Contact : 9561854529 Email : submitpaper@ijmem.com editorinchief.ijmem@gmail.com Contact Form Working Hours: 9am to 9PM
Mon–Fri 10:00–17:00 IST
IJMEM Logo
International Journal of Modern Engineering and Management | IJMEM
Multidisciplinary
Open Access Journal
ISSN No: 3048-8230
Follows UGC–CARE Guidelines
Home
About Us
Journal Overview Ethics & Policies
Scope
Author Guidelines
Submission Guidelines Call for Papers
Indexing Publication Charges Archives Editorial Board Downloads
Join Us
Conference Collaboration Join as Reviewer / Editorial Board
Contact Us

Digital Transformation Strategy, IT Governance Maturity and Firm Performance in Indian Small and Medium Enterprises

Author(s):

Thomas Hess

Affiliation: Institute for Information Systems and New Media, Ludwig Maximilian University of Munich, Munich, Germany

Page No: 1-4-

Volume issue & Publishing Year: Volume 3, Issue 4, 2026/04/04

Journal: International Journal of Modern Engineering and Management | IJMEM

ISSN NO: 3048-8230

DOI: https://doi.org/10.5281/zenodo.19508389

Article Indexing:

Abstract:

India's 63.4 million Micro, Small and Medium Enterprises (MSMEs), contributing 30% of GDP, 45% of exports, and employing 120 million workers, represent the economy's most critical and most under-digitised segment. The government's MSME Digital Transformation Initiative (2022-2027) targeting 5 million digitally enabled MSMEs by 2026 through SIDBI, NASSCOM, and state government digital skilling programmes has accelerated technology adoption but has exposed a significant capability gap: many SMEs are adopting individual digital tools (UPI payments, GST filing software, WhatsApp Business) without the underlying IT governance framework required to extract strategic value from integrated digital transformation.This study examines the relationship between digital maturity, IT governance quality, and firm performance (ROA, revenue growth, employee productivity) across 412 Indian SMEs in manufacturing (n=148), services (n=164), and agro-processing (n=100) sectors in Tamil Nadu and Maharashtra, using a cross-sectional survey with validated digital maturity assessment instrument (Gartner Digital Business Score adapted for SME context) and audited financial data from MCA21 returns. Structural equation modelling confirms that digital maturity significantly predicts firm performance (β=0.58, p<0.001), fully mediated by IT governance quality (β=0.44, p<0.001) — meaning that technology adoption without governance mechanisms fails to translate into performance outcomes. Skill gaps (72.4% severity), legacy system constraints (68.2%), and cybersecurity concerns (64.8%) are the three highest-severity barriers. Medium-sized firms (100-499 employees) show the highest digital ROI relative to investment, suggesting a sweet-spot of organisational complexity and resource availability.

Keywords:

digital transformation, IT governance, MSME, SME, India, firm performance, digital maturity, cloud computing, Industry 4.0, SEM, barriers

Reference:

  • [1] Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability. MIS Quarterly, 24(1), 169-196.

  • [2] Hess, T., et al. (2016). Options for formulating a digital transformation strategy. MIS Quarterly Executive, 15(2), 123-139.

  • [3] ISACA. (2019). COBIT 2019 Framework: Governance and Management Objectives. Information Systems Audit and Control Association.

  • [4] Mithas, S., Ramasubbu, N., & Sambamurthy, V. (2012). How information management capability influences firm performance. MIS Quarterly, 35(1), 237-256.

  • [5] MSME Ministry. (2023). Annual Report 2022-23. Ministry of Micro, Small and Medium Enterprises, Government of India.

  • [6] NASSCOM. (2023). SME Technology Adoption Survey 2023. National Association of Software and Service Companies.

  • [7] Venkataraman, P., & Balaji, S. (2023). IT governance maturity and SME performance. Journal of Global Information Management, 31(4), 1-28.

  • [8] Weill, P., & Ross, J. W. (2004). IT Governance. Harvard Business School Press.

Download PDF