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Accelerating digital transformation: key drivers of cloud computing adoption and firm performance outcomes in Malaysian SMEs

Author

Listed:
  • Anusuiya Subramaniam

    (Universiti Putra Malaysia)

  • Raymond Teh

    (Universiti Putra Malaysia)

Abstract

This study investigates the determinants influencing cloud computing adoption among small- and medium-sized enterprises (SMEs) in the Klang Valley, Malaysia, a region representing 46% of national SME concentration and contributing significantly to Malaysia's digital economy hub. Despite the recognized benefits of cloud computing, Malaysian SMEs lag behind global and regional counterparts in adoption rates. This study advances existing literature by integrating four theoretical perspectives—Technology–Organization–Environment (TOE), Diffusion of Innovation (DOI), Practice-Based View (PBV), and Dynamic Capabilities (DC)—to develop a comprehensive multi-level framework that addresses the limitations of single-theory approaches. Using a purposive sampling strategy, which while limiting generalizability, enables targeted investigation of SMEs actively evaluating cloud technologies, this research surveyed 350 SMEs to identify key factors driving cloud adoption. Data cleaning procedures included outlier detection, missing value analysis, and normality testing using both univariate and multivariate approaches. Validation steps encompassed content validity through expert review, construct validity via confirmatory factor analysis, and reliability testing through Cronbach's alpha and composite reliability measures. The study employed structural equation modeling using SmartPLS to analyze relationships between variables. Results reveal that relative advantage, security assurance, industry influence, competitive pressure, corporate culture, and IT competency significantly influence cloud computing adoption. The non-significance of cost-effectiveness (β = 0.054, p = 0.164) contradicts conventional wisdom but aligns with Malaysian SMEs' prioritization of capability over cost, possibly due to government subsidies and vendor promotional pricing. Similarly, the non-significance of complexity (β = 0.042, p = 0.276) suggests that Malaysian SMEs may lack the technical expertise to adequately assess system complexity, indicating a critical capability gap. This research makes three key theoretical contributions: (1) validates an integrated multi-theory framework demonstrating complementarity between TOE-DOI for adoption factors and PBV-DC for performance outcomes; (2) establishes top management support as a critical mediating mechanism (explaining 41.9% of variance); and (3) identifies vendor support as a boundary condition strengthening the adoption-performance relationship. Most importantly, cloud computing adoption strongly influences firm performance, explaining 63.5% of performance variance. These findings provide specific, actionable insights including SME leaders should prioritize building internal IT competencies through structured training programs; vendors should offer tiered support packages tailored to SME maturity levels; and policymakers should implement sector-specific cloud adoption incentives beyond generic digitalization initiatives.

Suggested Citation

  • Anusuiya Subramaniam & Raymond Teh, 2026. "Accelerating digital transformation: key drivers of cloud computing adoption and firm performance outcomes in Malaysian SMEs," Future Business Journal, Springer, vol. 12(1), pages 1-13, December.
    • Handle: RePEc:spr:futbus:v:12:y:2026:i:1:d:10.1186_s43093-025-00711-7
    DOI: 10.1186/s43093-025-00711-7
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    References listed on IDEAS

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    1. Amoako-Gyampah, Kwasi & Boakye, Kwabena Gyasi & Adaku, Ebenezer & Famiyeh, Samuel, 2019. "Supplier relationship management and firm performance in developing economies: A moderated mediation analysis of flexibility capability and ownership structure," International Journal of Production Economics, Elsevier, vol. 208(C), pages 160-170.
    2. Mohammed Banu Ali, 2019. "Multiple Perspective of Cloud Computing Adoption Determinants in Higher Education a Systematic Review," International Journal of Cloud Applications and Computing (IJCAC), IGI Global Scientific Publishing, vol. 9(3), pages 89-109, July.
    3. Frank Aligarh & Bambang Sutopo & Wahyu Widarjo, 2023. "The antecedents of cloud computing adoption and its consequences for MSMEs’ performance: A model based on the Technology-Organization-Environment (TOE) framework," Cogent Business & Management, Taylor & Francis Journals, vol. 10(2), pages 2220190-222, December.
    4. Mohd Faizal Abu Hassan & Abdul Hafaz Ngah & Michael Boon Yiaw Tio, 2023. "Third-party logistics intention to provide cold transportation services. The mediating effect of top management support and organizational readiness in TOE framework," OPSEARCH, Springer;Operational Research Society of India, vol. 60(4), pages 1603-1625, December.
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