International Journal of Contemporary Research in Multidisciplinary

The digital transformation of Micro, Small, and Medium Enterprises (MSMEs) has emerged as a strategic imperative in today’s rapidly evolving business landscape. This study explores the adoption of digital technologies among MSMEs, analyzing the multifaceted challenges, key drivers, and resultant impacts on business performance. Drawing from extensive literature and supported by a conceptual framework, the research identifies critical barriers such as financial constraints, limited digital literacy, infrastructural gaps, and cultural resistance that hinder the effective implementation of digital solutions. Despite these challenges, compelling drivers including the pursuit of operational efficiency, customer expectations, market competition, and supportive government initiatives are accelerating the shift toward digitalization. The integration of tools such as cloud computing, enterprise resource planning (ERP), artificial intelligence (AI), and e-commerce platforms has shown to significantly improve productivity, customer engagement, market access, and data-driven decision-making capabilities in MSMEs. Empirical evidence reveals that MSMEs embracing digital technologies demonstrate increased agility, innovation, and resilience, particularly during economic disruptions such as the COVID-19 pandemic. The study concludes that digital adoption positively influences operational, financial, and strategic outcomes, yet its full potential can only be realized through targeted support mechanisms including training programs, policy incentives, and infrastructure development. By addressing existing gaps and leveraging digital tools effectively, MSMEs can enhance their competitiveness and contribute meaningfully to sustainable economic growth in the digital era.