Searching for a New Pathway Affecting New Venture Digitalization in SMEs

Abstract

Previous studies on new venture digitalization have claimed that digitalization is becoming more important for new ventures’ survival. However, it is unclear how factors such as digital strategy, organization’s bricolage behaviour, financial literacy and organization’s IT capabilities can influence the adoption of new venture digitalization and affect small and medium enterprises’ (SMEs) specific business activities. This study is aimed at filling the gap in the literature by creating an understanding of how businesses can utilize their IT capabilities to combine resources towards achieving optimal new venture digitalization. Using gender and educational level as moderators, we examine the effect of organization’s IT capabilities, digital strategy, financial literacy and organization’s bricolage behaviour on new venture digitalization. We find that digital strategy, organizational bricolage behaviour and organization’s IT capabilities have a significant effect on new venture digitalization. Furthermore, digital transformation strengthens SMEs’ ability and flexibility to address main business issues. However, financial literacy has no significant effect on SME digitalization. Also, the gender and educational level of SME entrepreneurs seemed not to be influenced by financial literacy and the adoption of digitalization. These findings increase our understanding of how digital strategy, organization’s bricolage behaviour, financial literacy and organization’s IT capabilities can influence the adoption of new venture digitalization.