Digitalising Europe’s Economy: The Role of Small and Medium-Sized Enterprises
22 September 2026
Small and medium-sized enterprises (SMEs) are the backbone of Europe’s economy, accounting for more than 99% of firms and employing nearly 90 million people. Their ability to digitalise, innovate and invest will be critical to Europe’s competitiveness and to the success of the EU’s digital and green transitions. Yet SME digitalisation remains uneven and slower than required to meet the EU’s Digital Decade targets.
Drawing on quantitative indicators and qualitative evidence from nine EU Member States—Austria, Czechia, France, Germany, Greece, Italy, Romania, Spain and Sweden—this study examines four interconnected dimensions of SME digitalisation: the regulatory and institutional environment, skills and human capital, finance and investment, and technology and infrastructure.
The findings reveal a ‘triple transition’ challenge, as SMEs navigate digital, green and demographic changes simultaneously. Three structural bottlenecks stand out: persistent shortages of digital and advanced ICT skills; limited access to finance for high-risk digital investments; and regulatory complexity that places disproportionate burdens on smaller firms. Many SMEs also adopt digital technologies without fundamentally transforming workflows or business models, limiting productivity gains. Advanced technologies such as artificial intelligence, cloud computing and data analytics remain concentrated among larger and better-resourced firms, while cybersecurity and digital trust remain significant weaknesses.
Although the EU has developed extensive support instruments, fragmented implementation and administrative complexity limit their impact. The study therefore calls for an integrated, proportionate approach combining regulatory simplification, targeted finance, skills and leadership development, shared digital infrastructure, and stronger integration of cybersecurity and sustainability into SME support.
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