Digital transformation and innovation in small and medium enterprises (SMEs): a systematic review and future research agenda

The role of digital transformation in organizational innovation has received increasing attention from academia over the past decade. Although previous reviews have provided important insights, the relationship between digital transformation and innovation remains underexplored within the context of small and medium-sized enterprises (SMEs). This study aims to address this gap by examining the relationship between digital transformation and innovation in SMEs. Employing bibliometric techniques and in-depth content analysis, 115 empirical studies from 32 countries and regions were retrieved from the Scopus and Web of Science databases. The results reveal a positive correlation between digital transformation and innovation in SMEs, though the effects are often context-dependent. This study identifies two research streams, three evolutionary stages of research hotspots, and seven major thematic clusters. Building on these findings, an integrated AMMO (Antecedents–Mediators–Moderators–Outcomes)-TCM (Theory, Context and Method) framework is developed to advance the understanding of the complex and controversial relationship, along with the mediating mechanisms and boundary conditions that shape this relationship. The study offers both future research directions and practical implications for advancing SME innovation in the digital age.