This study explores critical factors influencing digital transformation in small and medium-sized enterprises (SMEs), focusing on management support, employee skill development, and technology adoption. Drawing on the Technology-Organization-Environment (TOE) framework and Organizational Learning Theory, three hypotheses were tested using survey data from 303 SMEs across manufacturing, services, retail, and IT sectors in emerging industrial regions of central and western of China. Through correlation analysis and multiple regression analysis, results reveal that (1) digital leadership enhances technology adoption, (2) employee skill development is vital to transformation success, and (3) technology adoption improves financial performance. The study highlights challenges such as uneven digital infrastructure and policy disparities and offers region-specific strategies to address them. These insights serve as a practical roadmap for policymakers and SME leaders, stressing the need to align digital initiatives with local socio-economic conditions. The findings also have global relevance, as SMEs in developing regions like Southeast Asia, Latin America, Eastern Europe, and Africa face similar obstacles including limited infrastructure, skill shortages, uneven policy support, and resource constraints. This makes these findings widely applicable insights for international policymakers and business leaders.

This study explores how small and medium-sized businesses (SMEs) in China’s emerging industrial regions can succeed in adopting digital tools. We focused on three key factors: (1) how managers lead digital changes, (2) employee training, and (3) effective use of technology. SMEs employ over half of the world’s workforce but often lack resources to adopt digital tools. In regions like China’s industrial zones, challenges like inconsistent government policies and worker skill gaps make this harder. Our research shows that SMEs can overcome these barriers by training employees, partnering with tech providers, and aligning technology use with their business goals. These strategies help small businesses grow sustainably and compete with larger companies. By surveying 303 SMEs staff, we found: Managers who actively guide digital changes and encourage teamwork help companies adopt technology faster. Employees need training to use new tools effectively—without skills, even the best technology fails. Technology adoption boosts financial performance, but only when aligned with business goals. Collaborating with governments or tech providers helps SMEs access resources they can’t afford alone.