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Evaluating digital transformation in small and medium enterprises using the Alkire-Foster method.

Luís L Moreira¹, Sofia S Pinto¹, Leonardo Costa²

¹Universidade Católica Portuguesa, Católica Porto Business School, Portugal.

|February 3, 2025

Summary

Small and Medium-sized Enterprises (SMEs) can improve digital technology integration by focusing on digital skills. The Alkire-Foster (AF) method effectively benchmarks digital transformation progress in SMEs.

Keywords:

AF method Digital transformation Industry 4.0 SMEs

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Area of Science:

Business and Management
Information Systems

Background:

Digital transformation enhances business flexibility and market responsiveness.
Small and Medium-sized Enterprises (SMEs) face unique challenges in adopting digital technologies.
Assessing digital integration is crucial for SME competitiveness.

Purpose of the Study:

To analyze digital technology integration profiles in SMEs.
To benchmark digital technology integration using the Alkire-Foster (AF) method.
To identify factors influencing digital technology integration in SMEs.

Main Methods:

The Alkire-Foster (AF) method was applied to measure digital technology integration.
Individual and group-level indicators were computed for benchmarking.
Linear regression analysis examined the influence of enablers on integration scores.

Main Results:

Most SMEs have the foundational digital infrastructure for integration.
A significant gap exists in the supply and demand for digital skills within SMEs.
The AF method proved effective for benchmarking digital integration at multiple levels.

Conclusions:

SMEs possess adequate digital infrastructure but require enhanced digital skills.
The AF method offers a robust framework for assessing and comparing digital integration in SMEs.
Targeted development of digital skills is essential for successful SME digital transformation.