DIGITAL ADOPTION AND BUSINESS PERFORMANCE AMONG SMALL AND MEDIUM ENTERPRISES IN SOUTH AFRICA: EVIDENCE FROM GAUTENG PROVINCE

Abstract

Small and Medium Enterprises (SMEs) play a critical role in economic growth, employment creation, and innovation in emerging economies. Despite their importance, many South African SMEs continue to experience challenges related to limited market access, operational inefficiencies, financial constraints, and inadequate digital capabilities. Digital technologies have increasingly been recognised as strategic resources that can enhance business competitiveness, improve customer engagement, and strengthen organisational performance. However, empirical evidence on the long-term impact of digital adoption within South African SMEs remains limited. This study investigates the impact of digital adoption on business performance among SMEs in Gauteng Province, South Africa, over the period 2013–2022. Guided by the Technology Acceptance Model (TAM), the Resource-Based View (RBV), and the Diffusion of Innovation Theory, the study employed a mixed-methods research design that combined structured questionnaires with semi-structured interviews involving SME owners and managers. Quantitative data were analysed using descriptive statistical techniques, while qualitative data were analysed through thematic analysis. The findings indicate that digital adoption positively influences customer acquisition, market reach, and operational efficiency, with financial performance improving more gradually over time. Mobile-based technologies, particularly WhatsApp Business and social media platforms, emerged as the most widely adopted digital tools because of their affordability, accessibility, and ease of use. The study further identifies digital skills shortages, financial constraints, and inadequate digital infrastructure as the primary barriers limiting effective digital adoption. In addition, the COVID-19 pandemic significantly accelerated digital transformation, compelling many SMEs to adopt digital technologies to ensure business continuity and resilience. The study contributes to the growing literature on digital transformation in emerging markets by providing longitudinal evidence from the South African SME sector. It also demonstrates that successful digital adoption extends beyond technology acquisition and depends on organisational capabilities, strategic integration, and supportive institutional environments. The findings offer practical implications for SME owners, policymakers, enterprise development agencies, and training institutions seeking to enhance SME competitiveness and sustainability through digital transformation.