Digitization and Productivity in Senegalese SMEs: An Examination of Internal Structural Factors

Abstract

The effects of digitization in small and medium-sized enterprises (SMEs) vary, even when resources are available. Success depends not only on resource availability but also on how effectively these resources are used, by analyzing the mechanisms that drive these effects and integrating them within the business. This study investigates how different forms of internal capital, as strategic resources, influence the digitization process and the productivity of Senegalese SMEs. This includes technological capital, general and specific human capital, infrastructure, and organizational capital, and their impact on the adoption and use of digital tools in SMEs. A quantitative cross-sectional design was employed, with a structured questionnaire to assess the perceptions of 255 respondents, comprising managers and employees, from 120 SMEs across multiple sectors in Senegal about digital technology adoption and its impact on productivity. Principal component analysis and multiple regression were used to analyze relationships among variables. The findings highlight that digitization positively influences the productivity of Senegalese SMEs, with each internal factor playing a significant role. A bootstrapped mediation analysis nevertheless indicates that digitization does not mediate the relationship between internal resources and productivity: once resource endowments are held constant, the indirect path through digitization is not significant. The results show that effectively integrating internal resources supports digitization and improves organizational performance. Theoretically, this study adds to the literature on digitization and SME performance in Africa by testing an integrated explanatory model in which digitization is positioned as the mechanism linking internal resources to productivity, and by showing that this mediating role is not supported in the Senegalese SME context. From a managerial perspective, digitization should be part of the firm's overall strategy rather than seen only as a technical solution. Aligning digital initiatives with long-term objectives can lead to substantial improvements in performance and competitiveness.