Digital Technology Adoption and the Financial Performance of SMEs: Evidence from Thailand*

This paper examines the impact of digital technology (DT) adoption, defined to encompass both intensity and scale of DT usage on financial performance of small- and medium-sized enterprises (SMEs) using Thailand as a case study during 2018-21, with emphasis on the role of information and communications technology (ICT) and personnel graduated in ICT, and DT depth. The results show that the depth of ICT adoption, firm size, and sectors matters in analyzing the impact of DT on firms' financial performance. SMEs receive significant benefits when adopting ICT in purchasing goods and services via the Internet, online sales (e-commerce), and online payments. Firms in the services sector tend to gain more benefits from operating through online activities than the manufacturing firms. Software usage generates benefits mostly for the medium and large firms but is of less importance for small firms. Interestingly, access to the Internet, except for e-commerce, has limited impacts on financial performance, even in large firms. The depth of technology, in general, generates greater impact on revenue and price-cost margins than on profit, reflecting the high cost of obtaining advanced technology or diversifying DT usage. The shortage of basic and advanced ICT staff generates concerns about SMEs' financial performance.