Institutional quality, cultural values and digital transformation in MSMEs: the moderating role of uncertainty avoidance in emerging economies

Abstract

Purpose Micro, small and medium-sized enterprises (MSMEs) digital adoption exhibits significant disparities across nations. We extend beyond traditional approaches by examining both the separate and combined effects of institutional settings and society's risk aversion on digital transformation. We focus on uncertainty avoidance (UA), as it captures societal attitudes toward risk and change, being aspects inherently linked to digital transformation processes.

Design/methodology/approach Using data from 17,498 Ibero-American MSMEs, our results reveal that favorable institutional environments positively influence digital transformation, while high UA hinders it.

Findings Additionally, we find a significant moderating effect: as UA increases, the positive impact of institutional quality on digital adoption diminishes.

Originality/value These findings suggest societal attitudes toward uncertainty and risk can override institutional support for digital transformation, even in strong institutional frameworks.