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Abstract

This analytical essay examines the intersection between digital transformation initiatives and small-to-medium enterprise (SME) economic contribution within Saudi Arabia's Vision 2030 framework. Drawing upon dynamic capabilities theory and analysis of government data, academic literature, and policy documents, we explore how digital transformation intensity influences SME performance and their contribution to economic diversification objectives. Government reports reveal that SMEs in Saudi Arabia grew from 429,026 enterprises in 2016 to over 1.8 million in 2024, yet contribute only 30% to GDP versus the Vision 2030 target of 35%. Concurrently, Saudi Arabia has achieved fourth place globally in digital government services and sixth in the UN E-Government Development Index. We argue that this paradox—rapid digital infrastructure development alongside modest SME economic contribution—reflects insufficient attention to organizational dynamic capabilities required for effective digital transformation. Through theoretical analysis integrating Teece's sensing-seizing-transforming framework with Saudi-specific data, we propose that maximizing SME digital transformation benefits requires cultivating complementary dynamic capabilities including organizational agility and digital absorptive capacity. This essay contributes insights for policymakers and business leaders by demonstrating that technology deployment alone proves insufficient without parallel capability-building initiatives aligned with economic diversification imperatives.

First Page

88

Last Page

103

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

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