Towards Digital Financial Solutions: A Conceptual Model of SME Strategies and Strategic Development

Abstract

Small and medium-sized enterprises (SMEs) often face persistent challenges in accessing financial resources, adapting to technological advancements, and sustaining competitiveness in an increasingly digitalised economy. SMEs continue to be limited by their resourcefulness, lack of digital literacy, and poor access to funding platforms, thus delaying their desired growth and sustainability despite the increasing roles of financial technologies and digital innovations. This study aims to develop a conceptual model that examines the relationship between SME strategies and digital financial solutions, with strategic development positioned as the mediating mechanism. A conceptual and literature-based approach allows the research to combine the teachings of the Resource-Based view and dynamic capabilities theory to propose a framework to which SMEs can enhance their performance by adopting digital practices such as digital marketing, alternate financing, and sustenance efforts to focus on financial inclusion and competitive advantage. The outcomes indicate that SME strategies play a prominent role in the digital financial adoption when mediated by relatively structured pathways of strategic development, emphasising the role of resource reconfiguration, workforce capacity, and networks of collaboration in digital transformation. This study also highlights the important functions of digital finance in mitigating the credit constraint, alternative finance instruments in widening the availability of finance, and co-creation networks in aligning business development with sustainability. The theoretical implications of this research are two-fold: first, the study contributes to academic discussions on the digital transformation of SMEs through an integrated conceptual framework; second, it provides practical recommendations that can be used by SMEs, policymakers, and financial institutions to improve digital readiness and financial resilience. Finally, this paper would need additional empirical verification of the propositions made and serve as a guide into future research involving sector-specific aspects and emerging digital technologies.