Digital Transformation and Business Model Innovation in Vietnamese Small and Medium Enterprises: Strategic Implications for Sustainable Competitiveness

Abstract

Digital transformation has become a strategic imperative for small and medium enterprises (SMEs) in the context of Industry 4.0 and the rapidly evolving digital economy. This study examines the role of digital transformation in reshaping SME business models, enhancing operational efficiency, and strengthening long-term competitiveness. Using a qualitative research approach based on theoretical synthesis, comparative analysis, and secondary data evaluation, the study investigates the applications, challenges, and strategic implications of digital transformation in SMEs. The findings indicate that digital transformation contributes significantly to business model innovation through omnichannel distribution systems, cloud-based operations, data-driven decision-making, digital customer relationship management, and supply chain integration. However, SMEs continue to face substantial barriers related to financial constraints, technological infrastructure, cybersecurity risks, organizational resistance, and limitations in digital capabilities. The study further proposes an integrated strategic framework that links digital transformation capabilities with sustainable competitive advantage and organizational adaptability. This research contributes to the growing literature on digital transformation and SME management by emphasizing the strategic and long-term nature of digital transformation beyond temporary environmental disruptions.