Determinants of digital transformation in Vietnamese Small and Medium-sized Enterprises (SMEs): Evidence from the World Bank enterprise survey

Abstract

This study investigates the impact of firm characteristics, competition, and managerial attributes on Digital Transformation (DT) among Vietnamese Small and Medium-sized Enterprises (SMEs). A notable contribution of this study is the new measurement of DT derived from World Bank Enterprise Survey (WBES) indicators, which captures multiple dimensions of digitalization such as website or social media presence, broadband connection, research and development, product and process innovation,  use of foreign technology, and electronic tax administration. Drawing upon the Technology-Organization-Environment (TOE) framework, the Resource-Based View (RBV), and the Upper Echelons Theory (UET), the research applies OLS regression on a sample of 222 Vietnamese SMEs using data from the WBES. The empirical results reveal that firm size, performance, and age have a positive impact on DT, indicating the importance of internal resources to perform transformation. Also, competition, including competitive pressure and informal competition, significantly drives DT adoption, highlighting the reactive nature of DT in Vietnam’s competitive and uneven market environment. The study contributes to both theory and practice by introducing a new approach to measuring DT using public survey data, and by offering policy-relevant insights for supporting SME digitalization in developing economies. The findings suggest that policymakers should design size-sensitive support programs such as subsidized digital tools, low-interest credit lines, and capacity-building training, while also addressing informal competition through stricter enforcement and improved access to digital marketplaces.