Digital Transformation Readiness of Construction SMEs: Determinants and Implications for Organizational Performance

Abstract

Construction is among the least digital sectors of the economy, and the small and medium-sized enterprises that make up over ninety percent of the industry face resource, skill and cultural barriers that larger contractors do not. Digital transformation readiness, the organizational capacity to initiate, implement and sustain digital change, has attracted far less attention in this setting than technology adoption itself, and its link to performance has rarely been quantified. This study identified the determinants of readiness among construction SMEs and assessed its consequences for organizational performance. A cross-sectional questionnaire survey, built on the Technology–Organization–Environment framework and supplemented with dynamic capability items, was administered to owners, directors and senior managers. Of 172 replies received, 150 were usable, 87.2 percent of those returned, and every construct returned a Cronbach’s alpha above the conventional 0.70 threshold. Multiple linear regression showed that technological context, organizational context, environmental context and dynamic capabilities together explained 52.4 percent of the variance in readiness. All four determinants were measured on a common five-point scale, and on that scale organizational context carried the largest coefficient (), followed by dynamic capabilities () and technological context (); environmental context was significant but smallest (). Readiness itself was moderate, at a mean of 3.54 on a five-point scale, with dynamic capabilities lowest at 3.49 and environmental context highest at 3.82. Readiness in turn explained 37.5 percent of the variance in organizational performance (). Internal resources and adaptive capacities therefore matter more to readiness than external pressure does.