Impact of Digitalization on Small and Medium Enterprises: Challenges and Opportunities

SMEs have a better chance of surviving in the twenty-first century by embracing digitization. The purpose of this paper is to examine the currently underlying digitalization among SEMs and to assess digitalization's impact on the performance of SMEs. The owners and managers of SMEs in Sunsari district are respondents to the study. A total response of 162 respondents was collected through interviews and standardized questionnaires. Responses were analyzed through regression analysis to examine relationships, and correlation analysis to gauge the degree of relationship between variables, using SPSS software. The revealed result shows that the best indicators of business revenue are internet access and power backup. Digital skills and infrastructure have weak associations with revenue. Likewise, investment in infrastructure and digital skills can increase revenue. Overall, the model is statistically significant, suggesting a reasonably strong correlation between independent variables and dependent variables. The study's results offer strong proof that digitization increases operational effectiveness and generates a sizable rise in revenue. Embracing digital methods and strategies has become essential for SMEs to stay competitive in today's rapidly evolving marketplace. In essence, the study underscores the importance of leveraging digitalization as a key driver for success in SMEs. Future studies could analyze the sector-specific effects of digitalization on the regional variation of SME enterprises in Nepal.