Differential Pathways to Digitalisation: A Multi-Group Analysis of Trade and Services SMEs

Abstract

Digitalisation is critical for the survival of small and medium-sized enterprises (SMEs), yet the mechanisms adopted across sectors vary significantly. This study combines the technology-organisation-environment (TOE) and the technology acceptance model (TAM) to investigate the impact of perceived benefits and the role of government support on the adoption of digital technologies (ADT). It examines the mediating role of transformational governance (TG). Two research questions are posed. First, to what extent do perceived benefits and government support stimulate SMEs’ transformational governance to adopt digital technologies? Second, are there statistically significant differences in the mechanisms of digital technologies adoption between SMEs in the trade and services sectors? Data were collected from 509 SMEs in Bulgaria – 198 in trade (retail and wholesale), and 311 in the services sector. The study raised four hypotheses, which were analysed employing Structural Equation Modelling and Multi-Group Analysis. Findings related to RQ1 revealed that perceived benefits were found to be the strongest driver of ADT. Government support, while significant, has a direct but rather low impact on TG. This further supports the conclusion that SMEs respond more to their own perceptions of the value of digitalisation than to external stimuli. TG emerged as a critical mechanism that mediates the impact of perceived benefits on the actual adoption of digital technologies. Importantly, the MGA results highlight some key differences between services and trade SMEs (RQ2). The impact of perceived benefits on transformational governance is invariant. While government support is a significant, though weak, driver of ADT in services SMEs via TG, it is insignificant for trade SMEs. Furthermore, ADT in trade SMEs is strongly dependent on TG, whereas in services SMEs, perceived benefits emerge as an important catalyst. This study’s findings contribute to the literature by highlighting the sector differences and the need for sector-specific approaches. It provides practical insights for policymakers and managers for navigating digitalisation successfully.