Abstract
The digitalization of Malaysia's economic industry over the past decade has compelled Small and Medium-Sized Enterprises (SMEs) to adopt technology to remain competitive amidst the industrial revolution. Digital disruptions, driven by technological evolution, impact various business operations, necessitating SMEs to undergo Digital Business Transformation (DBT). As integral contributors to Malaysia's transition to a high-income nation, SMEs must leverage emerging technologies and relevant talent to foster socio-economic development and community stability. This study examines the relationship between Digital Leadership (DL) and Digital Culture (DC) in facilitating DBT among Malaysian SMEs in the service sector. A survey conducted among these SMEs provides data to evaluate the proposed theoretical framework, which incorporates the strategic alignment theory. The findings underscore the critical role of Service Level Alignment (SLA) towards a successful DBT. Contrarily, Strategy Execution Alignment (SEA), Technology Transformation Alignment (TTA), and Competitive Potential Alignment (CPA) do not significantly impact DBT. Additionally, a significant positive correlation exists between DC and DBT, highlighting the importance of a digital-ready workforce and innovative digital strategies. These insights enhance the understanding of how DL and DC influence DBT success, offering valuable perspectives for improving the sustainability and competitiveness of Malaysian SMEs. The study underscores the necessity for SMEs to strategically align their operations with digital advancements to thrive in a rapidly evolving digital economy. The findings from this study can suggest new prospects for the growth and survival of SMEs. It can also promote DBT awareness amongst SME owners by developing new policies and governance to steer the complex DBT process.
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