Digitalization of Small and Medium-Sized Enterprises in Bulgaria – A Factor for Their Competitiveness

Digitalization is a key factor for improving the competitiveness, effectiveness, and sustainability of small- and medium-sized enterprises (SMEs) in Bulgaria. With ever-changing technology, evolving consumer expectations, and increased global competition, SMEs have recognized the use of digital tools has become essential for their growth. This study reveals initial information regarding digitalization implications on Bulgarian SMEs in terms of business transformation or business model innovation in the early stages of the digitalization journey, and highlights the main challenges and opportunities for these businesses in the process of digitalization. Digitalization provides various opportunities for SMEs like access to markets through online sales platforms and/or e-commerce with lower transaction costs and increased access to customers. Cloud services and business process management systems help organizations be more productive internally so they can respond well to the ever-changing landscape of the market. Digital tools engage in innovation, offering better ways to analyze the market, understand customers, and develop customized products and services.” This builds up trust and collaboration among stakeholders, and establishes an efficient business climate in terms of electronic transactions. Yet, in practice, the digital transformation of Bulgarian SMEs is going through enormous hardships. These challenges come in the form of limited qualified personnel, budget restrictions, and disparity in digital infrastructure connectivity between rural and urban corers. A common challenge is that most SMEs neither have a structured digital strategy nor incorporate digital technologies into current business models. That these barriers are holding them back from fully reaping the benefits that digital solutions bring. To address these questions, this study conducted an empirical analysis comprised of expert interviews and a nationwide survey. Interviews with 12 digitalization experts supported essential success factors like management support, tools used and organizational and environmental elements. Through a stratified random sampling technique, 150 SME managers in diverse sectors were surveyed in a time period ranging from January 10 to February 10, 2025, resulting in 114 complete responses. The survey analyzed levels of digital adoption, whether any digital strategies existed, areas of digitalization and impacts on competitiveness. Quantitative data were analyzed through descriptive statistics, factor analysis, and correlations. The results of this study are a guide for SMEs who aim to adopt such digital technologies, policymakers who work for favourable mechanisms, and scholars who study digital transformation. The study, by both assessing the context as well as by assessing its inhibitors and facilitators of the digital transformation of SMEs, moreover serves as a key reference for both policy makers and business leaders, as the study offers clear recommendations to create a better environment for SMEs in BG to be more inclusive and better prepared for a better digital transformation.