(2023) Enabling Role of program (EDP)
Digital
transformation
Anni Rajala and Exploring the 192 SMEs
Tuire Hautala- effects of SMEs' operating in the
Kankaanpää platform-based manufacturing
(2023) Digital arena
Connectivity on
Firm Performance
– The
moderating role of
environmental
turbulence
2 Enough Emanuela Conti The impact of 205 manufacturing
Furio Camillo digitalization on companies in Italy
Tonino Pencarelli marketing activities
(2023) in manufacturing
companies
Mario Rapaccini Digital Business service
Marco Paiola servitization companies
Lino Cinquini journey in small-
Riccardo and
Giannetti (2023) Medium-sized
enterprises: the
contribution of
knowledge-
intensive business
No. Digital Researchers and Research Title Object of
Transformatio Years Research
n Process
firms
Sanna Joensuu- Marketing first? 214 Finnish SMEs
Salo, Anmari The role of
Viljamaa and marketing
Emilia Kangas capability in SME
(2023) growth
3 Less Andreas Risberg A configurational 72 Swedish omni-
and Hamid Jafari approach to last channel retail
Erik Sandberg mile logistics stores
(2023) practices and omni-
channel firm
characteristics for
competitive
advantage: a fuzzy-
set qualitative
comparative
analysis
Imoh Antai Impact of the top management
Nonyelum Lina COVID-19 executive at a
Eze (2023) pandemic on Nigerian
business-to- technology
business company
relationships in
digital ecosystems:
an African
perspective
Aleksandra Value co-creation digital platform
Hauke-Lopes, and co-destruction provider and three
Milena Ratajczak- in the digital traditional pastry
 No. Digital Researchers and Research Title Object of
Transformatio Years Research
n Process
Mrozek and transformation of shops
Marcin highly traditional
Wieczerzycki companies
(2022)

From the table above, it appears that 10 (ten) articles show that the majority of
digital transformation processes in SMEs are good. It can be seen from the 10
(ten) articles reviewed, 4 (four) articles stated that they had a good process and
others were sufficient or lacking.

3. Problem Statement 3
What indicators support Digital Transformation in SMEs?
The results of the selected article review answer the formulation of problems
regarding indicators in digital transformation in SMEs with the following
results:

Table 3. Digital transformation indicator in SMEs

No Indicators Researchers Object of Sum

. and Years Research
1 Use of Digital Simone Exploring usage, 282
Media Splendiani expected benefits respondents of
Early Mauro and perceived travel agents
Francesca usefulness of in Italy
Rivetti social media in
Tonino travel agencies:
Pencarelli an empirical
(2023) investigation in
Italy
No Indicators Researchers Object of Sum
. and Years Research
Emanuela The impact of 205
Conti digitalization on manufacturing
Furio Camillo marketing companies in
Tonino activities in Italy
Pencarelli manufacturing
(2023) companies
Aleksandra Value co-creation digital
Hauke-Lopes, and co- platform
Milena destruction in the provider and
Ratajczak- digital three
Mrozek and transformation of traditional
Marcin highly traditional pastry shops
Wieczerzycki companies
(2022)
Luigi Mersico From knowledge Sinergia, an
Elisha Carloni broker to solution innovative
Roberta, provider in the small Italian
Bocconcelli Industry 4.0 consulting
and Alessandro setting: the firm
Pagano (2023) innovation path
of a small
consulting firm
Sarah Organisational 30 tourism
Schönherr, learning and organizations
Robert Eller, sustainable that are
Andreas tourism: the members of
Kallmuenzer enabling role of the executive
and Mike digital development
Peters (2023) transformation program
(EDP)
No Indicators Researchers Object of Sum
. and Years Research
2 Simplification Mario Digital Business
of Work Rapaccini servitization service
Marco Paiola journey in small- companies
Lino Cinquini and medium-
Riccardo sized enterprises:
Giannetti the contribution
(2023) of knowledge-
intensive
business firms
Anni Rajala Exploring the 192 SMEs
and Tuire effects of SMEs' operating in
Hautala- platform-based the
Kankaanpää digital manufacturing
(2023) connectivity on arena
firm performance
– the moderating
role of
environmental
turbulence
3 Speed of Sanna Marketing first? 214 Finnish
Change Joensuu-Salo, The role of SMEs
Anmari marketing
Viljamaa and capability in
Emilia Kangas SME growth
(2023)
Andreas A configurational 72 Swedish
Risberg and approach to last omni-channel
Hamid Jafari mile logistics retail stores
Erik Sandberg practices and
(2023) omni-channel
 No Indicators Researchers Object of Sum
. and Years Research
firm
characteristics for
competitive
advantage: a
fuzzy-set
qualitative
comparative
analysis
Imoh Antai Impact of the top
Nonyelum COVID-19 management
Lina Eze pandemic on executive at a
(2023) business-to- Nigerian
business technology
relationships in company
digital
ecosystems: an
African
perspective

From the table above, it appears that the majority of research shows the results
that the most priority indicator is the use of internal digital media. This can be
seen from the 5 (five) selected journals, and others show simplification of work
in 2 (two) journals and the speed of change in 3 (three) journals.

4. Problem Statement 4
What types of research, data collection techniques and research tools are used to
research Digital Transformation in SMEs?
The results of the selected article review answer the formulation of problems
regarding the type of research and data collection techniques in digital
transformation in SMEs with the following results:
 Table 4. Types of digital transformation research in SMEs

No. Types of Researchers and Object of Sum

Research Years Research
1 Quantitative Simone Splendiani Exploring usage, 282
Early Mauro expected benefits respondents of
Francesca Rivetti and perceived travel agents
Tonino Pencarelli usefulness of in Italy
(2023) social media in
travel agencies:
an empirical
investigation in
Italy
Emanuela Conti The impact of 205
Furio Camillo digitalization on manufacturing
Tonino Pencarelli marketing companies in
(2023) activities in Italy
manufacturing
companies
Imoh Antai Impact of the top
Nonyelum Lina COVID-19 management
Eze (2023) pandemic on executive at a
business-to- Nigerian
business technology
relationships in company
digital
ecosystems: an
African
perspective
Anni Rajala and Exploring the 192 SMEs
Tuire Hautala- effects of SMEs' operating in
Kankaanpää (2023) platform-based the
No. Types of Researchers and Object of Sum
Research Years Research
digital manufacturing
connectivity on arena
firm performance
– the moderating
role of
environmental
turbulence
Sanna Joensuu- Marketing first? 214 Finnish
Salo, Anmari The role of SMEs
Viljamaa and marketing
Emilia Kangas capability in
(2023) SME growth
2 Qualitative Andreas Risberg A configurational 72 Swedish
and Hamid Jafari approach to last omni-channel
Erik Sandberg mile logistics retail stores
(2023) practices and
omni-channel
firm
characteristics
for competitive
advantage: a
fuzzy-set
qualitative
comparative
analysis
Mario Rapaccini Digital Business
Marco Paiola servitization service
Lino Cinquini journey in small- companies
Riccardo Giannetti and medium-
(2023) sized enterprises:
 No. Types of Researchers and Object of Sum
Research Years Research
the contribution
of knowledge-
intensive
business firms
Aleksandra Hauke- Value co-creation digital
Lopes, Milena and co- platform
Ratajczak-Mrozek destruction in the provider and
and Marcin digital three
Wieczerzycki transformation of traditional
(2022) highly traditional pastry shops
companies
Luigi Mersico From knowledge Sinergia, an
Elisha Carloni broker to innovative
Roberta, solution provider small Italian
Bocconcelli and in the Industry consulting
Alessandro Pagano 4.0 setting: the firm
(2023) innovation path
of a small
consulting firm
Sarah Schönherr, Organisational 30 tourism
Robert Eller, learning and organizations
Andreas sustainable that are
Kallmuenzer and Tourism: The members of
Mike Peters (2023) Enabling Role of the executive
Digital development
Transformation program
(EDP)

Of the 10 (ten) articles studied related to digital transformation in SMEs, it

appears that each of them is evenly distributed in the qualitative type of
 quantitative fan with 5 (five) journals each. For quantitative research, the
majority use multiple linear regression SPSS tools. While research with a
qualitative approach uses questionnaires as a research medium.

DISCUSSION

Digital transformation is essential for all businesses, from small to enterprise.

Some articles that have been reviewed provide commensurate results that are significant
enough to be reviewed. Technology has an important role to play in an organization's
ability to evolve with the market and increase value for customers. Despite these goals
and expectations, the reality of digital transformation is still cloud for some SMEs
companies and in the process will face obstacles.

Of the 10 (ten) articles reviewed, with each 5 (five) qualitative and quantitative
studies showing different focus priorities in implementing digital transformation.
Among them are the use of digital media, simplification of work, and speed of change.
In terms of priority use of digital media, supported by 5 (five) articles by Simone
Splendiani, Mauro Dini, Francesca Rivetti, Tonino Pencarelli (2023); Emanuela Conti,
Furio Camillo, Tonino Pencarelli (2023); Aleksandra Hauke-Lopes, Milena Ratajczak-
Mrozek and Marcin Wieczerzycki (2022); Luigi Mersico, Elisa Carloni, Roberta
Bocconcelli and Alessandro Pagano (2023); Sarah Schönherr, Robert Eller, Andreas
Kallmuenzer and Mike Peters (2023). It can be concluded that the use of digital media is
a focus priority in adapting digital transformation in business. Furthermore,
simplification of work in 2 (two) journals and speed of change in 3 (three) journals.
From 10 (ten) journals it shows that the majority of digital transformation processes in
SMEs are good. It can be seen from the 10 (ten) articles reviewed, 4 (four) articles
stated that they had a good process and others were sufficient or lacking. Sufficient or
lacking in this case does not mean that research does not meet the qualifications in
discussions related to digital transformation, but the reality of digital transformation
does need a process of adaptation and not all business fields are able to adjust to
digitalization. In some industries, it is impossible or discouraged to fully digitize all
business processes, and in fact companies must retain some traditional analog characters
to create value (Hauke-Lopes et al., 2022).
CONCLUSION

The development of digital technology has affected all aspects of life including SMEs.
SMEs in the digital era have developed well, but the reality of digital transformation
does need a process of adaptation and not all business fields are able to adjust to
digitalization. In some industries, it is impossible or discouraged to fully digitize all
business processes, and in fact companies must retain some of the traditional analog
character to create value. The results of a review in 10 (ten) journals by reviewing
literature from the last month, showed that the majority gave a good response in the
digital transformation process and some in addition mentioned enough or less. This
means that there are differences in process improvement and capabilities in terms of
digital development and traditional production.

Furthermore, 3 (three) indicators of influence on digital transformation were

identified. This article shows the fragmentation of literature and how it concentrates on
the impact of a limited number of categories of concepts. The scattered frameworks
(theoretical and conceptual) and application of the weak theories used found in this
study highlight the need for the development of frameworks that view technology
adoption as a dynamic process due to the dynamic nature of today's new technologies.

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