Beyond the assumed barriers: a critical review of digital transformation challenges in SME

Digital Transformation (DT) is essential for the competitiveness of Small and Medium-sized Enterprises (SMEs), yet family-owned SMEs encounter distinct challenges that are often homogenized in academic literature. Existing research frequently catalogs barriers such as resource constraints and skill shortages but often overlooks the nuanced, lived experiences of these firms and the critical impact of succession planning on DT initiatives. This thesis investigates how family-owned SMEs in Upper Austria perceive barriers to DT identified in the literature and examines the rarely mentioned role that the presence or absence of a clear succession plan plays in their DT decisions.
The study employs a two-stage qualitative, exploratory design. First, a Structured Literature Review (SLR) analyzed 30 relevant papers, consolidating 336 distinct barrier mentions into a pragmatic nine-category scaffold, supplemented by a family governance/succession overlay. Second, ten semi-structured interviews, incorporating a card-ranking task, were conducted with owners and senior managers of regional family-owned SMEs. The data were analyzed using a hybrid (deductive-inductive) Qualitative Content Analysis (QCA).
The findings confirm the relevance of the literature-derived categories but reveal a significant shift in prioritization. Participants consistently elevated human and organizational hurdles - specifically 'People & Skills (HR)' and 'Culture & Change Readiness' over purely technological challenges. Inductive analysis highlighted context-specific themes, including cost-benefit opacity, externally mandated digitalization by vendors or regulators, and the strain of continual change. Critically, succession was found to function not as an isolated barrier, but as a conditioning factor - a "threshold logic" - that modulates time horizons, risk tolerance, and investment thresholds. Where succession is unclear, owners tend to defer major transformations; where succession is intended, DT is framed as a prerequisite for continuity and attractiveness.
The study contributes by identifying the core mechanisms that explain DT hurdles: technological misfit with existing workflows, the interplay between limited resources and perceived risk, and dependencies on external partners. It also highlights how family governance shapes the firm's overall risk appetite and timeline when addressing these challenges. It offers practical implications for SME owners to explicitly align DT initiatives with family horizons and prioritize organizational fit over technological novelty.