Dual Transition and SMEs’ Overlooked “Small Value-Added Gains”

Nguyễn Đặng Tuấn Minh

Digital and green transitions for SMEs rarely take the form of “mega-projects.” Instead, they unfold through numerous small, dispersed, and highly practical steps: adopting accounting software, deploying inventory management systems, enabling digital payments, and so forth. These “small value-added gains” often determine SMEs’ very survival—yet they are also precisely what markets and policies tend to overlook.

Within the IDAP project, businesses from Lào Cai visited Nam Cao “lụa đũi” village and used social media to help revive craft techniques that had been fading away. Photo: IDAP.

Amid the rhetoric of “digital transformation” and “green transition”—with grand slogans such as “Industry 4.0,” “artificial intelligence,” “net-zero,” “circular economy,” and more—small and medium-sized enterprises (SMEs) are grappling with a very different reality. They struggle to cover wages, secure orders, and cut production costs—leaving them able to transform only at a very small scale to survive and adapt.

In practice, most SMEs cannot access breakthrough technologies. They therefore start with solutions that are cheap, small, and fast: accounting software, inventory and sales management systems, e-commerce platforms, cloud services, collaboration tools, e-invoicing, and digital payments. More recently, some have begun to touch the layers of data and AI, but still largely through pragmatic applications such as customer-service chatbots, marketing content suggestions, simple demand forecasting, and basic cash-flow analysis.

At the same time, a wave of green transition has arrived. SMEs are increasingly compelled to think about energy use, emissions, waste, product life-cycle traceability, and the environmental standards of supply chains they participate in. As with digital transformation, SMEs do not need “super-green” mega-projects; they need small solutions to measure, optimize, and save—ranging from monitoring electricity consumption, supporting emissions data recording, to process adjustments that reduce material waste.

When both waves hit simultaneously, the need for SME transformation through “small value-added gains” becomes unmistakable. Yet do policy and markets actually enable SMEs to both reduce costs and transform—so they are not pushed out of supply chains due to missing data, insufficient transparency, or non-compliance with green standards?

The current state of dual transition: policy opens the way, SMEs remain stuck

Globally, surveys by the OECD, WEF, and APEC show that SMEs accelerated digitalization after COVID-19. Many became accustomed to remote work, online sales, cloud adoption, and collaboration tools. A significant share plans to increase spending on cybersecurity, cloud infrastructure, data, and even AI over the next 1–2 years. Yet many SMEs remain stuck at the level of “basic digitization”: they may have social media accounts, some accounting software, and online meeting tools, but lack a data strategy, lack the analytical capability to make data-driven decisions, and have not achieved systematic automation or AI adoption. Around 40% of European SMEs describe themselves as “not ready” for the next stage of digitization—an unmistakable warning signal.

For the green transition, the situation is even more complex. Many European studies indicate that SMEs account for roughly 60% of corporate-sector emissions, yet sit in a capability “lowland”: they lack capital, knowledge, and tools to measure and manage emissions. Despite growing pressures from net-zero targets, supply-chain standards, and new environmental regulations, most SMEs have changed perceptions more than they have implemented changes consistently and deeply.

Vietnamese SMEs face similar challenges, plus additional constraints of their own.

On the policy side, the government has used three key “levers” to energize the B2B technology market serving SMEs. First are digital transformation support programs, including “Make in Vietnam” platforms packaged for SMEs, through which hundreds of thousands of firms have accessed materials and tens of thousands have received training and advisory support. Second is a renewed legal framework and incentives for the digital industry, setting ambitious targets for the number of digital-technology firms, the share of the digital economy, and mechanisms to help SMEs purchase and trial technologies. Third is digital finance, including data-driven lending models that integrate e-invoice data, cash flows, and inventories to speed up credit scoring and reduce reliance on collateral. In parallel, policies and resolutions on green transition, sustainable growth, net-zero, and the circular economy are increasingly embedded across policy systems from central to local levels. SMEs in export-oriented sectors—agriculture, processing, textiles, and footwear—are beginning to feel pressure from traceability requirements, environmental standards, and ESG reporting demands from international buyers.

Investments of a few hundred million to a few billion VND for transformation are too small for banks or investment funds to treat as “major technology projects,” yet too risky for the cash flows of small firms.

Even so, most Vietnamese SMEs have only touched the surface of digital and green transitions. Over 60% report difficulties with technology investment costs; more than half face inertia from legacy operating habits and a shortage of internal personnel. In finance, SMEs’ access to bank credit remains far lower than that of large firms; the SME credit gap is estimated at tens of billions of dollars, and small, dispersed technology-upgrade projects are often absorbed into general working-capital needs. Green transition remains largely at the level of awareness and limited experimentation among more agile firms, while most have not transformed—some lacking even a shared “language” to measure emissions, energy, and waste.

Three gaps that lock SMEs out of small-scale transformation

Under pressure from both digital and green transitions, most SMEs struggle to begin with manageable small-scale projects because of three gaps.

First is the financing gap for “small value-added” digital–green projects. Investments of a few hundred million to a few billion VND for management systems, semi-automated lines, energy-measurement solutions, or traceability platforms are too small for banks or funds to regard as “large technology projects,” yet too risky for SME cash flows. The existing capital market is largely designed for short-term operating loans or large-scale investment projects, leaving a near-vacuum of specialized products for small digital and green transition packages that can be repaid gradually based on cash flows and realized value.

Second is the gap in absorptive capacity and in translating needs into projects. Most SMEs do not have a digital transformation lead, environmental specialists, or data teams. They feel pressure, see trends, and read about net-zero, AI, and ESG, but lack the capability to convert those pressures into concrete task lists, priorities, and feasible roadmaps. Meanwhile, technology providers and green-service vendors rarely understand the operational contexts of niche sectors, firm types, and localities in sufficient depth. This misalignment causes many potential partnerships never to materialize.

Third is the gap in the design of B2B technology products and intermediary services. Many solutions are still packaged as “selling software” or “selling devices,” with limited integration of financial models and weak linkage to operational outcomes. The role of intermediaries—entities that can assess firms’ digital and green maturity, design roadmaps, break them down into micro-projects, mobilize both vendors and capital providers, and coordinate implementation—has not yet been recognized as an essential component of the market.

These three gaps jointly explain why the SME sector, despite substantial demand for technology transfer to support dual transition, is still not served adequately or appropriately.

The opportunity to form a small-scale “dual transition” market

These very gaps also reveal a new opportunity.

At the level of small firms, the “dual transition”—digital and green—is not two separate stories. Digital technologies enable measurement and optimization of resources, energy, and emissions; the green transition in turn motivates SMEs to invest more seriously in data systems and governance. Many international organizations describe them as twins for SMEs: digital to see clearly, green to go further.

A tea business in Sơn La is digitizing its products to promote its brand within the IDAP project. Photo: IDAP.

For technology firms and B2B startups, this is a market for solutions that are small but smart: integrated management systems tracking both operations and environmental indicators; inventory–traceability platforms generating data sufficient for both customer requirements and bank assessments; AI tools that help SMEs understand and optimize energy costs and recommend saving scenarios; simple dashboards that let owners see revenue, costs, inventory, and electricity–water–material consumption on a single screen. If designed well, each such solution can deliver 4–15% cost savings in certain sectors, while reducing operational risk and opening doors to new markets.

For financial institutions and digital-finance platforms, “dual transition” creates room to link technology, data, and green performance to capital products. Using data from accounting systems, e-invoices, energy consumption, and traceability, banks can score credit more accurately and design specialized loans for digital–green investment. When debt repayment is tied directly to cost savings or value-added generated by technology, a “shared risk–shared benefit” model becomes more viable for SMEs.

For intermediaries—incubators, innovation centers, SME support organizations, industry associations—the opportunity is to become architects of dual-transition roadmaps that SMEs can realistically implement. This is highly practical work: segmenting firms by digital and green maturity, identifying the most reasonable “next small step,” matching SMEs with suitable technology providers, co-designing financing models with banks or funds, and tracking and measuring impacts so all parties can continuously adjust.

If we genuinely treat SMEs—and their small value-added technology-transfer needs—as central to digital and green strategies, the problem is no longer “how to run a few large pilot projects,” but rather: how to enable hundreds of thousands of small steps to happen continuously, safely, measurably, and with mutual learning.

If achieved, we would not only solve isolated problems for individual firms but gradually form a new market: a market for small value-added technology transfer for SMEs in the context of dual transition. This would become the true foundation of a green–digital innovation economy—not merely a handful of symbolic success stories.

Inequality risks if the system is designed poorly

However, the greater the opportunity, the clearer the challenges.

The first challenge is the speed of change. Digital transformation, green transition, data, AI, and compliance are unfolding simultaneously rather than sequentially. A small firm in a global supply chain may, within just a few years, face requirements to use e-invoices, report data, join ordering platforms, provide traceability, comply with environmental standards, and even demonstrate a credible emissions-reduction plan. With limited resources, many firms will feel “pushed into a corner.”

The second challenge is capability inequality. SMEs already comfortable with digital tools, with younger teams, and with at least one person who “speaks the language of technology,” will gain major advantages in dual transition. By contrast, firms lacking digital skills, capital, young talent, and foreign-language capacity must work much harder to avoid falling behind. Without appropriate support mechanisms, the gap between the two groups—in productivity, costs, quality, decision speed, and supply-chain compliance—will widen.

The third challenge is the risk of an unequal economy across different groups. At the top are firms (not necessarily large) that have digitized relatively well and are progressing toward data governance, automation, greener practices, and greater transparency—therefore more attractive to capital. At the bottom is a vast sea of small and micro businesses and household enterprises operating with Zalo, Facebook, Excel, and paper notebooks. They must cope with daily costs while learning new compliance requirements—often without guidance. If policies, support programs, and new B2B models focus only on the upper tier, we may produce “beautiful success stories,” but not a robust foundation for the entire system.

Finally, there is the challenge of designing policy and markets around the logic of small value-added gains. Current support systems—from science and technology funds, innovation funds, and digital-transformation programs to banks and investment funds—are accustomed to “projects that look good on paper,” with big indicators and compelling narratives. Yet the most important work of dual transition for SMEs lies precisely in the unglamorous: fixing a process, digitizing one step, piloting a small software tool, replacing a device, installing a sensor. These are not flashy, but accumulated at scale, they change national productivity.

If we truly consider SMEs—and their small value-added technology-transfer needs—as central to digital and green strategies, then the question is no longer “how to run a few large pilots,” but how to make hundreds of thousands of small steps happen continuously, safely, with measurement and learning. That is ultimately a story of ecosystem design—where technology, capital, intermediary capacity, and policy must work together, rather than operating in parallel as they often do today. □

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Published on Tia Sáng số 24/2025.