Digital Transformation as an Enabler of Strategic Agility in Post-Pandemic Service Sector SMEs

• Adaan Ahsun

  Covenant University

  Author

The COVID-19 pandemic exposed critical vulnerabilities in service sector small and medium enterprises (SMEs), forcing rapid digital adoption while revealing persistent gaps in understanding how specific technologies translate into strategic agility. Despite growing literature on digital transformation and organizational agility, few studies have examined service sector SMEs specifically, and fewer still have distinguished between different categories of digital technology adoption in predicting agility outcomes. This study addresses this gap by analyzing 491,636 cross-national SME technology adoption records to evaluate which digital transformation indicators most accurately predict organizational agility in the post-pandemic context. Using machine learning techniques including Random Forest, XGBoost, Gradient Boosting, Ridge, and Lasso regression, the study found that production technologies—automation, digital infrastructure, and back-end systems—were significantly stronger predictors of strategic agility than consumer-facing consumption technologies, with the Random Forest model achieving a test R² of 0.6249. The findings challenge prevailing assumptions that prioritize customer-facing digital tools and demonstrate that foundational digital capabilities account for 89.4% of the predictive variance in agility outcomes when properly modeled. The study concludes that service SMEs seeking strategic agility should prioritize investment in production-oriented digital infrastructure and workforce upskilling over cosmetic digital presence. These results offer actionable guidance for SME leaders, policymakers designing digitalization support programs, and researchers extending dynamic capabilities theory to crisis contexts

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Copyright (c) 2026 Adaan Ahsun (Author)

This work is licensed under a Creative Commons Attribution 4.0 International License.