From Digital Adoption to Competitive Capability: SME Digitalisation Policy in Singapore and Implications for Vietnam

Abstract

Digitalisation among small and medium-sized enterprises (SMEs) has become an increasingly important component of productivity and competitiveness policy. Yet widespread technology adoption does not necessarily translate into sustained improvements in firm performance, particularly where smaller firms lack the managerial, financial and organisational capabilities required to integrate digital technologies into business processes. This article examines Singapore’s SME digitalisation policy to identify how public interventions can support the transition from technology adoption to competitive capability and considers the implications for Vietnam. The study employs an explanatory qualitative case-study design based on policy-document analysis, official enterprise statistics, OECD and World Bank assessments, and peer-reviewed research on SME digital transformation. Drawing on the resource-based view and dynamic-capabilities perspective, the analysis focuses on the interaction between firm-level constraints and policy instruments rather than on individual programmes in isolation. The findings indicate that Singapore has progressively developed an integrated policy architecture in which sector-specific digital roadmaps, technology verification, financial co-funding, advisory services and capability-building programmes address different but complementary barriers to digital transformation. SME digital adoption reached 95.1% in 2024, while average adoption intensity increased from 2.0 to 2.3 digital areas. Nevertheless, AI adoption remained markedly uneven, at 14.5% among SMEs compared with 62.5% among larger enterprises, suggesting that near-universal basic adoption has not eliminated differences in digital capability. The article argues that the competitiveness significance of SME digitalisation lies less in expanding the number of firms using digital tools than in strengthening their capacity to combine technology with organisational knowledge, skills and market opportunities. For Vietnam, particularly following the adoption of the SME Digital Transformation Scheme for 2026–2030, the analysis suggests a need to move beyond participation-oriented support towards sector- and maturity-specific pathways, stronger technology-market intermediation, integrated advisory and financing mechanisms, and closer links between digital transformation and domestic supplier upgrading.