Digitalization of accounting processes and performance of small and medium enterprises: mediating role of exploitation and exploration

Purpose This study aims to fill a gap in the literature regarding the digitalization of accounting processes (DAP) and its impact on small and medium enterprises (SMEs) performance. Current research primarily focuses on large organizations, leaving SMEs comparatively understudied. It remains unclear if DAP directly influences SME performance or if the exploitation dimension of organizational ambidexterity mediates this relationship. This study investigates both the direct and mediated effects of DAP on SME business performance. Design/methodology/approach This study employs the ambidexterity theory and the technology-organization-environment (TOE) framework to present a conceptual framework that establishes a connection between DAP and SME performance, mediated by the influences of exploitation and exploration. To assess our hypotheses, we collected cross-sectional data from 254 SMEs in Oman. The analysis was conducted using structural equation modeling, implemented with Smart PLS. Findings The findings suggest that DAP has a positive impact on both the exploitation and performance of SMEs. Additionally, exploitation not only directly affects performance but also partially mediates the relationship between DAP and performance. Research limitations/implications Despite the significance of this study, numerous limitations must be recognized. The research is confined to SMEs in Oman, which may limit the generalizability of the results. Subsequent research may utilize this approach in many cultural and geographic settings, including developed economies, to investigate potential discrepancies in DAP impact. Secondly, although the study emphasizes exploitation as a mediator, additional organizational characteristics, including leadership style, digital culture and strategy alignment, may potentially affect the DAP performance link and warrant further examination. Thirdly, while quantitatively robust, the use of statistical data fails to adequately represent the varied perspectives of SME managers throughout the digitalization process. Practical implications The framework examined in this study offers practical guidance for decision-makers and policymakers involved in SME development. It underscores the significance of digitalizing accounting processes, which empowers these enterprises to enhance operational efficiencies by leveraging their existing resources and capabilities, ultimately resulting in improved business performance. These insights can inform practitioners in crafting policies and strategies that aim to ensure the sustainability of SMEs. Originality/value This study contributes to the growing body of knowledge on digital transformation and its impact on organizational performance. It offers a distinctive perspective on the connection between DAP and SME performance. The uniqueness of this study lies in its presentation and testing of a framework that intersects two theories from separate domains: the TOE framework in technology adoption and the ambidexterity theory in strategic management. Moreover, the study examines the potential mediating role of exploitation in the relationship between DAP and SME performance.