Digitalization Adoption Barriers in the Context of Sustainability and Operational Excellence: Implications for SMEs

In the global landscape, small and medium enterprises (SMEs) are increasingly enhancing their adaptability to capitalize on evolving market prospects. Industry 4.0 technologies, with their primary focus on improving operational excellence, hold immense potential for contributing to the sustainability of SMEs. These technologies optimize resources, repurpose materials, enable remote working, and minimize waste, thereby fostering a resilient business environment. In the current study, the authors have utilized the Technology, Organization, and Environment (TOE) framework to conduct a comprehensive literature review and identified the key barriers. Research questions and hypothesis were formulated. A questionnaire-based survey was conducted, involving 205 discrete manufacturing SMEs. The authors evaluated the proposed hypotheses using the Partial Least Square Structural Equation Modeling (PLS-SEM) technique to gain insights into their causal relationships. Identified barriers are categorized as adoption barriers, lack of in-house technology skills, readiness barriers, and adverse operational realities. The authors observed that lack of strategic planning, inadequate focus on processes and performance monitoring results in barriers that hinder the digitalization of SMEs. Further results anticipate that operational realities have a direct relationship with readiness barriers of SMEs. This implies that challenges such as workforce turnover, pricing pressures, last-minute design changes, overdue payments, and outdated infrastructure can lead to operational difficulties, resulting in suboptimal strategies, business plans, and ineffective processes. The findings of the current study also imply that implementing shopfloor industrial Internet of things (IIoT) to track performance and interventions through digital definitions of products and manufacturing can further strengthen processes. By incorporating the findings from this study, SME stakeholders can develop strategies to achieve operational excellence while fulfilling their sustainability goals.