How Digital Transformation Can Help Indian MSMEs in Overcoming Constraints and Improving Performance? – An Analysis and Way Forward

Abstract

MSMEs are under pressure to improve productivity, operational efficiency, competitiveness, innovativeness, adaptability and profitability in this current fast changing globalised world. Digital transformation in Industry 4.0 and related technologies challenged their existing business operations, current business practices, business models and industry assumptions. Their existence and survival becomes difficult owing to potential power of disruptive technologies. Business leaders, owners, executives, governments, industry experts have their own perceptions, myths and understanding about the potential impact on the future of businesses across industry and country. Considering the strategic significance of the MSMEs in context of their contribution in employment, exports and GDP, it’s essential that MSME should be strengthened, empowered, grow and developed. Overcoming MSME constraints like lack of technical knowledge and skills, difficulty in investing in research and development, high cost of acquiring technology etc is essential through innovation and adoption of technology. Industry 4.0 which is marked as the new industry revolution has a drastic potential to change the market dynamics, competitive landscape and the existing business models of the companies. MSME need to focus on technological innovations and digitalization to withstand global competition. This article describes the importance of digitalization, myths associated with digital transformation for the overall enhancement of the economic performance and competitiveness of MSME which can be the backbone for the existing and future high growth businesses. The article also addresses the issues, opportunities and challenges of the MSME sector in adopting digitalization.