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Advances in Social Sciences Research Journal – Vol. 11, No. 11

Publication Date: November 25, 2024

DOI:10.14738/assrj.1111.17846.

AL-Ghaili, M., Mahomed, A. S. B., & Yusof, R. N. R. (2024). Exploring the Influence Factors of Digital Entrepreneurship in Improving

the Digitization of Small and Medium Enterprises in Yemen. Advances in Social Sciences Research Journal, 11(11). 62-88.

Services for Science and Education – United Kingdom

Exploring the Influence Factors of Digital Entrepreneurship in

Improving the Digitization of Small and Medium Enterprises in

Yemen

Mohammed AL-Ghaili

School of Business and Economics, UPM, Malaysia

Anuar Shah Bali Mahomed

School of Business and Economics, UPM, Malaysia

Raja Nerina Raja Yusof

School of Business and Economics, UPM, Malaysia

ABSTRACT

This research provides valuable insights into the impact of digital

entrepreneurship on the digitalization of small and medium-sized enterprises

(SMEs) in Yemen. By integrating the Technology Acceptance Model (TAM) and the

Technology-Organization-Environment (TOE) framework, the research examines

the role of various factors-technological, organizational, environmental, and

individual, affecting technology adoption and utilization in SMEs. The study

primarily explores the direct and indirect influences of these factors on actual

system use, with a particular focus on the mediating roles of perceived usefulness

and perceived ease of use in shaping attitudes toward technology adoption. Data

were collected through a survey of 392 respondents, and the results were analyzed

using partial least squares structural equation modelling (PLS-SEM). The

measurement model was validated for reliability and accuracy, followed by an

evaluation of the structural model to test the proposed hypotheses. The findings

highlight the critical role of information and communication technology (ICT)

adoption in enhancing both perceived ease of use and perceived usefulness.

Additionally, the knowledge of IT entrepreneurs and government support were

found to uniquely influence perceived ease of use and perceived usefulness,

respectively. Both of these perceptions, in turn, positively impacted attitudes

toward and the actual use of digital tools within SMEs. To address the challenges

faced by Yemeni SMEs, it is recommended to enhance digitalization through ICT

adoption and promote a pro-technology culture. Policymakers should create a

supportive environment via targeted policies, subsidies, and public-private

partnerships to foster sustainable growth and competitiveness.

Keywords: Technology Acceptance Model, Technology-Organization-Environment

Framework, Attitude Toward Using, Actual System Use, SMEs.

INTRODUCTION

Digitalization has become an essential factor in the growth and sustainability of small and

medium enterprises (SMEs) worldwide [1-4]. Furthermore, technology, entrepreneurship, and

SMEs significantly contribute to the encouragement of economic and social development

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AL-Ghaili, M., Mahomed, A. S. B., & Yusof, R. N. R. (2024). Exploring the Influence Factors of Digital Entrepreneurship in Improving the Digitization

of Small and Medium Enterprises in Yemen. Advances in Social Sciences Research Journal, 11(11). 62-88.

URL: http://dx.doi.org/10.14738/assrj.1111.17846

processes influenced by technology, organizational structures, environmental, and individual

factors [1, 5, 6].

On the other hand, the digital transformation of entrepreneurship and SMEs is increasingly

recognized as a fundamental component in the long-term economic development of both

developed and developing countries [6]. This recognition was through the advantages of

adopting digital entrepreneurship on SME digitalization by increasing the GDP value, rate of

workforce participation, and diversification of the economic and production structure of the

countries by stimulating the process of economic and social development in SMEs [7-9]. On the

subject of global developing countries, SMEs are considered a significant economic force,

representing at least 90% of firms, contributing 40-60% to GDP, 40% of global industrial

production, and 35% of world exports [10]. However, in Yemen, SMEs contribute a substantial

around 97% to the country's GDP and 90 % of the workforce [2, 11, 12]. Due to that, SMEs play

a central role in the Yemen business environment since they are essential in job creation, which

contributes to the country's well-being and development as it makes the most significant

contribution to GDP [7, 13, 14].

The digitalization of entrepreneurship, SMEs in Yemen presents a complex landscape marked

by both significant challenges and emerging opportunities [8, 10]. In a country where SMEs are

the backbone of the economy, contributing significantly to GDP and employment, the

integration of digital technologies is not just a trend but a necessity for the economic growth

and development of Yemen [9, 15, 16]. Moreover, the absence of a digital economic strategy

and vision within the Yemeni government has delayed the development of a positive

environment for digital SMEs and entrepreneurship [10]. Compared to neighboring countries

like Saudi Arabia, Oman, and the UAE, Yemen has delays in digital infrastructure and e- government services, which are crucial for supporting digital businesses [17].

Yemen's digital landscape remains underdeveloped, with a persistent digital divide

significantly affecting SMEs and entrepreneurial activities. The term "digital divide" refers to

the gap between technology adopters and non-adopters [17, 18], and this gap has been

consistently highlighted in research [19, 20]. The ongoing conflict has further exacerbated this

divide, stalling ICT advancements and damaging critical infrastructure, leaving Yemeni

businesses at a disadvantage compared to neighboring countries like Saudi Arabia, Oman, and

the UAE, which have progressed significantly through government support and national digital

strategies [18, 21].

Yemeni entrepreneurs face critical challenges, including limited access to electricity, a weak

telecommunications infrastructure, and the high cost of internet services [18, 19, 21]. In

comparison, neighboring countries benefit from robust infrastructure and supportive policies

that enhance their digital economies [17]. Yemen's lack of a comprehensive national digital

strategy and inadequate institutional support further widen the gap, with insufficient funding

for digital business development posing a major barrier [22, 23]. Additionally, while

neighboring countries have successfully transitioned to advanced network technologies like 4G

and 5G, Yemen lags behind, hampering the potential for SME digitalization and

entrepreneurship [18-20]. And with current innocent of SpaceX company in 2024, Yemen

became the first country the Arabic region access to the internet as it’s already been activated

with highly speed.

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Advances in Social Sciences Research Journal (ASSRJ) Vol. 11, Issue 11, November-2024

Services for Science and Education – United Kingdom

Moreover, the lack of technology skills and education, compounded by insufficient government

investment in developing a digital knowledge base, creates further obstacles [2, 24]. High

unemployment among university graduates, due to inadequate digital skills, highlights the need

for strategic initiatives from the Yemeni government to foster digital readiness [7, 25]. These

infrastructural and skill gaps hinder the ability of Yemeni SMEs to compete in the growing

digital economy, leaving them ill-prepared to capitalize on emerging opportunities. Addressing

these issues requires a strategic vision for digital infrastructure development, along with

targeted investments in ICT, digital skills, and policies that foster a pro-technology

environment. Hence, this study aims to explore factors to offer solutions for overcoming these

barriers and developing a robust digital entrepreneurship ecosystem in Yemen, drawing

comparisons to the successful digital transformations seen in neighboring countries. By

leveraging findings from this research, Yemeni SMEs can enhance their competitiveness and

foster sustainable growth in an increasingly digital global economy.

THEORETICAL FOUNDATION

Technology Acceptance Model (TAM)

The Technology Acceptance Model (TAM), proposed by Davis [26], has been widely applied in

numerous studies to explore users' adoption of new technologies. TAM is grounded in the

Theory of Reasoned Action (TRA) [27] and the Theory of Planned Behaviour (TPB) [28]. It

identifies perceived usefulness (PU) and perceived ease of use (PEOU) as critical determinants

of user intentions and technology adoption behaviour [26, 29].

Perceived Usefulness (PU) refers to the extent to which individuals believe that using new

technology will enhance their performance, while Perceived Ease of Use (PEOU) relates to the

degree to which users find technology easy to adopt with minimal physical effort [26].

According to TAM, PU directly impacts users' behavioural intention to use technology, while

PEOU influences their attitudes toward using it indirectly by enhancing the perception of its

usefulness [30]. This relationship reflects the assumption that when technology is perceived as

easy to use, individuals are more likely to see its utility, leading to greater adoption [31].

The core dimensions of TAM include (i) Perceived Ease of Use (PEOU), (ii) Perceived Usefulness

(PU), (iii) Attitude Toward Use (ATU), (iv) Behavioural Intention to Use (BI), and (v) Actual

System Use (ASU) [32] (Parreira et al., 1987;). External variables, such as individual

characteristics, organizational factors, and environmental conditions, can also influence these

perceptions, making TAM a flexible and widely applicable model [33].

Research has consistently highlighted that PU exerts a more significant influence on user

behaviour than PEOU, with PU being the strongest predictor of technology acceptance [34].

Moreover, users' perceptions of technology's effortlessness and its contribution to their

performance positively shape their attitudes and behaviour towards adoption [35]. In this

study, TAM's application helps to assess Yemeni entrepreneurs’ attitudes toward digitalization,

using PU, PEOU, ATU, and BI as primary variables for understanding technology acceptance.

Technology-Organization-Environment-Individual (TOE-I) Framework

The Technology-Organization-Environment (TOE) framework, introduced by Tornatzky and

Fleischer [36], extends the understanding of technology adoption beyond individual attitudes,

incorporating organizational and environmental factors. TOE posits that the decision to adopt