Minding the GAPS: Digital transformation in Portuguese SMEs

Abstract

The widespread use of digital technologies is at the heart of a massive global transformation. Business models and processes are becoming increasingly more dependent on data, to the point that it is a critical success factor for many companies. However, not all enterprises are fully engaged with this relatively new reality, while some others procrastinate due to the absence of knowledge or easily/financially accessible tools. Based on data collected via a survey, we offer a characterization on the perception of people working in Portugal in respect to the value of technological innovation and its adoption on the enterprises where they work. Our data corroborates the existence of a bias, unfavourable to SMEs, both in terms of implementation and perception of relevance of Digital Transformation and Data-Driven Management in their operational and strategical routines. Based on the assumption that SMEs will face an increasing competitive pressure in the future, since technology progressively benefits economies of scale, we set on to identify business sectors where those enterprises were already lagging compared to larger ones in respect to several structural business metrics. A comparison with information from other European Countries underlines a generic dire picture of businesses in Portugal, where the value added per unit of capital and labour investment are much lower than those found in most European countries. Additionally, we observed that in Portugal, SMEs were particularly lagging behind bigger companies in the Information/Communication and Mining/Quarrying sectors. This works emphasizes the need to facilitate the adoption and use of technology in Portuguese SMEs, as well as building up management literacy that encourages continuous improvement and innovation.