Digital Technology Adoption and Its Impact on the Performance of Micro and Small Enterprises in Developing Countries: Special Reference to India

The rapid expansion of the digital economy has transformed business practices across the globe, presenting both opportunities and challenges for micro and small enterprises (MSEs) in developing countries. In India, digital technologies have become increasingly integral to enterprise operations, driven by widespread Internet access, mobile connectivity, and policy initiatives such as Digital India and Startup India. Despite this progress, digital adoption among MSEs remains uneven due to persistent infrastructural, financial, and skill-related constraints. This paper examines the adoption of digital technologies and their impact on the performance of micro and small enterprises in developing economies, with special reference to India. Using a descriptive and exploratory research design based on an extensive review of existing literature and selected empirical evidence, the study analyses key determinants of digital adoption, performance outcomes, and structural barriers faced by MSEs. The findings suggest that digital technology adoption enhances productivity, market access, operational efficiency, and competitiveness, while also reshaping business models and customer engagement strategies. However, disparities in digital literacy, access to finance, and institutional support limit the transformative potential of digitalization for many MSEs. The paper concludes by highlighting the need for targeted policy interventions, capacity-building initiatives, and supportive digital ecosystems to enable inclusive and sustainable digital transformation among MSEs in India and other developing economies.