DIGITAL ADOPTION WITHOUT PRODUCTIVITY GAINS: RE-EXAMINING SME PERFORMANCE IN DEVELOPING ECONOMIES

Abstract

The growing use of digital technologies by SMEs in emerging economies has led to high expectations regarding productivity improvements and increased competitiveness; yet, empirical research shows that these hopes are not necessarily fulfilled, creating an apparent disconnect between technological advancement and actual results. To define this phenomenon, this study posits the concept of the "productivity illusion," whereby the use of advanced technologies does not lead to corresponding improvements in productivity and growth. Using the RBV and Institutional Theory as its theoretical background, this paper claims that mere technology usage is not enough; instead, technology is supposed to be paired with other resources that would complement it, allowing organizations to reap tangible benefits. Based on the review of the latest scientific literature, this paper discusses the mediating role of various factors, including but not limited to human capital, management practices, organizational integration, as well as structural factors such as institutional weakness, financial constraints, and infrastructure problems. The research concludes that the benefits of technology can only be achieved under certain conditions and that the productivity increase is highly conditional and uneven