Research on applying digital transformation in business model innovation of small and medium enterprises in thai nguyen city

THAI NGUYEN UNIVERSITYINTERNATIONAL SCHOOL RESEARCH ON APPLYING DIGITAL TRANSFORMATION IN BUSINESS MODEL INNOVATION OF SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY An Undergraduate T

THAI NGUYEN UNIVERSITY

INTERNATIONAL SCHOOL

RESEARCH ON APPLYING DIGITAL TRANSFORMATION IN BUSINESS MODEL INNOVATION OF SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY

An Undergraduate Thesis Presented to The Department of Economics and Management International School of Thai Nguyen University The Socialist Republic of Vietnam

In Partial Fulfillment

Of the Requirements for the Degree Bachelor of Economics Major in Business Analysis

By

NGUYEN THI HA

2024

THAI NGUYEN UNIVERSITY

INTERNATIONAL SCHOOL

UNDERGRADUATE THESIS APPROVAL Part A – Candidate’s Information

Full name: NGUYỄN THỊ HÀ

Class: BAK10 Student’s ID: DTQ2053401010049Email hanguyen122002@gmail.com Telephone No: 0354684829

Title of Thesis: RESEARCH ON APPLYING DIGITAL TRANSFORMATION IN BUSINESS MODEL INNOVATION OF SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY

Candidate’s Signature Date

Part B – Supervisor’s Recommendation (To be completed by the supervisor)

I have checked the candidate’s Thesis and hereby recommend to the committee for the final defense

Supervisor’s Name:

Department:

Supervisor’s Signature: Date:

Part C – Checker’s Approval (To be completed by the Report Checker)

I have checked the two (02) copies of candidate’s Thesis and hereby recommend to the

University for submitting their Thesis report Checker’s

Name: _ Department: _ Checker’s Signature: _ Date: _

DECLARATION OF ORIGINALITY

I, Nguyen Thi Ha, hereby certify that the work included in this thesis was wholly original to me

and that I wrote it The text acknowledges information that was taken from other people'spublished and unpublished work, and the list of sources includes references This work has not

before been presented for similar objectives at this university or any other

Date of submission (dd/mm/yyyy): 25/12/2024

Signature of declarer:

Last but not least, I would like to thank my parents and entire family for their assistance I dedicate this study to them because they are the most significant people in my life.

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ABTRACT

This study explores the application of digital transformation in business model innovation of small and medium enterprises SMEs are offered possibilities to improve their sustainability and competitiveness by implementing digital tools and strategies as technology develops In order to assess the present state of digital transformation in business model innovation for SMEs in Thai Nguyen City, a survey was carried out with a focus on the impact of factors such as technology, employee competency, financial resources, government support, corporate culture of SMEs Thisstudy also explores the challenges faced by participants during the process of digital

transformation Information is gathered via documents and real surveys as part of theoretical research methodology in this topic Two sources provide the actual survey data: primary and secondary sources The utilization of quantitative research methods, including surveys, and in-depth interviews, was employed for processing and analyzing primary data in this study The outcomes of this research help enhance comprehension of the influence of digital transformation

on SMEs in Thai Nguyen City Determine and examine the elements influencing the

implementation of digital transformation at SMEs in Thai Nguyen City based on the findings andassessment of the study The purpose of the study is to offer insights into how SMEs can use digital technology to reinvent business models, increase the effectiveness of their operations, andreach a wider audience In addition, the study gathers fundamental information to direct the advancement of Thai Nguyen City's socioeconomic growth

Keywords: digital transformation, business model innovation, small and medium enterprises (SMEs), Thai Nguyen City

Tóm tắt

Nghiên cứu tìm hiểu về các yếu tố ảnh hưởng đến ý định thực hiện chuyển đổi số trong các doanh nghiệp nhỏ và vừa trên địa bàn thành phố Thái Nguyên Tính bền vững và khả năng cạnh tranh các doanh nghiệp vừa và nhỏ được cung cấp bằng cách triển khai các công cụ và chiến lược kỹ thuật số khi công nghệ phát triển Để đánh giá thực trạng chuyển đổi số trong đổi mới

mô hình kinh doanh dành cho doanh nghiệp vừa và nhỏ trên địa bàn thành phố Thái Nguyên, mộtcuộc khảo sát được thực hiện tập trung vào tác động của các yếu tố: công nghệ, năng lực nhân viên, nguồn lực tài chính, sự hỗ trợ của chính phủ, văn hóa doanh nghiệp của SMEs Đề tài cũng khám phá những thách thức mà người tham gia gặp phải trong quá trình chuyển đổi kỹ thuật số Thông tin được thu thập thông qua các tài liệu và khảo sát thực tế như một phần của phương pháp nghiên cứu lý thuyết trong đề tài này Hai nguồn cung cấp dữ liệu khảo sát thực tế: nguồn

sơ cấp và thứ cấp Việc sử dụng các phương pháp nghiên cứu định lượng, bao gồm khảo sát và phỏng vấn sâu, được sử dụng để xử lý và phân tích dữ liệu sơ cấp Kết quả của nghiên cứu góp phần nâng cao hiểu biết về tác động của chuyển đổi kỹ thuật số đối với các doanh nghiệp vừa và nhỏ tại Thành phố Thái Nguyên Dựa trên kết quả và đánh giá của nghiên cứu, xác định và đánh giá các yếu tố ảnh hưởng đến việc thực hiện chuyển đổi số tại các doanh nghiệp vừa và nhỏ trên địa bàn thành phố Thái Nguyên Mục đích của nghiên cứu là cung cấp những hiểu biết sâu sắc vềcách các doanh nghiệp vừa và nhỏ có thể sử dụng công nghệ kỹ thuật số để đổi mới mô hình kinh doanh, tăng hiệu quả hoạt động và tiếp cận đối tượng rộng hơn Ngoài ra, nghiên cứu còn thu thập những thông tin cơ bản nhằm định hướng thúc đẩy tăng trưởng kinh tế xã hội của thành phố Thái Nguyên

CHAPTER I: INTRODUCTION

1.1 Background of the study

Since the mid-20th century, digital transformation has gradually become an inevitable trend and

is directly changing the world Every aspect of human life is affected by the explosive

development of the fourth industrial revolution Additionally, digitization has penetrated public sectors at various levels, with digital strategies being addressed by nations, and this is crucial to emphasize (Kotarba, 2018)

In many countries, small and medium-sized enterprises (SMEs) are considered crucial factors in regional and national development (KESKĠN Hidayet et al., 2010) According to research by Fabian Eggers (2020) in the Business Research journal, SMEs are the backbone of every

economy globally In developing and middle-income countries, SMEs account for over 95% of total employment and about 70% of GDP; in low-income countries, SMEs account for over 60%

of GDP and more than 70% of total employment (Hidayet KESKĠN et al., 2010)

However, the challenges that companies face in transitioning to the Industry 4.0 model are not trivial (Nicola Bellantuono et al., 2021) According to Harry Bouwman et al (2019), SMEs do not have enough time and resources to experiment with new business models and implement newtechniques Vietnamese SMEs are also facing obstacles in their digital transformation journey, including challenges such as a lack of human and digital skills; insufficient IT infrastructure to support digital transformation; and a lack of digital mindset and culture (Phạm Huy Giao, 2020).Meanwhile, digital technologies play a crucial role in facilitating innovative business models across various fields (Feng Li, 2020) Thus, in the 21st century, often referred to as the age of information and knowledge, businesses in many countries are no longer unfamiliar with

integrating technology into workplace operations (Nguyễn Thị Hồng Thanh et al.) Compared to traditional business models, the emergence of new business models, such as e-commerce and digital platform businesses, brings much stronger competitive advantages (Nguyễn Xuân Trường

& Đặng Văn Mỹ, 2023)

Thái Nguyên city is one of the rapidly developing economic locations in Vietnam, with

significant contributions from small and medium-sized enterprises (SMEs) Additionally, the demand for digital transformation is increasing, and the workforce in SMEs is currently lacking

in both quantity and quality The readiness level across industries and sectors is uneven, with a gap compared to countries in the region and the world (Nguyễn Tài Vương et al., 2023)

Innovation through digital transformation can enable sustainability, competitiveness, and

customization in products and services (Philbin et al., 2022) Therefore, implementing digital transformation in SMEs in Thái Nguyên city is necessary and urgent

1.2 Statement of the problem.

Digital transformation involves the use of digital technology and the integration of digitized data

to reshape research, production, and business models with the main goal of creating new

opportunities, providing value, enhancing operational efficiency, and making organizations, agencies, and companies more competitive (Phạm Huy Giao, 2020) Many strategic foresight studies have been proposed as a foundation for the long-term policies of national governments, multilateral organizations, and industry associations (Ebert & Duarte, 2018)

Small and medium-sized enterprises (SMEs) play a crucial role in the global economy as they generate a significant portion of employment and tax revenue for state and local budgets

(Saksonova and Papiashvili 2021; Denicolai et al 2021; Mole et al 2017; Ramona Apoga et al., 2022) Regardless of new and existing industries, the role of SMEs is undeniable in enhancing economic expansion and development (Kit Yeng Sin et al., 2016) The adoption of digital transformation and technology has become a critical factor for the sustainability of SMEs

Rupeika-in recent years (Mo BRupeika-in & Guo Hui, 2021)

Moreover, the COVID-19 pandemic has changed the way small and medium-sized enterprises (SMEs) operate and conduct business Companies had to shift to remote work for employees andincrease online sales due to lockdown measures The pandemic forced SMEs to accelerate their digital transformation, contributing to economic recovery by transitioning from “multi-touch” business models to “low-touch” and even “no-touch” business models (Bùi Thị Thanh & NguyễnXuân Hiệp, 2021) Therefore, internal innovation is necessary for the survival and development

of SMEs themselves (Quân Đức Hoàng Vương, 2014)

Additionally, one of the external barriers is the lack of awareness and knowledge about digital transformation, which would benefit the entire society (Volker Stich et al., 2020) SMEs often face limitations in financial resources, skilled personnel, internal knowledge, and management (Roshan Rassool & Dissanayake, 2019) Furthermore, SMEs also encounter challenges such as a lack of digital workforce, insufficient IT infrastructure, limited financial resources for technologyinvestment, and a lack of independent capacity for digital transformation (Álvarez et al., 2019; Việt Anh Tạ & Chieh-Yu Lin, 2023) Moreover, SME leaders are still hesitant to change, and businesses have not yet established systematic and sustainable digital transformation processes The main obstacles to digital transformation are the limitations in awareness about digital

transformation (Bùi Thị Thanh & Nguyễn Xuân Hiệp, 2021)

1.3 Research Questions, Objectives and Hypotheses

Identify and analyze the factors influencing the digital transformation adoption process in SMEs

in Thái Nguyên city

Propose several solutions to guide and promote the socio-economic development of Thái Nguyêncity

1.3.3 Hypothesis

H1: Technological factors influence the adoption of digital transformation by small and sized enterprises (SMEs).

medium-H2: Government support factors influence the adoption of digital transformation by SMEs.

H3: Employee capability factors influence the adoption of digital transformation by SMEs.

H4: Financial resource factors influence the adoption of digital transformation by SMEs.

transformation by SMEs.

1.4 Significance of the study

Research on the application of digital transformation is a matter of concern and a vital solution for a nation, organization, business, and consumers worldwide The digital transformation process helps small and medium-sized enterprises (SMEs) improve and enhance operational efficiency and competitiveness Through research, the factors affecting the digital transformationapplication process in SMEs have been identified The research results can be applied to other SMEs across the country The research is highly practical, based on the reality of SMEs in Thai Nguyen city This serves as a basis for the recovery and economic development of businesses in Thai Nguyen city

1.5 Scope and Limitation of the study

Research Subjects: The research subjects are employees or managers, senior managers, and

accountants, etc., of SMEs in Thai Nguyen city

Scope of Research: This research accurately studies and clearly analyzes the importance of

applying digital transformation (factors affecting, difficulties, challenges, opportunities,

adaptability, and resilience), thereby serving as a basis for the recovery and economic

development of businesses in Thai Nguyen city.

➢ Spatial Scope: The spatial scope of the research topic is distinguished within the scope of SMEs registered in Thai Nguyen city

➢ Time: The research period is from September 2024.Hạn chế của nghiên cứu

Although the research objectives have been achieved, there are still some limitations such as: The research subjects are SMEs in Thai Nguyen city, and the research results will vary due to thelocation of the area, leading to solutions and proposals that may not be suitable for SMEs outsidethe research area of Thai Nguyen city

Additionally, this research lacks references to recent similar studies

1.6 Definition of terms

Digital Transformation: According to Siebel (2019), digital transformation is the convergence

of four technologies: cloud computing, big data, artificial intelligence (AI), and the Internet of Things (IoT) These four types of technology are combined to create massive transformations across various industries

Digital Business Transformation: According to K Schwertner (2017), digital business

transformation refers to the implementation of new software, systems, and processes that

increase revenue, efficiency, and competitive advantage through the adoption of technology Small and Medium-sized Enterprises (SMEs): SMEs are businesses that, in terms of total

assets, annual revenue, and number of employees, fit within a specific size range SMEs can be defined differently in each country and sector according to various criteria (Valenza et al., 2023) SMEs are often characterized by their relatively small size, limited resources, and flexibility in decision-making (Adam & Alarifi, 2021)

CHAPTER II: LITERATURE REVIEW 2.1 Theoretical review

2.1.1 Current status of digital transformation of SMEs

Digital transformation has been studied for many years, but no concept has been agreed upon (Nguyen Thi Kim Anh &; Nguyen Thi Xuan Nuong, 2022) At each stage, the author introduces different concepts and perspectives - According to Siebel (2019), the convergence of four technologies including: cloud computing, big data, artificial intelligence (AI), and the connection

of everything, is what constitutes digital transformation Four types of technology are combined

to create mass transformation from one industry to another

- According to Gartner (2019), digital transformation is the use of digital technologies to change business models, resulting in the creation of new opportunities, revenue streams, and value

- From a business perspective, digital business transformation refers to the implementation of new software, systems, and processes that increase revenue, efficiency, and competitive

advantage through the adoption of technology (K Schwertner, 2017)

Since the middle of the twentieth century, digital transformation has gradually become an

inevitable trend and change the world rapidly The increasing adoption of digital technologies, especially in production systems, is leading to a new industrial model known as Industry 4.0 (Nicola Bellantuono et al., 2021) About 40% of businesses are forecast to disappear within the next 10 years and be replaced by new digital-based businesses (Siebel, 2019)

The COVID-19 pandemic broke out in early 2020 and spread around the world Countries must apply strict restrictions and closures to control the complicated epidemic situation Economic andsocial activities are interrupted indefinitely, many businesses have to stop business activities In particular, SMEs are the most affected enterprises because they have weak and medium

economic recovery potential (Syriopoulos, 2020) According to research by Fabian Eggers (2020) in Business Research magazine, small and medium-sized enterprises are the backbone of every economy in the world Small and medium-sized enterprises are important to the economy when it comes to promoting job creation, innovation, and economic growth However, small and medium-sized enterprises often have a low level of recovery when faced with difficult problems such as limited access to capital and liquidity, lack of workforce, problems related to customers

and technological limitations (Konstantinos Syriopoulos, 2020) Small and medium-sized

businesses can establish a strong position in the market by targeting specific niches (Volker Stich, 2020) However, with the emergence of digital business models and platforms,

maintaining this position in the long term is becoming increasingly challenging for small and medium-sized businesses (Volker Stich, 2020)

Vietnam is a developing country and places significant emphasis on the use of digital

technologies in several economic sectors Directive No 52-NQ/TW of the General Secretary, published on September 27, 2019, has highlighted a number of initiatives and strategies to actively participate in the Fourth Industrial Revolution (Nguyen Thi Hang et al., 2021) AlthoughVietnam has made progress in the digital transformation of the economy, there are still obstacles

to achieving further progress (Nguyen Dinh Huy & Dao Tung Anh, 2023) Compared to large enterprises, small and medium-sized enterprises often do not have enough resources in terms of both finance and management skills (Phan Thi Cam Lai, 2022) According to Ms Bui Thi Thanh

& Nguyen Xuan Hiep, digital transformation will help SMEs find a more flexible business model, both save costs and optimize resources to be able to overcome difficulties and continue todevelop Mr Tran Duy Dong (Deputy Minister of Planning and Investment) affirmed:

Vietnamese enterprises are facing great challenges from the Fourth Industrial Revolution, from the integration process and especially from the impact of the COVID-19 pandemic Business enterprises face difficulties in applying digital technology due to limitations related to

technology, finance and regulations (Nguyen Dinh Nguyen & Dao Tung Anh, 2023)

Moreover, the sustainability of SMEs is highly dependent on digital transformation and

technology adoption (Mo Bin et al., 2021) For small and medium-sized enterprises to increase production efficiency, participate in global value chains, accelerate integration, promote

sustainable development, digital transformation 9 is an important trend and solution (Huong Nguyen, Thi Mai &; Sen Bui Thi, 2021) The new system delivers higher revenue, higher

efficiency and higher competitive protection Adapting to new technologies empowers

companies to reduce barriers to entry into the national market (Quaddus &; Hofmeyer, 2007) However, due to limited resources and capacity, the digital transformation of SMEs is relatively slow, so it is important to identify the essential components and factors that affect the success of the adoption of digitalization for SMEs in order to optimize the rational allocation of resources

and efficiency (Xin Zhang et al., 2022) Factors affecting the extent of digital transformation are among these limitations such as technology, human resources, finance, and government support (Xin Zhang et al., 2022) Government regulation is essential for the digital transformation of manufacturing companies, especially for small and medium-sized enterprises (Henderson 2020; Zhang et al 2021; Jianhua Zhu et al 2023) SMEs embracing digital transformation lies in adapting work and business processes, leveraging advances in digital technology to improve operational efficiency (Xiaoyan Teng et al., 2022) The digital transformation human resource management strategy is the key to success for businesses in adapting to the changes of the digitalage (Silvy Sondari Gadzali et al., 2023) Furthermore, Mergel et al (2019) emphasize the

cultural significance of promoting digital transformation, the company's culture needs to be in line with the digital environment (Leso et al., 2023)

2.1.2 Overview of some studies on factors that affect the adoption of digital transformation of SMEs

Zhang et al (2022) developed a mathematical model to assess the impact of digital

transformation on the performance of small and medium-sized enterprises The study looks at how government support, technology, human resources, finance, and other factors affect the extent of digital transformation

Research conducted by Xiaoyan Teng et al (2022) explores the correlation between business performance and digital transformation of small and medium-sized enterprises Through

empirical analysis, the study identifies factors affecting the sustainable development of SMEs in the digital transformation process The success of the digital transformation process of small and medium-sized enterprises is determined by the interaction of three factors: digital technology, digital skills, and digital transformation strategy (Xiaoyan Teng et al., 2022) By contributing to the existing knowledge base, this research expands the understanding of how SMEs navigate the digital transformation landscape and also encourages the success of digital transformation initiatives through the allocation of critical resources

Four-tier strategy for SMEs to accelerate digital transformation by Antonello Garzoni et al., (2020) This study analyzes how digital technology triggers a change in the operational processes

of small and medium-sized enterprises in the Apulia Region (Southern Italy) There are four

levels of outreach for small and medium-sized enterprises to participate in the application of digital technologies: digital awareness, digital requirements, digital collaboration, and digital transformation (Antonello Garzoni et al., 2020)

Tarutė et al (2018) put forward the factors influencing the digital transformation of small and medium-sized enterprises that include a set of key factors including internal and external factors Three main internal factors were identified in the study: resource alignment, internal competencyalignment, and factors related to changes in the business model (Tarutė et al., 2018) Three main external factors were identified in the study: alignment with resources, government regulations, alignment with external capabilities, and industry-related issues (Tarutė et al., 2018)

Research on Human Resource Management Strategies in Organizational Digital Transformation

by Silvy Sondari Gadzali et al., (2023) Global organizations are facing new obstacles in human resource management (Silvy Sondari Gadzali et al., 2023) The author argues that organizations can use digital technology to gain a competitive advantage, increase operational efficiency, and provide value to customers by focusing on improving the digital capabilities of employees and encouraging change in the culture and leadership of companies

Leso et al (2023) conducted a mixed-method study to investigate the role of organizational culture, structure, and leadership variables in the digital transformation of small and medium-sized enterprises The impact of organizational culture on the adoption of digital transformation

by small and medium-sized enterprises was examined in this study, which also offers a

conceptual model and hypothesis

According to Science magazine, Nguyen Danh Nam & Uong Thi Ngoc Lan (2021) examined thecurrent state of digital transformation of small and medium-sized enterprises in Vietnam as well

as the challenges they face Some recommendations were made related to how to support the digital transformation of SMEs: building human resources for digital transformation; strengthen cooperation between the Government and digital platforms, SMEs actively support each other; developing a program to support digital transformation in SMEs (advising on roadmaps, creatingconditions for connecting capital, technology and markets); The government needs to improve the legal environment to ensure a safe and reliable environment for digital transformation

A study conducted by Nguyen Thi Mai Huong and Bui Thi Sen (2021), studies the factors affecting the intention to implement digital transformation of small and medium-sized enterprises

in Hanoi In this study, the authors summarized and listed the following factors influencing the decision to implement digital transformation: The level of use of corporate technology, corporateculture, infrastructure technology, financial capacity of enterprises and digital transformation goals of enterprises (Nguyen Thi Mai Huong &; Bui Thi Sen, 2021)

A study conducted by Bui Thi Thanh & Nguyen Xuan Hiep (2021) on the digital transformation

of SMEs in the context of the COVID-19 pandemic has shown the basic factors hindering the digital transformation journey of these businesses, namely: business leaders are not bold to change, limited awareness of digital transformation; The digital transformation plan has not been clearly formed, in line with the business strategy & resources of enterprises; and businesses have not yet built a systematic and sustainable digital transformation process

The study by Dr Isotillia Costa Melo et al (2023) analyzed "Sustainable Digital Transformation

in Small and Medium Enterprises (SMEs): Performance Evaluation" by analyzing 74 papers published up to December 2021, with reference to Scopus and Web of Science (WoS) Research shows that small and medium-sized businesses are linking with organizations in Italy, China, Finland, Indonesia, and the United Kingdom through digital transformation Besides, the

practical aspect discovered from SLRs is that small and medium-sized enterprises in some specific industries and geographies have not been studied

The study conducted by Ramona Rupeika-Apoga et al (2022) explores the impact of digital orientation and digital competencies on the digital transformation of SMEs during the COVID-

19 pandemic in Latvia The authors argue that the study's contribution to academic literature and socio-political debate is fourfold, addressing the lack of solutions and knowledge gaps in the dynamics of digital transformation

The limitations of SMEs are the quality of unreliable financial reporting information, lack of transparency and unclear disclosure of financial activities, making it difficult to call for

investment (Hoang Manh Cuong, 2022) Moreover, many small and medium-sized businesses react to market changes passively and really do not try Instead, digital transformation still mostly happens in large companies According to data cited by Minh Nhat (2015), the Ministry

of Science and Technology (Science and Technology) said that "the country currently has nearly 600,000 enterprises, with more than 90% being small and medium-sized enterprises" Most use technology two or three generations slower than the global average 20% are working in the hightechnology sector; the remaining 76% of imported machinery and technology lines belong to the 60-70 generation of the last century; 75% of equipment is depreciated; and fifty percent of the equipment is refurbished (Minh Nhat, 2015; Nguyen Thi Anh Van & Nguyen Khac Hieu, 2020) Although a lot of research has been done on how to apply digital transformation to new businessmodels However, when assessing how the current state of digital transformation is affecting the operations of small and medium-sized enterprises, there are still research gaps and factors

affecting the digital transformation process of businesses that have not been clearly shown Therefore, there is a need for more specific research on the application of digital transformation

in business model innovation of SMEs in Vietnam Especially for research works in fields with a small research scope, from there, the collected documents will be more specific and detailed as well as the proposed solutions after analyzing the data of the works will be accurate and suitable for SMEs in the field of research

2.2 Factors affecting the application of digital transformation to business activities of SMEs and theoretical models.

2.2.1 Technology

According to Hsieh's research &; Chou (2018), businesses aim to operate quickly and efficiently

in an unstable market along with a highly competitive business environment Businesses rely heavily on information technology (IT) (Hsieh &; Chou, 2018) The use of IT can facilitate the allocation of company resources and encourage collaboration in their use (Hsieh &; Chou, 2018).According to Xin Zhang (2022), investing in IT infrastructure is believed to contribute to

improving decision-making capacity, increasing efficiency, improving productivity, and

measuring business productivity (Hui Li et al., 2019) Furthermore, enterprise resource

collaboration and service innovation can be enhanced in the ability to reorganize and realign enterprise resources using IT (Hsieh &; Chou, 2018; Yen et al., 2012)

The technological revolution has had a strong impact on business activities in many countries Besides, small and medium-sized enterprises are the backbone of every economy in the world (Fabian Eggers, 2020) Therefore, technological innovation is one of the important factors to promote SME growth in the long term Information technology has enhanced the

competitiveness of small and medium-sized enterprises by improving communication activities, internal organization, supply chain linkage, distribution of goods, and service improvement (Windrum &; De Berranger, 2002) By transforming the value-creation pathways that businesses often rely on to remain competitive, digital technology creates new types of business strategies, while providing technical support to implement them effectively (Xin Zhang et al., 2022) According to Xiaoyan Teng et al (2022), the effect of digital transformation on performance is shaped by digital transformation methods and shows a beneficial correlation with performance The three main elements of digital transformation: investment in digital technology, digital skills

of the workforce, and digital transformation strategy Thereby helping small and medium-sized enterprises maintain sustainability in development and improve operational efficiency (Xiaoyan Teng et al., 2022)

so that small and medium-sized enterprises can meet the requirements of operation and use of new technologies in digital transformation (Bui Thi Thanh & Nguyen Xuan Hiep, 2021) More than 70% of SMEs requested financial support from the Government; 57.6% proposed to supporthuman resource development (Bui Thi Thanh &; Nguyen Xuan Hiep, 2021)

Support programs from the Government bring positive signals to the activities of SMEs such as: creating positive external impacts, including the Government's support for the operation and

development of investment market activities (Cassiman & Veugelers, 2002); Information from the government regarding SMEs to financial institutions and potential investors helps to enhance the legitimacy of the company's operations (Tiwari, 2014) While the government may not be able to support businesses right away, it can still be supported in other ways, such as by tax exemptions or discounts (Oppewal et al., 2010; Marri et al., 2011) Small and medium-sized enterprises cannot ignore the Government's support in technology backup (Marri et al., 2002; Marri et al., 2011).

Furthermore, government financial support encourages SMEs to expand their business

internationally, improves SME performance, and contributes significantly to economic

development (Clement & Hansen, 2003) According to Wu et al (2012), the success of SMEs in developing countries relies on political relationships with the government Therefore, companies can quickly create a sustainable competitive advantage in a turbulent market by flexibly

manipulating political connections with the government (Li et al., 2008; Guariglia et al., 2008; Guariglia et al al., 2011)

2.2.3 Employee competancy

The business landscape has seen a significant upheaval due to digital transformation, which has affected how businesses operate, interact, and compete in an increasingly competitive market (Silvy Sondari Gadzali et al., 2023) The success of businesses in the changes of the digital era depends largely on the HRM strategy in organizational digital transformation (Silvy Sondari Gadzali et al., 2023)

According to the resource-based theory, a business is created with a variety of resources

(Xiaoyan Teng et al., 2022) In particular, human resources refer to the human resources of an enterprise, including the founder, senior management team, board of directors and employees (Barney, 2001; Calab et al., 2021) Research by Nguyen Quoc Hung (2021) on training human resources in the era of digital transformation to meet job roles at businesses shows

Human resource training includes a wide range of foundational knowledge, specialized skills related to specific careers, the ability to work in a team, and the ability to adapt to the evolving context of digital transformation and business development This direction is considered

appropriate and in line with the goal of human resource development By improving the digital

skills of employees, implementing talent management, performance reviews, clear

communication channels, promoting agility, and robust risk management, organizations can effectively leverage digital technology to gain a competitive advantage while improving businessefficiency and providing enhanced value (Silvy Sondari Gadzali et al., 2023) Therefore, human resources are decisive for the development of businesses (Wapshott & Mallett, 2015; Harney &; Alkhalaf, 2021)

2.2.4 Financial resource

Resource-based theory, financial resources are one of the important resources that an

organization can possess to have a competitive advantage Moreover, within the framework of the digital economy, the digital transformation of enterprises serves as an important driving forcebehind new socio-economic advances and is closely tied to the provision of financial resources (Luo Si, 2022) Therefore, financial innovation has become a matter of concern for small and medium-sized enterprises Financial resources are essential for small and medium-sized

enterprises to achieve good performance (Raimi & Uzodinma, 2020), a competitive advantage comes from owning and using resources that are superior to competitors

According to Jiang et al., (2022), financing can help alleviate financial barriers for small and medium-sized enterprises Financial platforms provide online financial services, helping

businesses access capital and financial services quickly and conveniently (Jiang et al., 2022) Digital finance can also help businesses access new capital and scale innovation activities (Jiang

et al., 2022)

According to Paul (2011), SMEs have access to a number of different sources of finance, which are divided into groups: loans, equity, subsidies, securities, and funds that cooperate with other businesses (Tran Thi Thanh Tu & Dinh Thi Thanh Van, 2015) According to Tran Thi Thanh Tu

& Dinh Thi Thanh Van (2015), SMEs face many difficulties in accessing capital

To ensure effective operations, small and medium-sized enterprises need to solve a number of problems such as: debt from banks, intermediaries or other financial backers (Akpan et al., 2020;Juergensen et al., 2020); lack of funding to take care of customers, pay employees, and comply with their commitments to suppliers (Syriopoulos, 2020); especially the disruption of raw

material supply as well as product distribution when consumer demand drops sharply

(Juergensen et al., 2020; Priyono et al., 2020)

2.2.5 Corporate Culture

All models involved in assessing a company's readiness to transform have a scope to determine the level of corporate culture (Olga Stoianova et al., 2020) Establishing successful digital operating habits in an organization is a prerequisite for the success of digital transformation, so organizational culture plays an important role (Martínez Caro et al., 2020; Leso et al., 2023) Common values, beliefs, principles, mindset, working techniques, historical values, technology, and governance structures are all components of corporate culture (Chanias et al., 2019; Warner

& Wäger, 2019; Leso et al., 2023), these factors have a significant impact on the digital

transformation journey Korshunova et al (2021) emphasized that the management and nurturing

of corporate culture must be in line with the internal and external driving forces of the business throughout the digital transformation process

According to Sørensen et al (2002), businesses with strong cultures operate more stably under reasonable stable circumstances In contrast, strong cultures lose credibility in contextual

instability (Sørensen et al., 2002) Ojo (2009) suggests that improving an organization's culture isessential to promote continuous improvements, refine employees' approach to work performance,and ultimately cultivate a sense of quality awareness The performance of employees in an organization is significantly influenced by a thorough understanding of the organizational culture(Ojo, 2009)

To achieve growth, businesses need to meet the corporate culture in the internal and external environment (Olga Stoianova et al., 2020)

CHAPTER 3: METHODOLOGY 3.1 Conceptual Framework

Based on theoretical framework as follow:

Base on theoretical framework, the author develop the conceptual framework as follow

Nguyen

3.2 Research approach and design

This research was conducted to show the current status and factors affecting the application of digital transformation in business model innovation in SMEs in Thai Nguyen City By

researching using theoretical research methods and collecting information through documents and actual surveys Meanwhile, the method at the desk used to data processing analyzes

secondary information to evaluate the overall business situation of SMEs in Thai Nguyen City After that, on the basis of data from the online survey, quantitative research and qualitative research are used to test models and hypotheses But, in essence, certain topics seem to fit the quantitative approach, which requires the collection of numerical data to describe an event Sukamolson, S (2007) Quantitative research involves numerical representation and

manipulation of data to interpret and explain observed phenomena This type of study

encompasses many different fields of science and society, including physics, biology,

psychology, sociology, and geology The surveys were developed based on questionnaires of previous researchers but have been refined and supplemented to suit the Vietnamese

circumstances After data collection, SPSS software will be used for processing

3.3 Data collection

3.3.1 Source of data

- Collect secondary information

The purpose of secondary information collection is to collect information from books, reports, journals, articles, websites, , and related research works Based on the collected data, assess the current situation of digital technology application in business activities of small and medium enterprises in Thai Nguyen city

- Collect primary information

Primary data collection by direct interview and survey method Information was gathered

through interviews and surveys of stakeholders about in current status and the effects of elementsrelated to digital transformation on SMEs' operations in Thai Nguyen City The study is expected

to survey about 333 SMEs in Thai Nguyen City The objective of the interview and survey is to collect information to assess the performance, adaptability, and identify the problems,

opportunities, and challenges of SMEs when applying technology transformation After that,

propose a number of strategies and solutions to help businesses develop sustainably in the period

of technological innovation

3.3.2 Data collection tools

For scholarly sources, researchers will use search engines such as Google, Google Scholar Google Forms will be used to create easy to understand, short and simple surveys to prevent respondents from misinterpreting

Spreadsheet software: Use spreadsheet software Microsoft Excel, Google Sheets to enter, store, and organize primary data Use to perform simple calculations, like sums, averages, and

percentages Statistical analysis software: Using IBM SPSS statistical analysis software to import and clean data; data processing and descriptive statistics; hypothesis testing; Analyze quantitative and qualitative data

3.4 Sampling

The survey object of the study is SMEs, collect information by questionnaire (over 50 criteria)

to survey the subjects who are employees of SMEs in Thai Nguyen city to collect information data for analysis and evaluation The following formula is used in the study to determine the sample size population size is known (Yamane Taro,1967):

n = N

1+N∗e2

n - the sample size

N - the population size

e - the acceptable sampling error Three regularly used error rates are typically ± 0.01 (1%), ± 0.05 (5%), and ± 0.1 (10%), with ± 0.05 being the most frequently common

By 2023, the number of small and medium-size enterprises in Thai Nguyen cíty is about 2.000 Therefore, it could calculate the sample size with N = 2.000, e = 0.05 as below:

1+2000∗0.052 = 333.33

There are 333 SMEs in the study's sample

3.5 Data gathering procedure

The measures listed below should be taken to guarantee the relevance and correctness of all questionnaire questions that contribute significant data to the study:

Step 1: Run a pilot to ensure the survey's validity

Step 2: The researcher must revise the questionnaire's illogical points after completing the pilot study Step 3: Complete the survey itself Quota sampling is the name for a two-stage sampling process Researchers can use convenience sampling or judgmental sampling to collect samples after identifying the population Quota sampling is an appropriate sample technique for this studybecause it is practical in

- Part II requires respondents to respond to trends and reasons leading to digital transformation

of enterprises; and determine the effect of digital transformation on SMEs' operational

effectiveness, the competitiveness of SMEs, the growth ability of SMEs, and the resilience of SMEs

The scales used in the study used a 5-point Likert scale: 1 - Totally disagree, 2 - Disagree, 3 - Moderately Normal, 4 - Agree, 5 - Totally agree

3.7 Data analysis

3.7.1 Data analysis techniques

Data was then classified, discussed, and summarized to facilitate the analysis process Answer codes were utilized to examine data and display conclusions; the thesis was then prepared using the studied data

Table 3.1: Data encryption

No Code Contents of quetion

I Technological

1 T1 Business is are using websites for information and image promotion

2 T2 Business is are using internal communication systems to reduce direct

work assignments

3 T3 Business has created a digital workspace in the work environment

II Government support

1 GS1 Government policies encourage digital transformation

2 GS2 Government technology policy for digital transformation

3 GS3 Government financial policy for digital transformation

III Employee competency

EC1 Employees have good skills in using information technology

applicationsEC2 Employees are implementing digital transformation

EC3 Employees have a positive attitude toward new technology applications

in enterprise work performance

IV Financial resource

FR1 Finance ensures payment of digital transformation technology

infrastructure costsFR2 Enterprise can afford to pay high-quality employees to respond to digital

transformationFR3 Finances ensure payment to the digital transformation service provider

Enterprises have the ability to digitize business and management processes

Enterprises are capable of successful digital transformationEnterprises achieve higher business efficiency after digital transformation

Enterprises can optimize the distribution and use of resources on digital platforms

Benefits for employee of the enterprise

3.7.2 Data analysis methods

This research gathers information from secondary data sources to enhance comprehension of academic concepts, address research issues, construct theoretical frameworks, and formulate survey instruments Secondary data is sourced from scholarly articles, documents, and reputable online authorities The data obtained from secondary sources serves as a valuable supplement to fill gaps that may exist in primary data collection

A formal study is quantitative and uses strategies for collecting data from questionnaires that have been identified via earlier research The questionnaire prioritized clarity, conciseness, and validity to ensure reliable data collection The SPSS 26.0 program will be used to process all of the data

This study utilized reliability analysis and descriptive statistics to analyze the collected data Thereliability test showed the general consistency of the measure Utilize the Cronbach's Alpha coefficient to assess the scale's dependability With the help of this technique, the analyst can minimize junk variables in the research process, get rid of inappropriate variables, and assess the Cronbach alpha coefficient's reliability of the scale

CHAPTER 4: FINDINGS AND DISCUSSION

In this chapter, the researcher analyzes the results obtained from the survey conducted and analyzes and discusses them based on specific research objectives This involves examining the impact of factors on the application of digital transformation in small and medium-sized

enterprises in Thai Nguyen city In addition, the demographic characteristics of the respondents were used to establish correlation with the variables being investigated The data obtained underwent analysis through both descriptive and inferential statistics, with the reliability of the application model evaluated using Cronbach's Alpha

4.1 Demographic data and Descriptive statistics of respondents’ profile.

4.1.1 Demographic data of respondents’ profile.

The survey results about respondents' personal information are shown in this section, consiting

of gender, age, education level, income of SME's business Data is displayed in both frequency and percentage to give the researcher an insight into their characterization Following data processing, the following tables display statistical information:

Male 40 27.6 27.6 100.0

(Source: Analysis result)

An overview of the respondents' gender distribution is given in Table 4.1 In examining the willingness to participate in the study, it is evident that 72.4% of female respondents actively engaged in the survey On the other hand, male participation stands at 27.6%

(Source: Analysis result)

The age distribution of the respondents is shown in Table 4.2 Most of the respondents are between the ages of 25 and 35, constituting the highest percentage at 35.9% (an important age group when it comes to digital transformation applications in SMEs) The second-largest group

is in the age range of 18 - 25 years old, comprising 32.4% of the participants The proportion of

participants aged 35 - 45 is 27.6 %, and those over 45 years old make up only 4.1% of the sample

The age distribution is uneven with different age groups having a significant impact on the ability of SMEs to apply digital transformation

Table 4 3: Education Level

Education Level Frequency Percent Valid

Percent

Cumulative Percent

(Source: Analysis result)

Table 4.3 outlines the distribution of respondents according to educational level The data

illustrate the diverse educational levels of the surveyed population, from high school graduates toindividuals with advanced degrees This diversity is important for understanding how

educational level may influence the application of digital transformation within SMEs

Postgraduate level accounts for the highest proportion (accounting for 44.8%), followed by Intermediate/College/University level accounting for 24.8% In addition, the Study abroad and High school qualifications groups also have a significant proportion, accounting for 19.3% and 9.7% respectively The remaining few, accounting for 1.4%, belong to other qualifications groups

Table 4 4: Income

Income Frequenc

y

Percent Valid

Percent

Cumulative Percent

(Source: Analysis result)

Table 4.4 illustrates the diverse income of survey participants, while the income level of 10 - 15 million VND accounts for the greatest proportion at 35.9% The following income groups range from 15 - 20 million VND (accounting for 27.6%), respectively, from 5 – 10 million VND (accounting for 19.3%) At 17.2%, the income bracket beyond 20 million VND has the lowest rate

4.1.2 Descriptive analysis of the respondents

Table 4.5: Descriptive analysis Technological