Abstract
Purpose: Small and Medium Enterprises (SMEs) are considered as the backbone of the economy, however they face many difficulties and challenges for their survival. Adapting to changing technology is one of the primary challenges SMEs face. Globally new technologies such as social media and e-commerce have become the trend in contemporary business activities in Business to Consumer (B2C) communications for SMEs. The study aims to find the factors affecting to the adoption of technology in SME sector in an emerging economy, Sri Lanka.
 Design: The study utilized Technology, Organizational, and Environmental (TOE) model. The data was collected from 102 SME owners in Western province Sri Lanka who are registered as SME sectors with less than 50 employees. Qualitative data were collected from 7 SME owners through semi-structured interviews to evaluate new opportunities can gain via technology adaptation and to evaluate the impact of performance via technology adaptation in SME sector in Sri Lanka.
 Findings: Descriptive statistics revealed that there are substantial disparities in how organizations and the environment adapt to new technologies. The ordinal regression analysis emphasised that organizational and environmental factors significantly influence on adaption of technology. Content analysis revealed that SMEs have gained many new opportunities via adaption of technology such as expand their businesses from local to global using e-commerce platform and online money transactions. Social media has made direct business to business instant contact. Further, transparency of business transactions increase trust with suppliers and customers.
 Implications: The SME sector needs both new technology and updates existing technology status and guided towards modernization and continuous improvement process. Finding of this study will give policy makers and government officials on strengthening and arming SME sector with technology to face challenge and complete with local and international competition.
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