Discussion Papers

No. 480: 360-degrees-overview on the current state of digitalization in SMEs

Authors: Marie-Christin Papen, Martin Lundborg, Sebastian Tenbrock

(full version only in German)

Summary

In Germany, small and medium-sized enterprises (SMEs) make up the largest part of the economy, thus constituting a key factor for economic growth. SMEs are a heterogeneous group represented in all industries and regions in Germany. Accordingly, SMEs face a wide range of challenges. Compared to large companies, SMEs have a significantly lower level of digitalization, which weakens their competitive position and reveals the need for action. The present paper therefore addresses following research questions: What is the current state of digitalization in SMEs in Germany? What are the relevant opportunities and constraints for SMEs? How can use cases for digital transformation in SMEs be classified?

To address the research questions, previous studies were analyzed, best practices were identified, expert interviews were conducted, and findings were structured according to themes and evaluated. The topics covered include, for example, the degree of digital readiness of SMEs, technologies and fields of value creation, regions and company size, motivations for digital transformation projects, acceptance and effects of digitalization projects.

The results indicate a considerable backlog in digitization compared to (international) competitors, which SMEs have recognized. A number of strategies appear to be particularly suitable for SMEs to implement digital transformation:

  • Networking between SMEs and highlighting positive examples can promote digitalization in SMEs. In this way, SMEs learn from each other, which creates trust and shows that the implementation of digitalization projects can succeed.
      
  • Qualification also plays an important role in addressing the knowledge gap. When implementing digital transformation projects, the acceptance of employees and managers is a key issue. Transparent internal communication, the involvement of internal influencers and, if necessary, professional change management can provide valuable support.
      
  • In addition, it is important to create awareness within companies that the digital transformation can help to counter the shortage of professionals: Skilled workers consider digital companies to be both more modern and therefore more attractive.
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