Exploring the Role of Technological Innovation and Digital Transformation in Enhancing the Competitiveness of IT SMEs in Saudi Arabia

Abstract

The competitiveness of small and medium-sized enterprises (SMEs) in the Information Technology (IT) sector is increasingly determined by their ability to innovate and embrace digital transformation. In the context of Saudi Arabia's Vision 2030, which aims to diversify the economy and reduce dependence on oil, IT SMEs are positioned as crucial players in driving economic growth, fostering innovation, and creating high-quality jobs. This study explores the role of technological innovation and digital transformation in enhancing the competitiveness of IT SMEs in Saudi Arabia. Through a mixed-methods approach, combining quantitative surveys and qualitative interviews with IT SME leaders, the study examines factors such as innovation capability, access to digital infrastructure, the regulatory environment, and leadership in driving competitiveness. The findings indicate that digital transformation significantly mediates the relationship between innovation and competitiveness, underscoring the importance of strategic investment in technology. The study also highlights the challenges IT SMEs face, including limited access to cutting-edge technology, regulatory complexities, and the need for skilled personnel. Practical recommendations are provided for IT SMEs to align their strategies with the objectives of Vision 2030, and for policymakers to create a more supportive environment for innovation and digital transformation. This study contributes to the body of knowledge on SME competitiveness in emerging economies and provides actionable insights for business leaders and policymakers in Saudi Arabia.