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businesses in their transition to digital models is a major driver of transformation in the
country. Additionally, the Vietnamese government has created favorable conditions for

enterprises to adopt digital technologies, including tax incentives, investment in
broadband infrastructure, and financial support for small and medium-sized enterprises
(SMEs) to adopt digital solutions (Nguyen et al., 2022).
Technological advancements
The rapid development of technologies such as artificial intelligence (AI), cloud
computing, big data, and the Internet of Things (IoT) has created new opportunities for
Vietnamese businesses. These technologies offer the potential to optimize operations,
reduce costs, and increase productivity. AI and big data, for example, allow businesses

to analyze large amounts of information in real time, improving decision-making and
enabling personalized services for customers (Ismail et al., 2017). Cloud computing has
also transformed the way businesses operate by allowing enterprises to store, manage,
and process data in a flexible and scalable manner. This has reduced the need for large
upfront investments in IT infrastructure, making digital transformation more accessible
to Vietnamese businesses, particularly SMEs (Doan & Vuong, 2019).

Increasing global competition
As Vietnam becomes more integrated into global markets, its enterprises are under
pressure to remain competitive by adopting the latest technologies. Digital
transformation enables businesses to increase operational efficiency, reduce costs, and
respond more quickly to changing market conditions. In particular, manufacturing firms
in Vietnam have been leveraging digital technologies to enhance productivity and
improve supply chain management (World Economic Forum, 2021). Moreover, digital

transformation allows Vietnamese enterprises to tap into new markets and expand their
reach through e-commerce platforms, digital marketing, and online customer
engagement. The growing importance of e-commerce, which has accelerated during the
COVID-19 pandemic, underscores the need for businesses to adopt digital strategies to
compete in both domestic and international markets (Nguyen & Nguyen, 2021).
3.1.2. Challenges of digital transformation for Vietnamese enterprises

Despite the government's support and the clear benefits of digital transformation,
Vietnamese enterprises face several challenges that hinder their ability to fully embrace
digital technologies.
Infrastructure limitations
While major urban centers such as Hanoi and Ho Chi Minh City boast advanced
digital infrastructure, many rural areas in Vietnam still lack access to reliable internet
services and digital technologies. This urban-rural divide creates significant disparities
in digital readiness between businesses in different regions. Rural enterprises,

particularly in agriculture and manufacturing, often face barriers to adopting digital
technologies due to poor infrastructure and connectivity (World Bank, 2021). The lack
of advanced digital infrastructure in some parts of the country limits the ability of
businesses to deploy cloud computing, AI, and IoT solutions, which are essential

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