Technology Adoption and Digital Transformation in MSMEs of Coastal Andhra Pradesh: An Empirical Study

Abstract

Micro, Small and Medium Enterprises (MSMEs) are the backbone of industrial and service sector economy for Andhra Pradesh and their capacity of embracing digital technologies has proved to be a game-changer in the current dynamic of doing business in the post-pandemic era. In this paper, the researcher attempts to empirically analyze the level of technology adoption and digital transformation among MSMEs in the coastal districts of AP and how this technology adoption and digital transformation affect business performance in these MSMEs. The primary data were gathered using the structured questionnaire from 200 MSME owners and managers in manufacturing, trading and service enterprises. Data obtained were subjected to descriptive statistics, reliability analysis, Karl Pearson correlation, multiple regression and oneway ANOVA and Chi square tests were used in SPSS. The outcomes show that sample MSMEs are—on average—adopting technology moderately (M = 3.42, SD = 0.68) and practicing digital transformation moderately (M = 3.28, SD = 0.74), and are statistically significantly related to business performance in a positive direction in both cases. Financial, skill gap and infrastructure issues were identified as perceived barriers impacting digital transformation negatively to a significant degree. There was also a significant difference in digital transformation rates by business type, and by type of investment. This indicates that targeted policy support, skill creation interventions, and cost-effective digital infrastructure are essential to kickstart the digital transformation phenomenon in coastal AP's MSME sector.