Page 320 - ISC PROCEEDINGS 21.4

SUSTAINABLE DEVELOPMENT OF SMALL AND MEDIUM-SIZED ENTERPRISES
IN VIETNAM IN THE CONTEXT OF DIGITAL TRANSFORMATION DURING THE
PERIOD 2021–2025

Le Minh Hieu* 1

1 Hanoi Open University, Hanoi, Vietnam.
(*E-mail: leminhhieu29052000@gmail.com)

ABSTRACT
This study examines the sustainable development of small and medium-sized
enterprises in Vietnam in the context of digital transformation during the period 2021–
2025. The research combines a literature review, theoretical approaches such as the TOE
framework and dynamic capability theory and survey data collected from 200 SMEs using
a five-point Likert scale. The study focuses on five key dimensions: technological readiness,
organizational capacity, environmental influences, the relationship between digital
transformation and sustainable development and the role of adaptability and innovation
within enterprises. The results indicate that Vietnamese SMEs have made positive
progress in basic digital infrastructure, leadership awareness and commitment to digital
transformation. Firms have also begun to recognize the clear impact of digital
transformation on operational efficiency, cost reduction and competitiveness. However,
several constraints remain, particularly in data governance, digital workforce quality,
resource allocation, the effective use of policy support and the integration of digital
transformation with social and environmental objectives. The study concludes that digital
transformation can become a genuine driver of sustainable development only when it
goes beyond isolated technology adoption. It must be embedded within a governance
structure supported by strong organizational capacity, adaptability and an enabling
institutional environment. The contribution of this paper lies in proposing an integrated
perspective linking digital transformation with sustainable development for SMEs in the
Vietnamese context, thereby providing empirical evidence and offering managerial and
policy implications to promote more efficient, flexible and sustainable business
development.
Keywords: Digital transformation, SMEs, sustainable development, innovation
capability, Vietnam.

1. Introduction
The Fourth Industrial Revolution is unfolding extensively and digital transformation
has become an inevitable development trend, directly affecting business models,
management capacity and the competitiveness of enterprises. As Klaus Schwab once
stated, the world is facing “a technological revolution that will fundamentally alter the
way we live, work and relate to one another.” This observation indicates that digital
transformation is no longer merely a technical option but has become a strategic
requirement for enterprise development in the new business environment.
In Vietnam, small and medium-sized enterprises (SMEs) account for approximately
98% of the total number of operating enterprises and play a crucial role in job creation,
economic growth and maintaining the vitality of the private sector. Meanwhile, the
Government has identified digital transformation as a major strategic direction through

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