Digital Transformation, Internationalization and Productivity in Small and Medium-Sized Enterprises: Unravelling Effects from Spain

Abstract The digital transformation has significantly changed the business environment, altering how small and medium-sized enterprises (SMEs) approach productivity and internationalization. This research examines this relationship in Spain, using data from over 5,500 industrial firms collected between 1990 and 2016. It analyses how digital transformation influences international market access and SMEs’ competitiveness, revealing: #1) a partial positive correlation between digital technologies and SMEs’ international activities; #2) the fundamental role of productivity improvements in shaping firms’ international business decisions. Through rigorous dynamic panel modelling analysis, the research provides nuanced insights into the intricate dynamics of digital transformation, productivity, and international business patterns in SMEs, highlighting heterogeneity across firms depending on productivity levels and firm characteristics. The study’s implications inform business management practices and policy frameworks, empowering SMEs in their digital transformation journey to leverage new growth prospects in an evolving global market.