Investigating the Impact of Digital Technology on Business Performance among Small and Medium Enterprises in South Africa

Abstract

Small and Medium Enterprises (SMEs) are recognised as significant contributors to global economic growth. Due to their capability to establish new markets and provide employment. In a society that is becoming more digital, SMEs need to adapt to these market changes to remain operational and profitable. This study investigated the impact of digital technology on business performance, in the South African context. This study was anchored on the resource-based view theory, which stipulates that an organisation’s competitive advantage can be determined by its internal capabilities and resources. This study employed a quantitative research design and the primary data collection method involved gathering survey responses through the Qualtrics platform. The study population consisted of SME owners, managers and employees. The data collected was analysed through statistical methods, which included tests for normality and reliability, as well as correlation and regression analysis. These tests were implemented to evaluate the hypotheses that were developed from the literature review conducted. The results obtained based on the sample of 114 participants revealed that access to finance and social capital had a positive impact on business performance. However, the remaining four factors, digital marketing, social media usage, E-commerce and entrepreneurial education did not have an impact on business performance. This was due to their statistical significance being higher than the threshold, therefore yielding inconclusive results. This study contributes to the existing literature by providing insights on key factors that drive business performance within the SME sector. It recommends that SMEs establish strategic connections with each other based on their product offering, to solidify their value chain to attract new customers. Additionally, training provided to SMEs should be tailored to accommodate their schedules and digital marketing should be used with an intention beyond generating sales, but also to develop relationships with custo