International Journal of Science Annals, Vol. 7, No. 1, 2024 рrint ISSN: 2617-2682; online ISSN: 2707-3637; DOI:10.26697/ijsa SOCIAL AND BEHAVIORAL SCIENCES. Health Care Sciences ORIGINAL RESEARCH Digitalisation Factors Influencing the Dynamic Capabilities of Small and Medium Enterprises in the Healthcare Sector Authors’ Contribution: A – Study design; Makelana P.1 ABCDEF , Kekwaletswe R.2 ABCDEF , B – Data collection; Segooa M. A.1 ABCDEF C – Statistical analysis; 1 Tshwane University of Technology, South Africa D – Data interpretation; 2 University of Johannesburg, South Africa E – Manuscript preparation; F – Literature search; Received: 28.04.2024; Accepted: 20.05.2024; Published: 30.06.2024 G – Funds collection Abstract Background and Digitalization is problematized as one of the ways to improve dynamic capabilities Aim of Study: of healthcare sector small and medium enterprises (SMEs) in their strive to stay competitive in today’s digital society. Digitalisation and dynamic capability are current key issues in both academia and practice due to the recent advances in information and communication technologies. Nonetheless, there is inadequate research informing what and why digitalisation can be leveraged to enhance the dynamic capabilities (DC), in the context of SMEs in healthcare sector. The aim of the study: to explore and explain factors influencing DC of healthcare SMEs in South Africa. Material and Methods: The study employed task-technology fit theory as a lens to explain digitalisation factors influencing the DC of SMEs. To achieve the aim of the study, a deductive approach was followed. The study population was healthcare sector SMEs, in South Africa. The sampling frame was 384 randomly selected SMEs, in a self- administered survey. Results: The empirical results show that SME performance (β=0.132, p<0.05), task- technology fit (β=0.052, p<0.05), internet access (β=0.235, p<0.05), customer service (β=0.057, p<0.05), information sharing (β=0.022, p<0.05), innovation (β=0.125, p<0.05), and data security (β=0.427, p<0.05) are highly significant in the digitalisation of DC of SMEs. While cost saving (β=0.178, p>0.05) was found to be less significant. Conclusions: The study has explained and shown that appropriating technology to task during digitalisation is key to enhancing dynamic capabilities, in the context of South African healthcare sector SMEs. The cost of digital technology is a none factor. Subsequently, digitalization is a people-driven transformation journey. Keywords: digitalisation, dynamic capabilities, task-technology fit, small and medium enterprises, healthcare sector, South Africa. Copyright: © 2024 Makelana P., Kekwaletswe R., Segooa M. A. Published by Archives of International Journal of Science Annals DOI: https://doi.org/10.26697/ijsa.2024.1.4 Conflict of interests: The authors declare that there is no conflict of interests Peer review: Double-blind review Source of support: This research did not receive any outside funding or support Information about Makelana Penuel (Corresponding Author) – https://orcid.org/0000-0003-0986- the authors: 1117; Penuel.kman@gmail.com; Doctor of Computing, Lecturer, Department of Informatics, Tshwane University of Technology, Pretoria, South Africa. Kekwaletswe Ray – https://orcid.org/0000-0002-3455-3127; Professor, School of Management, University of Johannesburg, Johannesburg, South Africa. Segooa Mmmatshuene Anna – https://orcid.org/0000-0002-4190-8256; Doctor of Computing, Lecturer, Department of Informatics, Tshwane University of Technology, Pretoria, South Africa. 42 International Journal of Science Annals, Vol. 7, No. 1, 2024 рrint ISSN: 2617-2682; online ISSN: 2707-3637; DOI:10.26697/ijsa Introduction In the epoch of digital technologies (DTs), both has become popular among SMEs, particularly in the academics and practitioners have strongly been healthcare sector (Mashal & Morrish, 2023; Raimo et advocating for the value of achieving dynamic al., 2023). In support of the above viewpoint, a report capabilities (e.g., Ozanne et al., 2022). Along the same published by Deloitte UK’s Centre for Health Solution lines, a plethora of research (e.g., Bolosha et al., 2022; (2020) state that about 65.0% of SMEs in the healthcare Fatoki, 2021; Gaglio et al., 2022; Matekenya & Moyo, sector have increased the adoption of DT (Mashal & 2022; Rashidirad & Salimian, 2020) posit that achieving Morrish, 2023; Raimo et al., 2023). Recent scholarly dynamic capabilities requires an inclusive digital work by Moretti et al. (2023) defines digitalization as strategy. This paper argues that there is a need to the process of converting information into digital enhance the dynamic capabilities (DC) of Small and format. Medium Enterprises (SMEs) to contribute to economic In a broader context, a plethora of research (Moretti et expansion (Khurana et al., 2022; Matarazzo et al., 2021; al., 2023) refers to digitalisation as the process of Suhendi et al., 2020). As emphasized by Farida and combining DTs into everyday life (Warner & Wäger, Setiawan (2022); Weaven et al. (2021), it is substantial 2019), business processes and enterprises (Achieng & that SMEs in developing nations enhance the DC to Malatji, 2022). Recent scholarly works found that attain a competitive edge (Owoseni & Twinomurinzi, digitalisation can enable SMEs in the healthcare sector 2019) and to compete with multinational enterprises in to improve health services (Raimo et al., 2023), reduce the emerging digital world (Achieng & Malatji, 2022; cost (Moretti et al., 2023), reduce health inequalities Suhendi et al., 2020). (Saifudin et al., 2021), gain access to electronic health Baloyi and Khanyile (2020) alluded that the substantial records (Spanò et al., 2023), provide services to patients role of SMEs as the lubricants of economic expansion in (Cerchione et al., 2023) and allow healthcare providers South Africa has largely been recognized. Sibiya et al. to monitor patient’s vital signs (Balta et al., 2021). A (2023) and Tshwete (2020) have shown the substantial growing body of literature on DTs (Khurana et al., 2022; role of SMEs in eliminating poverty, creating job Moretti et al., 2023) has shown that digitalisation can opportunities (Mashavira et al., 2022) and enhancing enhance SMEs’ DC (Raimo et al., 2023; Warner & economic expansion (Loury-Okoumba & Mafini, 2021; Wäger, 2019). In the emerging digital world and with Masocha, 2019; van Staden, 2022). Several government the scarcity of resources (Moretti et al., 2023), budget agencies in South Africa such as the Department of constraints (Sumaili et al., 2018), and limited Trade and Industry (DTI), SEDA, the Department of opportunities to directly influence the market structure Small Business Development (DSBD), the National (Schoemaker et al., 2018), DC is an important set of Empowerment Fund (NEF), and the Small Enterprise capabilities that SMEs should have because it will Finance Agency (SEFA) prioritize support for SMEs enable them to quickly detect market changes before (Kelly et al., 2021). According to Sibiya et al. (2023), rivals do (Engelmann, 2024). the number of registered SMEs in South Africa during Engelmann (2024) states that the development of DC the first quarter of 2021 was projected to be close to 2.3 among SMEs relies on sensing, seizing, and million (SEDA, 2021). Baloyi and Khanyile (2020) state reconfiguring (Khan et al., 2021). Firstly, sensing that SMEs play a substantial role in the economy as they capabilities explain the evaluation of opportunities that make up 95.0% of businesses, which contributes 60.0% are available in the market (Engelmann, 2024); with to job creation (Venter & Hayidakis, 2021) and around DTs helping SMEs to sense as they can identify 45.0–50.0% of South Africa’s Gross Domestic Product opportunities such as discovering and collaborating with (GDP) (Loury-Okoumba & Mafini, 2021; Mashavira et patients on the internet (Spanò et al., 2023). Secondly, al., 2022; Matekenya & Moyo, 2022). Furthermore, a seizing capabilities entails enterprises’ reaction to report by the National Planning Commission (2020) has market requirements to reduce cost (Engelmann, 2024; documented that SMEs in South Africa will create Khan et al., 2021). DTs can help SMEs in the healthcare 90.0% of new job opportunities by 2030 (Kelly et al., sector seize the opportunity of doing business on the 2021; Matekenya & Moyo, 2022). Nonetheless, many Internet at a lower cost (Raimo et al., 2023; Suhendi et scholars (e.g., Mhlongo & Daya, 2023; Sibiya et al., al., 2020; Warner & Wäger, 2019). Lastly, reconfiguring 2023) have identified a plethora of challenges capabilities is the development of new enterprises’ preventing the expansion of SMEs in South Africa. capabilities to support new business models A growing body of literature on SME growth has shown (Engelmann, 2024). that a lack of digital technologies (Bvuma & Scholarly literature on DC (e.g., Khurana et al., 2022; Marnewick, 2020), poor infrastructure (Loury- Zamani et al., 2022) state that the development of Okoumba & Mafini, 2021; Sibiya et al., 2023) and business models among enterprises is integral to limited access to technology (Kademeteme & creating sustainable growth (Engelmann, 2024; Khan et Twinomurinzi, 2019), are the major reasons that prevent al., 2021). Along the same lines, empirical studies SMEs from enhancing their DC (Hermawati & conducted on DC (Engelmann, 2024; Warner & Wäger, Gunawan, 2019). Extant research (e.g., Mashal & 2019) have argued that SMEs must develop new Morrish, 2023; Raimo et al., 2023) suggest that SMEs business models to provide services to customers may resort to digitalisation to tackle their challenges to (Zamani et al., 2022). DTs can enable SMEs in the enhance the DC (Khurana et al., 2022). Digitalisation Healthcare sector to provide services to their patients on 43 International Journal of Science Annals, Vol. 7, No. 1, 2024 рrint ISSN: 2617-2682; online ISSN: 2707-3637; DOI:10.26697/ijsa the internet (North et al., 2020; Raimo et al., 2023; considered to be a good return (Salah & Ayyash, 2023). Spanò et al., 2023). The collected data were analyzed using SPSS version The aim of the study. To explore and explain 28. A reliability test was also conducted in this present digitalisation factors influencing the DC of SMEs in the study. Scholarly work by Hall et al. (2023) states that the healthcare sector. prime reason for conducting a reliability test is to To realize the aim, the research question was formulated examine the level of consistency of the survey as what are the digitalisation factors influencing the DC questionnaire. A plethora of research (e.g., Dzomonda of SMEs in the healthcare sector? & Fatoki, 2019; Martinez-Corona et al., 2020) has indicated that a questionnaire is considered reliable if Materials and Methods Cronbach’s alpha (CA) is greater or equal to 0.7 As the aim of this present study was to explore and (Cheung et al., 2023; Ogujiuba et al., 2023). As explain digitalisation factors influencing the DC of documented in Table 1, Cronbach’s alpha was SMEs in the healthcare sector, a deductive research determined to be 0.886, which is considered excellent, approach was followed. A sampling frame was acquired since it exceeded the recommended value of 0.7. through the South African Small Enterprise Table 1 Development Agency (SEDA). According to a survey Reliability Result of the Data Collection Instrument undertaken by SEDA (2021), the number of registered SMEs, including those in the healthcare sector, in the Gauteng province of South Africa during the first quarter of 2021 was 786,027. The study sample size was, therefore 384. This sample size is in line with Krejcie and Morgan (1970) who stated that a population that is between 75,000 and 1,000,000 is well represented by a sample size of 384. The present study was designed as a cross-sectional The present study was cross-sectional in nature since study envisioned obtaining data from five hundred (500) data collection only occurred at one specific point in SMEs operating in the Healthcare sector. Three hundred time. A self-administered survey questionnaire was (300) responded accordingly. Table 2 presents the employed to obtain data from the SMEs operating in demographical statistics of respondents. The Gauteng province. A total of 500 survey questionnaires demographic variables include gender, age (years), were sent to 500 SMEs operating in the Healthcare education, job position, sector, use of DTs, and types of sector. Of the 500 questionnaires, only 300 were DTs used. returned. This meant a response rate of 60.0%, which is Table 2 Demographical Statistics of Respondents 44 International Journal of Science Annals, Vol. 7, No. 1, 2024 рrint ISSN: 2617-2682; online ISSN: 2707-3637; DOI:10.26697/ijsa As shown in Table 63.3% (187) of participants Furthermore, Table 2 shows that 74.0% (222) of representing healthcare SMEs were males, whilst 37.7% participants use WhatsApp, 21.3% (64) use Facebook, (113) were females. Furthermore, the findings in Table and 4.7% (14) use X (formerly Twitter). 2 reveal that 74.0% (222) of participants were between Regression Analysis the ages of 20 to 30, 21.3% (64) were between 41 to 50 At this stage, regression analysis was utilised to evaluate and 4.7% (14) were above 50 years. Regarding the degree to which INO, FPM CSE, SHI, DST, IEA, education, 56.7% (170) of participants had a B-tech, COS, and TTF influence the digitalisation of SMEs to followed by 19.3% (58) who had a master’s, 15.3% (46) improve the DC of SMEs in the Healthcare sector. As had a diploma, 6.7% (20) had a matric and only 2.0% (6) shown in Table 3, the regression findings show a had a PhD. Concerning job position, Table 2 shows that significant value of 0.000, implying that the regression 100% (300) of participants were SMEs managers. model can be used for the digitisation of SMEs to Moreover, the results in Table 2 show that 100.0% (300) improve the DC. In this present study, the predictor of SMEs operate in the healthcare sector. Concerning variable accounts for 68.1% of the variance in the the use of digital technologies (DT), 88.0% (264) of digitalisation of SMEs in the healthcare sector to participants revealed that they are using DTs, whilst improve the DC and the adjusted R Square (R2) 12.0% (36) alluded that they are not using DTs. equals=0.681. Table 3 Regression Statistics* Note. *Dependent variable – Digitalisation of SMEs to improve the DC; INO – innovation; FPM – firm performance; CSE – customer service; SHI – sharing information; DST – data security; IEA – internet access; COS – cost savings; TTF – task-technology fit. As displayed in Table 3, the results show that INO found that one factor has a negative influence on the (β=0.125, p<0.05), FPM (β=0.132, p<0.05), and CSE digitalisation of SMEs to improve the DC, namely, COS (β=0.057, p<0.05) hypotheses positively influence the (β=0.178, p>0.05). digitalisation of SMEs to improve the DC. Along the The results demonstrated in Table 4 indicate that seven same lines, this present study confirmed that SHI (7) hypotheses (H1, H2, H3, H4, H5, H6, and H8) are (β=0.022, p<0.05) and DST (β=0.427, p<0.05) have a supported, whilst H7 is not supported. To check if there positive effect on the digitisation of SMEs to improve is an existence of multi-collinearity, this present study the DC. Furthermore, the study proved that IEA employed the Variance Inflation Factor (VIF). As (β=0.235, p<0.05) and TTF (β=0.052, p<0.05) depicted in Table 3, all the VIF numbers were below 5, hypotheses positively influence the digitalisation of which implies that there is no existence of multi- SMEs to improve the DC. However, this present study collinearity. Table 4 Hypotheses Testing Note. *p<0.05; **p<0.01; INO – innovation; FPM – firm performance; CSE – customer service; SHI – sharing information; DST – data security; IEA – internet access; COS – cost savings; TTF – task-technology fit. 45 International Journal of Science Annals, Vol. 7, No. 1, 2024 рrint ISSN: 2617-2682; online ISSN: 2707-3637; DOI:10.26697/ijsa Results and Discussion The model (Figure 1) shows factors that are significant DTs, for example, artificial intelligence (AI) can enable to digitalization with respect to improving dynamic SMEs in the healthcare sector to refine patient treatment, capabilities of South African healthcare sector SMEs. enhance firm performance (Gautam et al., 2022), and Task Characteristics improve the DC (Drydakis, 2022). The positive effect of As shown in Table 4, INO (p=0.022<0.05) has a positive CSE (p=0.014<0.05) on the digitalisation of SMEs is effect on the digitalisation of SMEs to improve the DC. also confirmed. In support of this result, several scholars This outcome is consistent with Raghavan et al. (2021), (Cerchione et al., 2023; Spanò et al., 2023) state that DT who stated that DTs such as Cloud Computing can help can enable SMEs in the healthcare sector to improve SMEs in the Healthcare sector become innovative by customer service (Vishwakarma et al., 2023). Similarly, sharing information and communicating with patients the present study proved that SHI (p=0.003<0.05) has a on the internet (Arega & Sharma, 2023). Also, the positive effect on the digitalisation of SMEs. This result present study proved that FPM (p=0.000<0.05) has a is in line with Spanò et al., (2023) who alluded that DTs positive effect on the digitalisation of SMEs. This result can enable SMEs in the healthcare sector to share is in line with Vishwakarma et al. (2023), who stated that information with patients (Engelmann, 2024). Figure 1 A Model for Digitalisation Factors Influencing the Dynamic Capabilities of SMEs in Healthcare Sector Technology Characteristics state that TTF plays a substantial role in the use of Big As shown in Table 4, DST (p=0.000<0.05) has a positive Data Analytics (BDA) in mobile cloud healthcare effect on the digitalisation of SMEs. This result is system. And by the same token, this paper has shown that supported by Benzidia et al. (2021), who found that DTs TTF is an appropriate theoretical lens to help explain can enable SMEs in the healthcare sector to protect the digitalization and dynamic capability in the healthcare data of patients by implementing security measures sector SMEs. (Raghavan et al., 2021). The positive effect of IEA (p=0.014<0.05) on the digitalisation of SMEs is also Conclusions confirmed. As emphasized by Spanò et al. (2023) and In this paper, digitalization was problematized as one of Vishwakarma et al. (2023) DTs enable SMEs in the the ways to improve dynamic capabilities of healthcare healthcare sector to collaborate with their patients on the sector Small and Medium Enterprises in their strive to Internet (Arega & Sharma, 2023). However, the present stay competitive in today’s digital society. This paper has study found that COS (p=0.687>0.05) has a negative explained and shown that appropriating technology to effect on the digitalisation of SMEs. This result is in line task during digitalization is key to enhancing dynamic with Khurana et al. (2022), who found that DTs are not capabilities, in the context of South African healthcare easy to adopt, because SMEs take time to replace old sector SMEs. The cost of digital technology is a none technologies with new ones. factor influencing the digitalization process. Task-Technology Fit Subsequently, digitalisation is a people-driven On the other hand, the present study found that TTF transformation journey. The paper argues that customer (p=0.013<0.05) has a positive effect on the digitalisation service, innovation, SME performance, and sharing of of SMEs. In support of this result, Wang et al. (2019) information play a positive role on the digitalisation 46 International Journal of Science Annals, Vol. 7, No. 1, 2024 рrint ISSN: 2617-2682; online ISSN: 2707-3637; DOI:10.26697/ijsa journey of SMEs. Access to Internet, task-technology fit, marginalized settings: Evidence from South and data security are also significant factors. On the other Africa. Innovation and Development, 13(3), 583– hand, saving costs plays a negative role in the 601. digitalisation process. This paper concludes that https://doi.org/10.1080/2157930X.2022.2092681 digitalisation accompanied by good infrastructure, Bvuma, S., & Marnewick, C. (2020). 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It can be found online in the IJSA Archive https://ijsa.culturehealth.org/en/arhiv This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (http://creativecommons.org/licenses/by/4.0/deed.en). 50