Revisiting digital transformation adoption in SMEs in an Asian context: do managerial factors matter?

In today's digital era, digital transformation (DT) has become a necessity for all organisations worldwide. According to Statista (2024), global spending on DT has risen sharply from $1 trillion in 2018 to $2.5 trillion in 2024. The widespread adoption of DT has encouraged small and medium enterprises (SMEs) across diverse sectors to embrace DT (Malodia et al., 2023). Scholars argue that DT helps SMEs manage their business processes, operational routines, and organisational capabilities, thereby gaining a competitive advantage (Malodia et al., 2023). While around 85% of SMEs recognise the importance of adopting technologies (WeForum, 2023), many still face challenges in this process (Clemente-Almendros et al., 2024). Reports indicate that over 80% of DT projects failed in 2023 (Kimberling, 2025), emphasising the risks involved in adoption. This raises a critical question: What are the key determinants of SMEs' decisions in DT adoption?

While much of the existing research on DT has focused on the organisational level, such as value creation (Matarazzo et al., 2021), organisational structure and strategy (Fischer et al., 2020), studies specifically addressing DT at the individual level remain relatively scarce (Malodia et al., 2023; Bresciani et al., 2021; Scuotto et al., 2021). In response, a growing body of research has begun exploring individual-level perspectives on DT to better understand the roles of individuals who shape and implement DT strategies within organisations (Porfírio et al., 2021). However, most existing contributions focus on large organisations (AlNuaimi et al., 2022; Wrede et al., 2020), while research examining how individual-level factors influence DT in the SME context seems to be overlooked (Jafari-Sadeghi et al., 2023; Bresciani et al., 2021), where decision-making is centralised, and SME leaders have a significant influence on the firm's strategic decisions (Eller et al., 2020). According to Omrani et al. (2022), SMEs differ fundamentally from large enterprises in ways that shape their technology adoption—most notably in limited resources, constrained managerial capacity, and the dominant role of owners in decision-making (Ghobakhloo and Tang, 2013). This underscores the critical role of top managers in driving DT within SMEs (Wrede et al., 2020), where organisational structures are centralised and decisions made by top managers significantly impact all aspects of the firm's activities (Chuang et al., 2009). In fact, DT is a complicated and challenging process, raising more managerial concerns than technical ones (Walsh et al., 2023).

Although individual-level perspectives on DT in SMEs are receiving growing scholarly attention, the literature remains fragmented and underdeveloped (Zoppelletto et al., 2023). Existing studies are predominantly situated in Western contexts (e.g. Porfírio et al., 2021; Fernandez-Vidal et al., 2022; Zoppelletto et al., 2023) or in Middle Eastern settings (Jafari-Sadeghi et al., 2023), limiting understanding of how managerial factors operate in other institutional environments, such as Asian context. Moreover, prior research tends to examine managerial attributes in isolation—for instance, focussing separately on digital literacy (Malodia et al., 2023; Zahoor et al., 2023) or leadership-related characteristics (Jafari-Sadeghi et al., 2023; Malodia et al., 2023)—rather than considering their interrelated and configurational effects. As a result, existing studies have yet to develop an integrated perspective that captures how combinations of managerial-level attributes jointly shape DT adoption in SMEs.

This conceptual fragmentation limits our understanding of DT as a managerial and behavioural phenomenon, particularly in organisational contexts where decision-making is highly centralised. This concentration of authority becomes even more salient in institutional contexts such as Asian countries, characterised by high power distance and hierarchical governance structures (Koo and Park, 2017). This pattern is further reinforced by Confucian cultural values, which institutionalise hierarchical relationships between leaders and followers and amplify the influence of top managers over strategic and innovation-related decisions (Ou et al., 2014). In such unique contextual characteristics, leadership styles and managerial behaviours may play a more decisive role in shaping DT outcomes than those observed in Western settings (Koo and Park, 2017). Under these conditions, DT adoption may reflect more the cognition, competence, and risk orientation of the owner-leader. When strategic discretion is concentrated, managerial characteristics are likely to exert a more direct influence on firm-level outcomes. Yet, the operation of managerial attributes under concentrated ownership structures remains insufficiently explored in the DT literature.

Responding to these gaps, this study examines how managerial attributes are enacted under concentrated ownership to shape DT adoption in an Asian SME context, focussing specifically on Vietnam—a lower-middle-income country strongly influenced by Confucian values (Le et al., 2021). Vietnam offers a particularly relevant setting, as its economy is dominated by SMEs (Thi, 2022), most of which are owner-managed and characterised by centralised decision-making and hierarchical organisational structures (King-Kauanui et al., 2006). By examining how culturally embedded characteristics—such as owner dominance and centralised authority—shape digital leadership behaviour and DT adoption, this study provides novel, context-sensitive insights into how DT is enacted in resource-constrained and culturally distinct SME environments.

This research makes three main contributions to enrich the body of DT literature. First, it refines Upper Echelons Theory (UET) by shifting attention from demographic proxies to managers' psychological characteristics, which demonstrates how managerial cognition and risk orientation operate in owner-dominated SMEs, where strategic discretion is highly centralised. Second, the study advances DT research by integrating owner-centric transformational leadership, digital competence, and risk-taking behaviour into an owner-centric decision framework. Rather than examining these attributes independently, the study sheds light on how they interact to shape DT adoption under uncertainty. Third, by situating the analysis within a high power-distance emerging economy, the study identifies concentrated ownership as an important condition for understanding DT decisions among SMEs in the Asian context. Practically, the findings offer valuable insights for SME owner-leaders by providing contextually grounded guidance on leadership approaches that enable firms to engage more effectively in DT.

The origin and development of the term “digital transformation” emerged from the Fourth Industrial Revolution in the 2000s (Kim et al., 2021), and scholars and institutions have introduced various definitions of DT since the 2010s. Although the term DT has garnered significant attention in academic and practitioner literature, its concept has been described in various ways (Vial, 2019), and there is a lack of consensus (Gong and Ribiere, 2021). For example, while some researchers view DT as a process at the organisational level (Vial, 2019), others believe that DT also involves substantial changes and impacts across industry and society (Majchrzak et al., 2016). Furthermore, some academics consider DT a strategy (Fischer et al., 2020), whereas others approach DT as a business model (Henriette et al., 2015). Among the various definitions, that proposed by Fitzgerald et al. (2014) has been widely adopted in prior studies (e.g. Tijan et al., 2021; Paavola et al., 2017). According to this view, DT is defined as “the use of new digital technologies (social media, mobile, analytics or embedded devices) to enable major business improvements (such as enhancing customer experience, streamlining operations or creating new business models)” (Fitzgerald et al., 2014, p. 1).

DT adoption has been observed across various firms, including SMEs. In this context, rapid changes in the business environment have pushed SMEs across sectors to adopt DT (Eller et al., 2020). However, SMEs seem to lag behind larger enterprises in embracing the DT journey (Eller et al., 2020). This lag among SMEs may limit their development and productivity, thereby increasing inequalities (Malodia et al., 2023). While large enterprises can quickly develop and deploy their own digital platforms, most SMEs face various difficulties and thus rely solely on third-party digital platforms (Westerlund, 2020). Due to limited capabilities and resource constraints, the DT process differs significantly in SMEs compared with large companies; hence, it is crucial to understand the determinants of DT adoption in the context of SMEs (Malodia et al., 2023).

Research on DT adoption in SMEs has been predominantly explained from organisational-level perspectives (AlNuaimi et al., 2022; Matarazzo et al., 2021; Eller et al., 2020), whereas DT adoption informed by individual-level explanations is still limited (Jafari-Sadeghi et al., 2023; Zoppelletto et al., 2023; Bresciani et al., 2021). In the context of SMEs, where ownership and strategic authority are highly concentrated (Chuang et al., 2009), both operational and strategic decisions often fall to a single individual, highlighting the concentrated and personalised nature of leadership in SMEs (Ghobakhloo and Tang, 2013). Consequently, organisational-level perspectives alone may be insufficient to fully explain how and why DT adoption unfolds in owner-dominated SMEs. In such settings, DT decisions are shaped not only by firm-level resources but also by the cognition and risk orientations of key decision-makers. In response, the managerial factors on DT among SMEs have received increasing scholarly attention in recent years. An overview of relevant studies on managerial factors in DT adoption in SMEs is summarised in Table 1.

Regarding managerial attributes, two determinants have emerged from the DT literature in the SME context. Firstly, digital literacy has been identified as a key determinant of DT adoption in SMEs, where the adoption of digital technologies tends to be relatively slow (Adomako et al., 2021). This concept refers to the set of skills, knowledge and awareness required by managers to effectively perform tasks using digital technologies (Zahoor et al., 2023; Scuotto et al., 2021). From a micro-foundation perspective, the studies by Zahoor et al. (2023) in the United Arab Emirates and Malodia et al. (2023) in India confirm that digital literacy is a key managerial factor influencing DT adoption among SMEs. Using a behavioural theoretical lens (TAM and TPB), Raharjo et al. (2024) and Jafari-Sadeghi et al. (2023) also highlight the importance of digital literacy for DT adoption among SMEs in Indonesia and India, respectively.

Secondly, digital leadership has been recognised as the most critical factor to SMEs in their DT journey as it ensures both financial and organisational commitment (Porfírio et al., 2021). It can be defined as “leaders' ability to create a clear and meaningful vision for the digitalisation process and the capability to execute strategies to actualise it” (Jafari-Sadeghi et al., 2023, p. 3). Given the limited resources of SMEs, top managers' commitment will enable and drive the DT process (Malodia et al., 2023). By employing different methods, prior studies have ascertained the positive impact of digital leadership on DT adoption in SMEs or across various firm sizes in different contexts, including Canada (N'Dri and Su, 2024), India (Malodia et al., 2023), Iran (Jafari-Sadeghi et al., 2023), Brazil (Leso et al., 2023), Italy (Zoppelletto et al., 2023), Portugal (Porfírio et al., 2021) and China (Wang et al., 2023).

Regarding theoretical perspectives, several prior studies have examined managerial factors influencing DT adoption in SMEs based on established technology adoption frameworks such as TOE (N'Dri and Su, 2024; Wang et al., 2023), TAM and Social Cognitive Theory (Raharjo et al., 2024), and TPB (Jafari-Sadeghi et al., 2023). Accordingly, digital leadership is conceptualised as an organisational factor that contributes significantly to DT success (N'Dri and Su, 2024; Wang et al., 2023). Similarly, a study drawing on Social Cognitive Theory and TAM emphasises that digital literacy is the result of a learning process, which is obtained from external factors in enhancing DT adoption intention (Raharjo et al., 2024). Although these perspectives have contributed significantly to identifying key drivers of DT adoption, such studies primarily conceptualise managerial factors at the organisational level. Managers are viewed either as part of the organisational context (in TOE) or as a technological skill-related antecedent that shapes intentions to adopt (in TAM and TPB), rather than unpacking how managerial cognitions and values influence DT adoption.

In addition to behavioural theories, several research has adopted microfoundational perspectives to explain DT adoption (Jafari-Sadeghi et al., 2023; Malodia et al., 2023; Zahoor et al., 2023). From this perspective, these studies have emphasised managerial attributes in DT adoption at the individual level. Accordingly, they highlight the importance of digital leadership (Jafari-Sadeghi et al., 2023; Malodia et al., 2023) and digital literacy (Jafari-Sadeghi et al., 2023; Malodia et al., 2023; Zahoor et al., 2023) in shaping DT adoption decisions.

Although the DT literature has increasingly acknowledged the role of managers in shaping DT adoption, existing studies have yet to consider culturally contextualised perspectives from an individual viewpoint. Most prior studies have focused on a single managerial factor rather than viewing managerial attributes as a set of integrated mechanisms. This limitation is particularly salient in the Asian context, including Vietnam, which is characterised by relatively high power distance, collectivism, and a strong emphasis on social harmony (Gupta et al., 2002). In such settings, leaders typically exercise substantial authority over strategic decisions while simultaneously showing considerable care toward subordinates (Ashkanasy, 2002). Given this unique context, this current study extends existing knowledge by emphasising the cultural embeddedness of DT adoption–showing how high power distance amplifies the influence of individual managerial characteristics on DT adoption in SMEs, where decision-making is highly centralised and owner-centric.

In addition, as can be seen from Table 1, most of the studies are mainly focused on Western contexts—such as Italy (Zoppelletto et al., 2023), Portugal and Spain (Porfírio et al., 2021; Fernandez-Vidal et al., 2022), Middle Eastern – such as Iran (Jafari-Sadeghi et al., 2023), and to some extent South Asian contexts – such as India (Malodia et al., 2023), which are typically characterised by more distributed leadership, participatory decision-making, and to some extent, relatively lower power distance. Therefore, there is a lack of explanation of how managerial attributes translate into DT adoption in the context of a single owner-leader and high power distance among Asian SMEs, particularly in Southeast Asia, where organisational hierarchies are deeply ingrained, and leadership practices are often shaped by paternalistic and authoritarian values (Lam et al., 2012). Given such a distinctive cultural context, a more specific theoretical lens is needed to explain deeply how managerial characteristics influence DT adoption in SMEs in the Asian context, such as Vietnam. Grounded in microfoundational reasoning, this study draws on Upper Echelons Theory.

Originally developed by Hambrick and Mason (1984), UET posits that organisational outcomes are reflections of top managers' values, cognitions, and behavioural characteristics, as these attributes shape how managers interpret strategic situations and make key decisions. Under UET, managerial characteristics include observable (e.g. age, tenure, education, and functional background) and psychological characteristics (e.g. values, cognitive bases, attitudes, and risk preferences) (Hambrick and Mason, 1984). These managerial attributes influence how executives perceive environmental challenges and opportunities and, in turn, affect organisational behaviour and strategic outcomes, including innovation adoption (Kafetzopoulos, 2020). From this perspective, managers play a central role in initiating, shaping, and implementing strategic change within organisations.

The relevance of UET is further amplified in the context of SMEs, where decision-making authority is highly centralised and organisational outcomes closely reflect the preferences and behaviours of top managers (Chuang et al., 2009). In such settings, management is responsible for virtually all strategic and operational decisions, including those related to technology and DT adoption. Prior studies have accordingly highlighted the critical role of top management in driving DT adoption within SMEs (Matarazzo et al., 2021), suggesting that the effectiveness of DT adoption is closely tied to managerial characteristics. Consistent with UET, this study argues that organisational outcomes—specifically DT adoption in SMEs—are shaped by the psychological and behavioural characteristics of top managers, thereby reinforcing the suitability of UET as a guiding theoretical framework.

The objective of this study is to examine the managerial factors influencing DT adoption in SMEs in Vietnam, grounded in Upper Echelons theory. While research on DT is prominent, studies focussing on the managerial aspects of DT adoption within SMEs remain emerging, especially in the context of owner-dominated SMEs operating under high power-distance conditions. Therefore, a qualitative method employing an inductive approach is appropriate for this exploratory, in-depth investigation.

The definition of SMEs varies across countries and regions, depending on factors such as the number of employees, annual turnover, and ownership structure (Ayyagari et al., 2007). In Vietnam, SMEs are primarily defined based on the number of employees and total registered capital or total annual revenue. According to Decree 80/2021/ND-CP, an SME is an independent business with an average of no more than 200 permanent employees and a total registered capital not exceeding VND 100 billion (approximately US$4.4 m) or a total revenue from the previous year did not exceed VND 300 billion (approximately US$13.2 m). Based on these criteria, Vietnamese SMEs are further classified into very small-sized (micro), small-sized, and medium-sized enterprises.

In Vietnam, SMEs account for a large number—98% of all enterprises, contributing around 40% of the national GDP (VnEconomy, 2024) and employing 51% of the workforce (Vietnamnews, 2025). It is argued that they make significant contributions to economic growth, job creation, and regional and local development. Recognising their importance, the Vietnamese government offers various benefits and incentives to help SMEs strengthen their competitiveness (Walsh et al., 2023). Despite these efforts, technological growth within SMEs in Vietnam remains in its early stages. Although investments in DT have increased, the success rate remains relatively low, with only about 10% of SMEs achieving success in DT (Mai et al., 2023). According to a report released by the Vietnam Chamber of Commerce and Industry (VCCI, 2020), most SMEs exhibit a low level of technology and innovation, with over 80% of enterprises having just started to understand DT. Limited experience and knowledge of DT remain significant challenges for businesses in the DT adoption journey (VCCI, 2020). Additionally, there is a lack of in-depth research on how DT adoption influences operational efficiency, as well as a shortage of clear guidelines for SMEs in adopting DT (Mai et al., 2023). Therefore, understanding how managerial characteristics influence DT adoption can provide valuable insights into fostering a more proactive digital mindset within SMEs.

Vietnam is geographically divided into three distinct regions: the northern, central, and southern areas, and SMEs are spread across these regions. Due to this geographical diversity, the sample selected for in-depth interviews should include firms from all three regions to ensure regional representativeness. In this study, purposeful sampling (Creswell and Creswell, 2017) was employed to achieve diversity in organisation size and location. The sample was drawn from SMEs, with lists compiled from the official website of the Vietnamese Association of SMEs (VINASME), which is the national representative organisation of SMEs in Vietnam. The selection criteria included owners/leaders/senior managers of Vietnam-based SMEs who are actively involved in firm operations and strategy. These individuals possess strategic insight and decision-making authority and can provide rich, in-depth information on their company's DT adoption. Additionally, since the participants are at management levels, snowball sampling was also employed, whereby earlier participants were asked to refer others for interviews.

The researchers conducted 15 semi-structured interviews of 50–70 min each with managers in SMEs located in the North, Central, and South of Vietnam. All interviews were conducted online (July–October 2024) via Microsoft Teams. Table 2 summarises the participants' demographics and companies' profiles. Most of them are individuals in key management positions, such as business owners, directors, and vice directors, with an average of 8 years of work experience. In terms of years of establishment, nearly all companies have been operating for more than ten years.

The interview protocol was developed based on the literature review and comprises 13 questions across three main sections. These included participant demographics, DT adoption within their companies, their perspectives on DT, the level of adoption, and themes identified from the literature, such as digital leadership and digital competence. The protocol was first draughted in English and then translated into Vietnamese, following the recommended back-forward translation techniques (McGorry, 2000).

The instrument was pretested over three weeks with seven academic experts and eight industry professionals in Vietnamese SMEs. This stage helped identify any potential difficulties respondents might face in understanding questions, as well as any ambiguous or biased items (Quinlan et al., 2015). The protocol was subsequently revised, incorporating modifications to its format and wording. Before the interviews, invitation letters outlining the research objectives, research questions, and data collection methods were sent to participants via emails, along with consent forms, in accordance with institutional research ethics guidelines.

Since the study aimed to identify themes related to determinants of DT adoption rather than to construct a specific theory, thematic analysis using an inductive approach was employed to analyse the transcribed interviews (Braun and Clarke, 2006). This approach enabled the refinement of existing managerial constructs while uncovering context-specific insights relevant to Asian SMEs.

In accordance with qualitative data analysis guidelines, the analysis followed an iterative and systematic process of coding and theme development. Initially, interview transcripts were carefully reviewed to generate meaningful codes that captured recurring words, phrases, and patterns within the data. While the coding process was primarily inductive, it was sensitised by managerial characteristics identified in the literature review. Accordingly, potential codes relating to digital leadership, digital competence, and managerial risk-taking behaviour were considered, while remaining open to new concepts emerging directly from participants' narratives.

Following the initial coding stage, related codes were clustered into sub-themes based on shared underlying meanings. These sub-themes were subsequently reviewed, refined, and organised into higher-level themes to ensure internal coherence and conceptual clarity. For example, codes such as “centralised decision-making” and “personalised influence” were grouped under the broader theme of owner-centric leadership.

The resulting themes were then compared with managerial factors identified in prior studies, leading to further refinement of thematic domains to ensure alignment with both the empirical evidence and the guiding theoretical framework. This iterative process enabled the development of cohesive thematic narratives grounded in participants' accounts while engaging meaningfully with existing literature. Table 3 provides an illustrative example of the coding structure for owner-centric digital transformational leadership.

Data saturation (code) was used as the guiding criterion for determining sample adequacy in qualitative research (Lim, 2025). Data saturation is reached when additional data collection no longer generates new codes or conceptual insights, and is commonly operationalised as the point at which descriptive redundancy is observed within the coding structure (Ando et al., 2014; Braun and Clarke, 2021). For in-depth interviews, Hennink et al. (2017) found that data saturation was reached at approximately nine interviews.

In this study, 15 in-depth interviews were conducted with owners or leaders of Vietnamese SMEs. During the analysis, new codes emerged primarily in the first several interviews, whereas interviews from the twelfth onward mainly confirmed and enriched existing categories rather than introducing substantively new themes. This pattern indicated that data saturation had been achieved. Therefore, the sample size was considered adequate to ensure analytical depth and thematic stability within the specific contextual setting of Vietnamese SMEs.

In qualitative research, validity and reliability are often referred to by the concept of trustworthiness, which is assessed through four key criteria: credibility, transferability, dependability, and confirmability (Korstjens and Moser, 2018; Ahmed, 2024).

Firstly, credibility involves aligning participants' perspectives with how the researcher represents those views. To enhance the credibility of the findings, the standardised interview guide was followed to ensure consistency. Interview transcripts were returned to participants for checking to ensure that their perspectives were accurately captured in the study. In addition, during this stage, meetings between co-authors were conducted regularly to refine the coding process and cross-check interpretations, thereby mitigating potential researcher bias. Furthermore, the open coding stage was grounded in participants' own language (Vietnamese), ensuring that the analysis remained closely aligned with the empirical data.

Secondly, transferability refers to the extent to which the qualitative findings may be applicable to other contexts and respondents. This was facilitated by purposive and snowball sampling, which involved 15 owner-leaders of Vietnamese SMEs. The sample was employed across geographical regions (North, Central, and South Vietnam) and diverse industries, with clearly defined selection criteria (SME size and senior managerial position). Such strategies enhance the richness and contextual depth of the data.

Thirdly, dependability relates to the consistency and stability of the findings over time. To ensure dependability, all interviews in this study adhered to a standardised semi-structured interview guide and were recorded, fully transcribed and stored electronically as well. Additionally, a detailed coding protocol was developed, and all data management was conducted using NVivo 14. These approaches help minimise data and analysis errors, enhance a consistent and transparent process during data collection and data analysis.

Finally, confirmability refers to the extent to which the researcher's interpretations are firmly grounded in the data rather than shaped by personal biases or assumptions. In this study, confirmability was enhanced by developing an interview protocol informed by established literature, particularly key constructs such as digital leadership and digital competence. The research process involved iterative data analysis, accompanied by regular discussions with co-authors to critically examine emerging interpretations. In addition, all co-authors participated in reviewing the coding structure and validating the findings, thereby strengthening the objectivity and confirmability of the study.

In this section, findings are presented pertaining to the following individual-level elements: owner-centric transformational leadership, digital competence and managerial risk-taking behaviour factors shaping DT strategy and processes in SMEs. All the concepts, themes and aggregated dimensions gathered from data are summarised in Figure 1 and discussed below.

The findings indicate that owner-centric digital transformational leadership emerged as the primary driver of DT adoption in Vietnamese SMEs. In the firms studied, decisions regarding whether, when, and how to adopt digital technologies were predominantly shaped by the owner-leader rather than by collective managerial consensus. DT was therefore closely tied to the leader's vision, authority, and strategic direction. As A2 shared that:

Most participants suggested that digital leadership is as a critical determinant for the effective adoption of DT with leaders who possess a digital mindset, vision, commitment, and the ability to inspire, being better equipped to guide their organisations through the challenges of transformation. When leaders are aware of the significant benefits and purpose of DT, they are more likely to push for the adoption of digital technologies in their firms. In Vietnamese SMEs, where resources are typically more limited, and decision-making tends to be more centralised, a leader's mindset and awareness of the benefits of DT may accelerate the decision-making process and the adoption of DT. This is typically highlighted by a participant (A4) as follows:

These findings suggested that in SMEs, business owners are often managers or leaders, making owner-centric leadership a crucial determinant of DT adoption. Unlike models of distributed or participative leadership commonly described in the literature, leadership in these SMEs is highly centralised. The owner-leader not only articulates the digital vision but also determines the allocation of resources and the pace of implementation. As a result, DT adoption reflects the strategic priorities and personal commitment of a single dominant decision-maker.

All participants in this research acknowledged the business owner's central role in driving change.

A13 expressed the same view in the interview:

These views reinforce the top-down cultural leadership in Vietnam, in which the owner-leader is positioned as the ultimate authority and decisions are often highly personalised due to centralised decision-making power. As a result, the company's strategic direction tends to reflect the owner's individual judgement, preferences, and leadership style—highlighting the personalised influence they exert on the organisation.

From a UET perspective, this finding reinforces the argument that organisational outcomes are shaped by the characteristics and orientations of top managers. In owner-managed SMEs, where power is concentrated in the owner, and the business is shaped by the owner's personalised influence, the influence of the owner becomes even more pronounced. DT adoption thus reflects the cognition, strategic orientation, and authority of the owner rather than an aggregated top management perspective.

Overall, the evidence suggests that in Vietnamese SMEs, DT adoption is primarily driven by owner-centric digital transformational leadership rather than by external pressures or technological trends. Since the owner makes all decisions; thus, DT capacity is heavily influenced by their traits, styles, and competence. Therefore, the owner's authority and strategic vision function as the central force that initiates and sustains digital change within the organisation.

This theme encompasses the foundational skills, knowledge, attitudes and abilities that leaders must possess to engage with and promote DT within their organisations effectively. It highlights the importance of technical and cognitive readiness in the digital landscape. The findings suggest that owners' digital competence is a key factor influencing the adoption of DT in SMEs, with participants frequently citing it as a critical consideration.

First, a consensus emerged among participants that a manager's digital knowledge and skills are essential foundations for evaluating technological options. Many participants agreed that for SMEs, where resources are often limited, business owners must have a solid understanding of digital technologies to make informed decisions and maximise the benefits of DT. Unlike large firms with dedicated IT departments, SMEs typically rely on their leaders to allocate resources to drive DT. Thus, possessing digital knowledge is essential for selecting and adopting the most appropriate technologies effectively. As an interviewee noted:

Second, the finding also emphasises the importance of SME leaders' digital acumen for successful DT adoption. It suggests that owners' ability to comprehend, utilise, and sometimes master digital tools is instrumental in driving the organisation's DT journey.

Moreover, the findings show that managers with a favourable attitude towards DT can significantly influence DT adoption within their organisations. Participants highlighted the crucial role of managers' positive attitudes towards DT in driving its implementation within the firm. Specifically, a positive attitude towards DT will foster a willingness to learn and develop digital knowledge and skills. Conversely, leaders who lacked interest in digital developments tended to delay or avoid adoption. The correlation between managerial attitude and DT adoption was highlighted by many participants, as reflected in the following:

In short, this theme highlights the importance of not only digital knowledge, skills and abilities but also a proactive attitude among business leaders. Accordingly, digital competence in these SMEs represents both cognitive understanding and attitudinal aspects of DT adoption. It is suggested that a higher level of digital understanding can strengthen leaders' confidence in committing resources, thereby reinforcing risk-taking behaviour. Digital competence at the leadership level can, as a result, lead to more widespread implementation of an organisation's DT strategies. From a UET perspective, digital competence constitutes a key cognitive base shaping how owner-leaders evaluate digital opportunities and identify potential uncertainty. It suggests that leaders with strong digital competence are better positioned to recognise opportunities for digital innovation, thereby increasing the likelihood of adoption. Therefore, enhancing digital competence among SME leaders is essential for facilitating a successful DT journey.

The findings indicate that managerial risk-taking behaviour plays a decisive role in translating DT from intention into action. In SMEs, adopting digital technologies often requires substantial resource commitments, organisational disruption, and uncertain returns. As such, owners' willingness to accept uncertainty emerged as a critical enabler of DT adoption.

Several participants in this study emphasised that openness to change and readiness to explore new opportunities enabled firms to accelerate the adoption of DT within their organisations. As A4 explained:

This statement highlights that a leader's individual characteristics, particularly their tolerance for uncertainty, play a critical role in determining whether DT is pursued. Similarly, the findings suggest that the level of risk acceptance is an important consideration in the decision to adopt DT. Leaders with higher risk tolerance are more inclined to embrace change and take calculated risks, which is essential for driving DT initiatives.

Interestingly, another participant explained that:

These views highlight that risk-taking behaviour functions not merely as a personal characteristic, but as a catalyst that enables strategic commitment under uncertainty. In resource-constrained SMEs, DT investments are influential owner-leaders. Leaders with high risk tolerance are more likely to champion DT initiatives, driving not only the decision to adopt digital technologies but also the speed and extent of their implementation within the organisation. Therefore, DT decisions require not only recognition of technological opportunity but also a willingness to accept financial losses.

From a UET perspective, this finding underscores the role of managerial risk orientation in shaping strategic outcomes. In SMEs, where ownership and control are unified, the leader's tolerance for uncertainty directly influences whether digital investments are pursued or postponed. Risk-taking behaviour thus serves as the behavioural driver that activates digital competence and leadership vision into concrete adoption decisions. Therefore, the findings highlight that, in Vietnamese SMEs, DT adoption depends not only on strategic vision and technological understanding but also on the owner's willingness to commit resources despite uncertainty.

First, findings from this study underscore the pivotal role of owner-centric digital transformational leadership in driving DT adoption among SMEs. This finding implies a unique mix of leadership style—one that blends transformational leadership with owner-centric authority—as a key mechanism for accelerating both the width and depth of DT adoption in Vietnamese SMEs. Indeed, in the context of SMEs in Vietnam, the business owner—beyond their primary role as a leader who inspires, motivates, and supports employees in DT adoption—is also the key decision-maker who dominates all matters, a pattern shaped by the cultural characteristic of high power distance. Rather than being enacted through distributed empowerment, transformational leadership in the studied SMEs took an owner-centric form characterised by centralised vision-setting and strategic authority. Owners defined the direction and scope of DT and exercised final discretion over investment decisions. While employees were encouraged to support digital initiatives, decision-making authority remained highly concentrated. This pattern suggests that in high power-distance, owner-dominated SMEs, transformational leadership does not disappear but is refracted through concentrated authority. The owner's vision and cognitive framing of DT directly shaped strategic outcomes, reflecting a high level of managerial discretion.

On the one hand, our insight aligns with the existing DT literature, which identifies digital leadership as a foundation for DT adoption in SMEs (Jafari-Sadeghi et al., 2023; Leso et al., 2023; Malodia et al., 2023; Zoppelletto et al., 2023). As defined by Burns (1978), transformational leadership involves leaders motivating and inspiring employees to undertake the changes necessary to achieve organisational goals. This leadership style has been widely emphasised in the DT literature investigating leadership in a digital environment (AlNuaimi et al., 2022). According to De Waal et al. (2016), digital leadership is understood as a combination of transformational leadership and digital technology. On the other hand, our study extends the concept of digital leadership in DT literature by contextualising it within the Asian setting, where hierarchical structures and high power distance remain prevalent. In such contexts, employees may be reluctant to make strategic decisions independently, even when empowered. Thus, the owner/leader should also prepare themselves to make that decision. That means the owner's role is not only influential but often decisive, shaping the strategic direction and commitment to transformation. Therefore, owner-centric digital transformational leadership emerged as a critical determinant that shapes DT adoption in this context. This underscores the importance of Upper Echelons theory, which suggests that organisational outcomes largely reflect leaders' values and decision-making styles.

Second, the findings also highlight the significant role of digital competence in enabling successful DT in SMEs. By equipping owner-leaders with the necessary digital knowledge, skills, proactive attitudes, and application abilities, digital competence enhances their capacity to interpret technological opportunities and make informed strategic decisions. According to Kohnke (2017), digitalisation requires more new managerial skills than before; thus, digital competence is essential in DT adoption. This aligns with UET, which posits that organisational outcomes are partially predicted by the experiences, cognitive bases, and capabilities of top executives. In the context of SMEs, where resources are limited and strategic discretion is highly concentrated, DT adoption is more a reflection of the owner-leader's cognitive and technological preparedness. Owner-leaders with a high level of digital knowledge and skills can quickly adopt and comprehensively understand technological advancements, and then quickly make DT decisions. Specifically, in the context of SMEs in Asian countries, such as Vietnam, where decision-making structures are highly centralised, the owner-leader is both the decision-maker and the implementer. Hence, it is argued that the owner-leader's digital competence becomes the most decisive factor in whether their firms can keep up with DT. This finding is consistent with prior studies showing that digital literacy is important for DT adoption (Zahoor et al., 2023; Malodia et al., 2023; Jafari-Sadeghi et al., 2023). However, under conditions of highly centralised authority and high power distance, this study uncovers a mechanism linking digital competence to owner authority.

Third, the findings reveal that managerial risk-taking behaviour functions as a critical catalyst mechanism in shaping DT adoption in SMEs. In the context of SMEs, where decision-making authority is highly concentrated, the owner-leader's risk tolerance directly shapes the allocation of financial and organisational resources toward digital investments. Unlike large firms, where risk is distributed across managerial layers, SMEs depend heavily on the psychological readiness of a single dominant decision-maker. As such, risk-taking behaviour becomes a decisive factor in their strategic decisions. Our results support the Upper Echelons theory's view that leaders' cognition, such as risk attitude, shapes organisational strategies and outcomes. Prior studies have acknowledged the significant role of the leader's risk-taking behaviour in SMEs' adoption of blockchain technology (Polas et al., 2022). However, our study has shed light on a new context – SMEs in Vietnam, characterised by high power distance and centralised decision-making, in which decisions are made by a single individual. Hence, the leader's risk-taking behaviour serves as a key catalyst for successful DT adoption. A risk-taking leader is more likely to champion the adoption of new technology and, in doing so, recognises the need to equip themselves with the necessary knowledge and skills to fully appreciate its benefits. Thus, findings from this study imply that risk-taking behaviour influences digital competence, digital leadership, and DT adoption in SMEs.

In general, the evidence presented in our findings supports the proposition of a conceptual model analysing the DT adoption in SMEs in the Asian context, particularly in Vietnam. Figure 2 presents the configuration of managerial determinants shaping DT adoption among Vietnamese SMEs: owner-centric transformational leadership, digital competence, and risk-taking behaviour. Owner-leaders play a vital role in strategic decision-making (e.g. digital transformation) in firms, especially in SMEs, where resource constraints often make transformation efforts more challenging. Thus, strong digital transformational leadership is essential for successfully driving DT in SMEs and achieving long-term success in the digital era. Moreover, the central and dominant role of the leader—who is typically also the business owner—is particularly emphasised during the transformation process. This concentration of power and authority underscores the importance of owner-centric leadership—a concept that is prominent in Asian SMEs, where hierarchical structures and high power distance are common. As a result, our study proposes that owner-centric transformational leadership is considered a critical determinant of DT adoption in SMEs in the Asian context.

Once digital leadership is established, it can actively facilitate the development of digital competence among leaders. Strong digital leadership encourages leaders to deepen their understanding of digital technologies through continuous learning, seeking expert guidance, and engaging in self-development. In turn, as leaders build their digital competence, they become better prepared and more willing to use digital technology (Neumeyer and Liu, 2021), thereby further reinforcing their digital leadership capabilities. Additionally, managerial risk-taking behaviour plays a significant role in shaping owner-centric transformational leadership, digital competence, and DT adoption. Leaders who are more open to taking risks are more likely to assume proactive leadership roles in adopting new technologies. Their willingness to embrace uncertainty and explore innovation motivates them to enhance their digital competence. Consequently, risk-taking behaviour not only strengthens a leader's digital leadership but also influences how they cultivate the necessary competencies to navigate and lead successful DT efforts.

This study qualitatively explores the managerial determinants of DT in Vietnamese SMEs. In line with the Upper Echelons theory, our findings suggest that managerial characteristics directly influence strategic decisions, thereby shaping the adoption of DT within SMEs in the Asian context, such as Vietnam. Particularly, owner-centric transformational leadership and digital competence are key drivers of DT adoption—particularly relevant in Asian contexts such as Vietnam, where high power distance and centralised decision-making are prevalent. Within such contexts, managerial risk-taking behaviour emerged as a critical catalyst for DT adoption, shaping SMEs' willingness to invest in and commit to digital initiatives under uncertainty.

Our study contributes to the DT literature on various fronts. First, limited studies have examined DT adoption at the individual level in SMEs, particularly the critical role of managerial factors in driving successful DT. In the existing literature, the adoption of DT has been the focus of most studies from the organisational–level perspective (Fischer et al., 2020) or in the context of large enterprises (AlNuaimi et al., 2022). Unlike previous studies, this research investigates DT adoption in SMEs from an individual-level perspective, focussing on managerial attributes. Particularly, this study contributes to the Upper Echelons theory by shifting the focus from demographic proxies to behavioural and psychological attributes, specifically owner-centric transformational leadership, digital competence, and managerial risk-taking behaviour, as central drivers of DT adoption. While prior UET research has extensively examined top managers, it has largely relied on observable demographic proxies—such as age, tenure, and educational background—to approximate cognitive orientations (Nielsen, 2010), and has primarily focused on large firms (Bennat and Sternberg, 2022). This study extends the UET theory by directly investigating managers' psychological attributes in SMEs, which remain empirically underexplored—particularly in DT contexts (Yin et al., 2025). This extension responds to the calls in UET literature to incorporate deeper behavioural measures beyond observable demographics (Bennat and Sternberg, 2022).

Second, while prior studies have called for greater attention to the role of ownership structure in DT among SMEs (Malodia et al., 2023), this study extends this stream of research by examining managerial characteristics within owner-managed SMEs. In doing so, our study conceptualises digital leadership in the existing DT literature by introducing a new concept – owner-centric transformational leadership in Asian contexts, where Confucian culture emphasises hierarchical structures and leaders play a decisive role in organisational change. In such contexts, where power distance is high, decision-making authority is exercised by the owners rather than by managers in general. Therefore, while owner-centric digital transformational leadership shares similar core characteristics with traditional transformational leadership—such as role modelling, inspirational motivation, and providing personal support—it extends this perspective by equipping the owner/leader themselves with competence for decision-making (for instance, digital literacy). In high power distance contexts such as Vietnam, employees and middle managers are often reluctant to make strategic decisions independently, even when empowered or encouraged. Therefore, merely motivating or supporting subordinates may not be sufficient to drive DT adoption. Instead, the owner–leader must also equip themselves with adequate digital literacy, knowledge, and the willingness to take calculated risks in order to make informed strategic decisions. Our study contributes to the literature by shedding light on under-researched leadership roles that drive DT within SMEs in the Asian context. By incorporating Vietnam-specific cultural characteristics, this study provides a deeper understanding of how leadership styles interact with institutional contexts to influence DT outcomes in SMEs.

Third, some managerial factors have been studied separately in prior research; this study offers a comprehensive perspective by integrating them, shedding lights of their interactions and their influence on the firm's DT adoption. Notably, while managerial risk-taking has been recognised as a key driver of innovation and DT (e.g. Jiang, 2023), prior research has primarily addressed it at a conceptual level. This study extends the prior study by providing qualitative evidence of how managerial risk-taking operates as a catalytic mechanism for DT adoption within owner-dominated SMEs. In such a context, leaders' willingness to embrace uncertainty and make bold decisions significantly influences both the adoption and implementation of digital technologies. By integrating managerial risk-taking behaviour as a behavioural mechanism, this study explains how digital leadership and digital competence translate into DT decisions under high uncertainty. Lastly, based on these insights, we propose a conceptual model of DT adoption from a managerial perspective, which can serve as a foundation for future empirical research. This model provides insights for both scholars and practitioners seeking to understand and support the DT journey in SMEs.

The findings of this study align with the Vietnamese Government's recent policy direction, Resolution No. 68-NQ/TW (May 2025), which positions the private sector—mainly SMEs—as a key driver of the national economy. The resolution aims for DT, innovation, science and technology as the goal for sustainable growth. In line with the resolution's objectives, this study emphasises that enhancing digital competence and leadership among SME managers can significantly accelerate DT adoption and enhance organisational performance.

The findings suggest that DT adoption in owner-dominated SMEs is primarily driven by the owner-leader's cognition, authority, and risk orientation. DT is primarily a managerial challenge rather than a technical one (Walsh et al., 2023), thus making managerial factors crucial for successful adoption. Therefore, owner-leaders should recognise DT as a strategic leadership responsibility rather than a purely technical support function, enabling them to define appropriate strategic directions and align digital initiatives with long-term business objectives.

According to Trung and Phuc (2020), the lack of leadership is one of the primary reasons why the vast majority of DT projects fail in businesses in Vietnam. As such, SME owners should prioritise enhancing their digital leadership ability. They should actively engage in framing the digital vision, evaluating technological trade-offs, and committing resources under uncertainty. Enrolling in leadership development programs or participating in executive training initiatives organised by various government and peak body associations, such as Vietnam Chamber of Commerce and Industry (VCCI) and SME associations, can provide opportunities for self-directed learning. Such engagement can equip SME owners with strategic capabilities, digital awareness, and professional networks necessary to lead transformation effectively.

Additionally, this study underscores the importance of digital competence. Owner-leaders should prioritise developing an evaluative understanding of digital technologies, proactively build their digital capabilities through self-learning, or engage in training programs focused on emerging digital technologies. Short executive-oriented digital strategy programs may be more impactful than purely operational IT training. Strengthening digital competence not only enhances decision-making but also enables owner-leaders to respond more effectively to technological change.

The study also highlights the catalytic role of managerial risk-taking in translating digital intent into concrete action. In resource-constrained and highly uncertain environments, DT adoption is often evaluated through a trade-off between perceived risks and anticipated benefits. Under such conditions, owner-leaders may adopt a structured DT roadmap—such as phased implementation strategies or staged experimentation—to manage uncertainty while maintaining strategic direction. Particularly, given the centralised decision-making structure of SMEs, the roadmap should begin by enhancing the owner's digital competence to increase their cognitive readiness. When sufficient digital competence is established, the owner should initiate small-scope digital applications (e.g. digitising order processing or order tracking). This staged experimentation allows the owner to take calculated risks and reduce uncertainty before committing organisational resources. After that, the owner–leader can scale up digital initiatives and engage employees through inspirational communication and motivation. By implementing DT step by step rather than through a single large investment, owner-leaders can reduce perceived risks while maintaining progress toward long-term digital goals.

For policymakers, the findings highlight the importance of designing supportive policies that empower SMEs in their DT journey. This includes providing financial incentives, support programs or technology toolkits to help SMEs overcome resource constraints and invest in digital technologies. In addition to financial assistance, non-financial support measures—such as digital skills training, industry-specific workshops, and knowledge-sharing initiatives—are also crucial, especially for resource-limited SMEs, to strengthen their digital capabilities. Such measures can significantly enhance SMEs' readiness and capacity to adopt DT, ultimately contributing to achieving national goals in Resolution 68-NQ/TW, such as increasing innovation, productivity, and economic competitiveness.

Despite the theoretical and practical contributions, the study has several limitations and provides recommendations for future research. First, this study primarily relies on interviews with a relatively small sample of SME owner-leaders, which may limit the generalisability of the results. A future quantitative investigation would be desirable to operationalise and empirically test the proposed framework, providing broader generalisability and deeper insights into the identified relationships. Second, the study is conducted within the Vietnamese SME context, characterised by high power distance and owner-dominated governance structures. Although this context provides significant insights, the framework also needs to be examined in other contexts. Future studies could compare SMEs across different cultural and institutional contexts to examine whether the owner-centric aspect identified in this study is unique to the Vietnamese context or also applies to other governance settings. Such comparative research would help clarify the broader applicability of the proposed framework.

Conceptualisation: My Thanh Tran Dinh, Ahmad Abareshi and Vinh Thai; Methodology: My Thanh Tran Dinh, Ahmad Abareshi and Vinh Thai; Data Collection: My Thanh Tran Dinh; Formal Analysis: My Thanh Tran Dinh; Writing—Original Draft: My Thanh Tran Dinh; Writing—Review and Editing: Ahmad Abareshi and Vinh Thai.

This study was approved by the RMIT University BL CHEAN (Approval No. 2024-27356-23831).