The Impact of Digital Transformation on Business Performance: A Study of Pakistani SMEs

Authors

  • M. F. Mubarak School of Economics and Business, Kaunas University of Technology, Lithuania and Faculty of Management Sciences, Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Pakistan
  • F. A. Shaikh Department of Economics, University of Sindh, Pakistan
  • M. Mubarik Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia, Malaysia
  • K. A. Samo Faculty of Engineering, University Malaysia Sarawak, Malaysia
  • S. Mastoi Faculty of Technical and Vocational Education, Universiti Tun Hussein Onn Malaysia, Malaysia
Volume: 9 | Issue: 6 | Pages: 5056-5061 | December 2019 | https://doi.org/10.48084/etasr.3201

Abstract

Business ecosystems are continuously evolving. In this hyper-competitive era, firms are increasingly transforming their business operations through advanced digital technologies. Gone are the days of mere testing and debating the influence of digital transformation and industry 4.0, yet the time has come for actionable steps. Therefore, this study has identified the role of industry 4.0 technologies including big data, cyber-physical systems, internet of things and interoperability, on the performance of Small and Medium-sized Enterprises (SMEs) in Pakistan. A relevant questionnaire was developed and distributed randomly in the cities of Karachi, Lahore, Peshawar, Islamabad, Gujrat, and Sialkot. After applying multiple regression techniques through SPSS, it was found that big data, cyber-physical systems, and interoperability have a significant positive impact to improve business performance, while the insignificant effect of internet of things was revealed. Since the research in the area of digital transformation and industry 4.0 is scant, the current study has contributed novel directions, insights and a framework for future researchers. Moreover, this study will help managers to justify the allocation of resources towards technological infrastructure development in the operations of their firms. Finally, policymakers will find it helpful in order to devise suitable strategies for developing human capital and to enhance their absorptive capacity.

Keywords:

digital transformation, business performance, Pakistani SMEs, industry 4.0

Downloads

Download data is not yet available.

References

M. Imran, W. Hameed, A. U. Haque, “Influence of industry 4.0 on the production and service sectors in Pakistan: Evidence from textile and logistics industries”, Social Sciences, Vol. 7, No. 12, pp. 246, 2018 DOI: https://doi.org/10.3390/socsci7120246

A. Bharadwaj, O. A. E. Sawy, P. A. Pavlou, N. Venkatraman, “Digital business strategy: Toward a next generation of insights”, MIS Quarterly, Vol. 37, No. 2, pp. 471–482, 2013 DOI: https://doi.org/10.25300/MISQ/2013/37:2.3

D. Q. Chen, D. S. Preston, M. Swink, “How the use of big data analytics affects value creation in supply chain management”, Journal of Management Information Systems, Vol. 32, No. 4, pp. 4–39, 2015 DOI: https://doi.org/10.1080/07421222.2015.1138364

S. Faraj, S. Pachidi, K. Sayegh, “Working and organizing in the age of the learning algorithm”, Information and Organization, Vol. 28, No. 1, pp. 62–70, 2018 DOI: https://doi.org/10.1016/j.infoandorg.2018.02.005

A. Toffler, The third wave, Bantam Books, 1980

German Federal Ministry for Economic Affairs and Energy, Industry 4.0, 2018

M. S. Mubarik, C. Govindaraju, E. S. Devadason, “Human capital development for SMEs in Pakistan: is the one-size-fits-all policy adequate?”, International Journal of Social Economics, Vol. 43, No. 8, pp. 804-822, 2016 DOI: https://doi.org/10.1108/IJSE-02-2015-0033

G. Wang, A. Gunasekaran, E. W. T. Ngai, T. Papadopoulos, “Big data analytics in logistics and supply chain management: Certain investigations for research and applications”, International Journal of Production Economics, Vol. 176, pp. 98–110, 2016 DOI: https://doi.org/10.1016/j.ijpe.2016.03.014

M. S. Shahbaz, R. Z. R. Rasi, M. F. B. Ahmad, “A novel classification of supply chain risks: Scale development and validation”, Journal of Industrial Engineering and Management, Vol. 12, No. 1, pp. 201–218, 2019 DOI: https://doi.org/10.3926/jiem.2792

S. Mubarik, N. Naghavi, M. F. Mubarik, “Governance-led intellectual capital disclosure: Empirical evidence from Pakistan”, Humanities and Social Sciences Letters, Vol. 7, No. 3, pp. 141–155, 2019 DOI: https://doi.org/10.18488/journal.73.2019.73.141.155

J. Bughin, T. Kretschmer, N. V. Zeebroeck, “Experimentation, learning and stress: The role of digital technologies in strategy change”, iCite Working Paper 2019 - 31, 2019 DOI: https://doi.org/10.2139/ssrn.3328421

M. S. Shahbaz, M. A. Soomro, N. U. K. Bhatti, Z. Soomro, M. Z. Jamali, “The impact of supply chain capabilities on logistic efficiency for the construction projects”, Civil Engineering Journal, Vol. 5, No. 6, pp. 1249–1256, 2019 DOI: https://doi.org/10.28991/cej-2019-03091329

B. Slusarczyk, “Industry 4.0: Are we ready?”, Polish Journal of Management Studies, Vol. 17, No. 1, pp. 232-248, 2018 DOI: https://doi.org/10.17512/pjms.2018.17.1.19

L. Thames, D. Schaefer, “Software-defined cloud manufacturing for industry 4.0”, Procedia CIRP, Vol. 52, pp. 12–17, 2016 DOI: https://doi.org/10.1016/j.procir.2016.07.041

J. Posada, C. Toros, I. Barandiaran, D. Oyarzun, D. Stricker, R. D. Amicis, E. B. Pinto, P. Eisert, J. Dollner, I. Vallarino, “Visual computing as a key enabling technology for industrie 4.0 and industrial internet”, IEEE Computer Graphics and Applications, Vol. 35, No. 2, pp. 26–40, 2015 DOI: https://doi.org/10.1109/MCG.2015.45

L. D. Xu, E. L. Xu, L. Li., “Industry 4.0: State of the art and future trends”, International Journal of Production Research, Vol. 56, No. 8, pp. 2941–2962, 2018 DOI: https://doi.org/10.1080/00207543.2018.1444806

J. Qureshi, G. M. Herani, “The role of small and medium-size enterprises (SMEs) in the socio-economic stability of Karachi”, Indus Journal of Management & Social Sciences, Vol. 4, No. 2, pp. 30–44, 2011

SMEDA, “State of SMEs in Pakistan”, available at https://smeda.org/index.php?option=com_content&view=article&id=7:state-of-smes-in-pakistan&catid=15, 2019

M. S. Dar, S. Ahmed, A. Raziq, “Small and medium-size enterprises in Pakistan: Definition and critical issues”, Pakistan Business Review, Vol. 19, No. 1, pp. 46–70, 2017

C. Homburg, D. Wielgos, C. Kuhnl, “Digital business capability and its effect on firm performance”, AMA Winter Academic Conference: Understanding Complexity, Transforming the Marketplace, Chicago, USA, February 22-24 ,2019

M. S. Shahbaz, R. Z. R. M. Rasi, M. F. B. Ahmad, S. Sohu, “The impact of supply chain collaboration on operational performance: Empirical evidence from manufacturing of Malaysia”, International Journal of Advanced and Applied Sciences, Vol. 5, No. 8, pp. 64–71, 2018 DOI: https://doi.org/10.21833/ijaas.2018.08.009

G. Zhang, X. Peng, J. Li, “Technological entrepreneurship and policy environment: A case of China”, Journal of Small Business and Enterprise Development, Vol. 15, No. 4, pp. 733–751, 2008 DOI: https://doi.org/10.1108/14626000810917834

V. H. Birgit, D. Hess, “Guest editorial industry 4.0–prerequisites and visions”, IEEE Transactions on Automation Science and Engineering, Vol. 13, No. 2, pp. 411–413, 2016 DOI: https://doi.org/10.1109/TASE.2016.2523639

D. Lukac, “The fourth ICT-based industrial revolution “industry 4.0”—HMI and the case of CAE/CAD innovation with EPLAN P8”, 23rd Telecommunications Forum Telfor, Belgrade, Serbia, November 24-26, 2015 DOI: https://doi.org/10.1109/TELFOR.2015.7377595

Industrial Internet Consortium, A global industry first: Industrial Internet Consortium and Plattform Industrie 4.0 to Host Joint IIoT Security Demonstration at Hannover Messe, Press Release, IIC, 2017

H. Kagermann, W. Wahlster, J. Helbig, Recommendations for implementing the strategic initiative INDUSTRIE 4.0: Final report of the Industrie 4.0 Working Group, Forschungsunion, 2013

J. K. Gerrikagoitia, G. Unamuno, E. Urkia, A. Serna, “Digital manufacturing platforms in the industry 4.0 from private and public perspectives”, Applied Sciences, Vol. 9, No. 14, Article ID 2934, 2019 DOI: https://doi.org/10.3390/app9142934

G. Nawanir, The effect of lean manufacturing on operations performance and business performance in manufacturing companies in Indonesia, PhD Thesis, Universiti Utara Malaysia, 2016

M. S. Shahbaz, A. G. Kazi, B. Othman, M. Javaid, K. Hussain, R. Z. R. M. Rasi, “Identification, assessment and mitigation of environment side risks for Malaysian manufacturing”, Engineering, Technology & Applied Science Research, Vol. 9, No. 1, pp. 3851–3857, 2019 DOI: https://doi.org/10.48084/etasr.2529

E. Brynjolfsson, L. M. Hitt, “Beyond computation: Information technology, organizational transformation and business performance”, Journal Of Economic Perspectives, Vol. 14, No. 4, pp. 23–48, 2000 DOI: https://doi.org/10.1257/jep.14.4.23

M. Ghobakhloo, T. S. Hong, “It investments and business performance improvement: The mediating role of lean manufacturing implementation”, International Journal of Production Research, Vol. 52, No. 18, pp. 5367–5384, 2014 DOI: https://doi.org/10.1080/00207543.2014.906761

L. Heracleous, M. Barrett, “Organizational change as discourse: Communicative actions and deep structures in the context of information technology implementation”, Academy of Management Journal, Vol. 44, No. 4, pp. 755–778, 2001 DOI: https://doi.org/10.2307/3069414

H. Lasi, P. Fettke, H. G. Kemper, T. Feld, M. Hoffmann, “Industry 4.0”, Business & Information Systems Engineering, Vol. 6, No. 4, pp. 239–242, 2014 DOI: https://doi.org/10.1007/s12599-014-0334-4

M. S. Shahbaz, S. Sohu, F. Z. Khaskhelly, A. Bano, M. A. Soomro, “A novel classification of supply chain risks: A review”, Engineering, Technology & Applied Science Research, Vol. 9, No. 3, pp. 4301–4305, 2019 DOI: https://doi.org/10.48084/etasr.2781

S. Erevelles, N. Fukawa, L. Swayne, “Big data consumer analytics and the transformation of marketing”, Journal of Business Research, Vol. 69, No. 2, pp. 897–904, 2016 DOI: https://doi.org/10.1016/j.jbusres.2015.07.001

J. Manyika, M. Chui, B. Brown, J. Bughin, R. Dobbs, C. Roxburgh, A. H. Byers, Big Data: The next frontier for innovation, competition, and productivity, McKinsey & Company, 2011

P. Zikopoulos, C. Eaton, D. Deroos, T. Deutsch, G. Lapis, Understanding big data: Analytics for enterprise class hadoop and streaming data, McGraw-Hill Osborne Media, 2011

A. Gunasekaran, T. Papadopoulos, R. Dubey, S. F. Wamba, S. J. Childe, B. Hazen, S. Akter, “Big data and predictive analytics for supply chain and organizational performance”, Journal of Business Research, Vol. 70, pp. 308–317, 2017 DOI: https://doi.org/10.1016/j.jbusres.2016.08.004

K. Ashton, “That 'internet of things' thing: In the real world, things matter more than ideas”, RFID Journal, Vol. 22, No. 7, pp. 97–114, 2009

T. Li, W. Chen, Y. Tang, H. Yan, “A homomorphic network coding signature scheme for multiple sources and its application in IoT”, Vol. 2018, Article ID 9641273,2018 DOI: https://doi.org/10.1155/2018/9641273

L. Belli, L. Davoli, A. Medioli, P. L. Marchini, G. Ferrari, “Towards industry 4.0 with IoT: Optimizing business processes in an evolving manufacturing factory”, Frontiers in ICT, Vol. 6, Article ID 17, 2019 DOI: https://doi.org/10.3389/fict.2019.00017

J. K. Nwankpa, Y. Roumani, “It capability and digital transformation: A firm performance perspective”, Thirty Seventh International Conference on Information Systems, Dublin, Ireland, December 11-14, 2016

M. S. Shahbaz, A. F. Chandio, M. Oad, A. Ahmed, R. Ullah, “Stakeholders’ management approaches in construction supply chain: A new perspective of Stakeholder’s theory”, International Journal of Sustainable Construction Engineering and Technology, Vol. 9, No. 2, pp. 16–26, 2018 DOI: https://doi.org/10.30880/ijscet.2018.09.02.002

Kenpro, “Sample size determination using Krejcie and Morgan table”, available at: http://www.kenpro.org/sample-size-determination-using-krejcie-and-morgan-table, 1970

M. Sarstedt, C. M. Ringle, J. F. Hair, “Treating unobserved heterogeneity in PLS-SEM: A multi-method approach”, in: Partial least squares path modeling, pp. 197–217, Springer, 2017 DOI: https://doi.org/10.1007/978-3-319-64069-3_9

J. W. Creswell, Research design: Qualitative, quantitative, and mixed methods approaches, Sage, 2017

R. K. Shukla, “Coordination practices in supply chain management: An empirical study of Indian manufacturing firms”, Journal of Management Research, Vol. 16, No. 1, pp. 44–54, 2016

B. Waschneck, T. Altenmuller, T. Bauernhansl, A. Kyek, “Production scheduling in complex job shops from an industrie 4.0 perspective: A review and challenges in the semiconductor industry”, International Conference on Knowledge Technologies and Data-Driven Business, Graz, Austria, October 18-19, 2016

S. Keawphang, “Corporate governance and corporate disclosure and transparency lessons from the thai financial crisis of 1997”, International Journal of Business, Economics and Law, Vol. 5, No. 4, pp. 115–118, 2014

M. S. Shahbaz, S. Kazi, N. U. K. Bhatti, S. A. Abbasi, R. Z. R. Rasi, “The impact of supply chain risks on supply chain performance: Empirical evidence from the manufacturing of Malaysia”, International Journal of Advanced And Applied Sciences, Vol. 6, No. 9, pp. 1–12, 2019 DOI: https://doi.org/10.21833/ijaas.2019.09.001

G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron, N. Buckley, “Strategy, not technology, drives digital transformation”, MIT Sloan Management Review and Deloitte University Press, Vol. 14, pp. 1–25, 2015

Downloads

How to Cite

[1]
M. F. Mubarak, F. A. Shaikh, M. Mubarik, K. A. Samo, and S. Mastoi, “The Impact of Digital Transformation on Business Performance: A Study of Pakistani SMEs”, Eng. Technol. Appl. Sci. Res., vol. 9, no. 6, pp. 5056–5061, Dec. 2019.

Metrics

Abstract Views: 1913
PDF Downloads: 644

Metrics Information
Bookmark and Share

Most read articles by the same author(s)

> >>