Digital innovation affects SMEs’ development, efficiency, competitiveness, and sustainability, according to this study. SMEs are vital to economic growth, but many confront structural barriers like market, finance, and managerial capacity. In response to these problems, digital innovation has transformed traditional business models using e-commerce platforms, cloud computing, mobile apps, and digital payment systems. This conceptual and literature-based study uses the Resource-Based View to describe how digital innovation improves SME performance as a strategic organisational resource. The investigation reveals that digital innovation boosts SME growth through market access, operational efficiency, customer interaction, product innovation, and financial inclusion. The effectiveness of these results depends on enabling elements like digital infrastructure, management ability, financing, and supporting regulatory frameworks. Despite its potential benefits, the study found high implementation costs, low digital skills, cybersecurity concerns, aversion to change, and weak institutional support systems hinder SMEs’ digital adoption. These limits are especially severe in emerging economies, where infrastructure and socioeconomic issues hinder digital integration. The study also suggests that context-specific research and post-adoption integration and long-term sustainability outcomes are lacking in the literature. The study found that digital innovation may boost SME growth and resilience, but it requires internal capabilities and external enabling conditions. To maximise digital transformation benefits for SMEs, it advises improved infrastructure, digital skills training, targeted financial support, strengthened institutional frameworks, and increased public-private collaborations. 

Keywords: Digital Innovation, Growth, Small and Medium, Enterprises.