MODELING AND ANALYSIS OF THE REACTION OF SMALL AND MEDIUM BUSINESS MANAGERS TO THE IMPLEMENTATION OF DIGITAL TECHNOLOGIES

Abstract

This study explores the application of the Upper Echelons Theory in explaining the digitalization processes within small and medium-sized enterprises (SMEs). The research hypotheses are formulated based on this theoretical framework and tested using survey data collected from 43 SMEs. Poisson regression serves as the primary method of empirical analysis to examine the relationship between managerial characteristics and the degree of digitalization in SMEs. To ensure the robustness of the findings, several additional models were estimated using alternative approaches to constructing the dependent variable and incorporating different sets of control variables. The empirical results demonstrate that the level of education of managers has a positive impact on the digital transformation of SMEs, while their age exhibits a negative effect. This suggests that higher educational attainment among managers fosters digitalization by equipping them with the necessary cognitive capabilities and strategic foresight to embrace digital technologies. In contrast, older managers tend to exhibit more resistance to digital innovation, possibly due to risk aversion, established decision-making patterns, or a lack of familiarity with emerging technologies. Furthermore, the study evaluates the influence of individual managerial characteristics on strategic decisions regarding digital adoption. The findings provide strong evidence that the Upper Echelons Theory is applicable in the context of SME digitalization, reinforcing the notion that managerial attributes significantly shape strategic business choices. This research offers a novel contribution by presenting the first empirical assessment of the impact of managerial traits on the digital transformation of SMEs within this specific context. The study’s insights have important implications for both academia and practice. From a theoretical perspective, it extends the application of the Upper Echelons Theory to the field of digital transformation, highlighting the critical role of managerial demographics in shaping technological adoption strategies. From a practical standpoint, the findings underscore the necessity of targeted training programs and policy initiatives aimed at enhancing managerial education and fostering digital literacy among SME leaders. In summary, this research underscores the pivotal role of managerial characteristics in determining the extent of digitalization in SMEs and confirms that strategic decisions regarding digital transformation align with the principles of the Upper Echelons Theory. By offering empirical validation of these relationships, this study contributes to a deeper understanding of the factors influencing SME digitalization and provides valuable insights for policymakers, business practitioners, and researchers interested in the intersection of managerial attributes and digital transformation.