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Strategic Decision-Making in SME Growth: Harnessing Digital Transformation and Innovation in Jordan

Author

Listed:
  • Yousef Alsafadi

    (Department of Business Administration, Zarqa University, Zarqa, Jordan)

  • Manaf Al-Okaily

    (School of Business, Jadara University, Irbid, Jordan;
    School of Business, The University of Jordan, Amman, Jordan)

  • Rejaul Karim

    (Department of Business Administration, Varendra University, Rajshahi-6204, Bangladesh;
    Faculty of Business and Communications, INTI International University, Putra Nilai, Malaysia)

  • Bablu Kumar Dhar

    (Business Administration Division, Mahidol University International College, Mahidol University, Thailand)

  • Md. Mustaqim Roshid

    (Department of Management Studies, Rajshahi University, Rajshahi-6205, Bangladesh)

  • Sharmila Devi Ramachandaran

    (Faculty of Business and Communication, INTI International University Nilai, Malaysia)

Abstract

[Purpose] This study investigates the strategic role of digital transformation (DT), digital innovation (DI), and digital strategy (DS) in enhancing the performance of small and medium enterprises (SMEs) in Jordan, a developing economy. The research focuses on the mediating influence of digital strategy in translating technological advancements into financial and non-financial organizational outcomes. [Design/methodology/approach] A quantitative approach was employed, utilizing cross-sectional survey data from 117 SMEs. The study used partial least squares structural equation modeling (PLS-SEM) to examine the relationships among digital transformation, digital innovation, digital strategy, and firm performance. The model was validated with diagnostic tests for reliability, validity, and model fit indices. [Findings] The findings reveal significant direct effects of digital transformation and digital innovation on digital strategy. Mediation analysis confirms that digital strategy partially mediates the relationships between digital advancements and performance. For financial and non-financial outcomes, digital strategy enables SMEs to leverage technological resources effectively. The study identifies the potential of strategic digital alignment for sustainable growth in resource-constrained environments. This research explicitly contributes to the field of Decision Sciences by modeling how SMEs optimize digital resources under uncertainty, linking decision-making processes with performance outcomes. [Research limitations/implications] The cross-sectional design limits the ability to observe long-term impacts of digital strategies. Moreover, the sample is restricted to Jordanian SMEs, which may limit generalizability. Future longitudinal and cross-country studies are recommended to capture dynamic effects and comparative insights. [Practical implications] The research highlights actionable strategies for SME leaders to adopt and align digital technologies with organizational goals. Policymakers are encouraged to design initiatives that support SMEs in overcoming technological and resource barriers. [Social implications] Promoting digital transformation in SMEs fosters job creation, innovation, and economic stability, contributing to the broader socio-economic development of emerging economies. [Originality/value] This study is original in its context-specific focus on SMEs in a developing economy and differs from prior literature by explicitly demonstrating how digital strategy mediates both financial and non-financial outcomes. By highlighting originality and explicitly situating digital strategy within the Decision Sciences paradigm, the paper shows how structured decision models can guide SMEs in resource-constrained environments.

Suggested Citation

  • Yousef Alsafadi & Manaf Al-Okaily & Rejaul Karim & Bablu Kumar Dhar & Md. Mustaqim Roshid & Sharmila Devi Ramachandaran, 2026. "Strategic Decision-Making in SME Growth: Harnessing Digital Transformation and Innovation in Jordan," Advances in Decision Sciences, Asia University, Taiwan, vol. 30(1), pages 1-39, March.
    • Handle: RePEc:aag:wpaper:v:30:y:2026:i:1:p:1-39
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    References listed on IDEAS

    as
    1. Alfonso Mendoza-Velázquez & Luis Carlos Ortuño-Barba & Luis David Conde-Cortés, 2022. "Corporate governance and firm performance in hybrid model countries," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 21(1), pages 32-58, February.
    2. Wing-Keung Wong & Mu Yue, 2024. "Could Regressing a Stationary Series on a Non-Stationary Series Obtain Meaningful Outcomes?," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 19(03), pages 1-16, September.
    3. Jiatong Yu & Jiajue Wang & Taesoo Moon, 2022. "Influence of Digital Transformation Capability on Operational Performance," Sustainability, MDPI, vol. 14(13), pages 1-20, June.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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