Impact of digitalization and digital tools on the financial performance of SMEs in Benue State, Nigeria

This study aims to explore to what extent digitalization and digital tools impact the financial performance of small and medium-sized enterprises (SMEs) in Benue State, Nigeria. The study endeavors to bridge the gap in understanding to what extent digital tools impact the financial performance of SMEs in a developing country context, amidst a challenging business environment and low adoption of digital technologies and digitalization of SMEs. The research will investigate the factors that influence SME digitalization, such as top management support, digital literacy and skills, digital business strategy, and competitive pressure. The studies propose 5 hypotheses to be tested. In this study, the researcher will employ Propensity Score Matching (PSM) to identify SMEs that adopt digitalization and SMEs that do not, which is relevant in determining the causality in the study. Furthermore, this study will dwell on the variance-based SEM, i.e., partial least squares SEM (PLS-SEM), using Statistical Package for the Social Sciences (SPSS) to test the direct and indirect relationship among the constructs, with digitalization standing as a mediation variable between the independent variable and dependent variable (financial performance). The findings should help SMEs integrate digitalization into their business processes efficiently, control costs, and improve financial performance in a dynamic business environment.