Digital Transformation of Small and Medium-Sized Enterprises as an Innovation Process: A Holistic Study of its Determinants

Abstract

This paper analyses the factors that determine the process of digital transformation of small and medium-sized enterprises (SMEs). To this end, digital transformation is conceptually approached as an innovation process in a company that affects its products and processes. The proposed theoretical framework integrates, from a holistic perspective, three dimensions in the digital transformation process in SMEs: (1) the technological dimension; (2) the human capital dimension; and (3) the organizational/relational dimension. Furthermore, these dimensions manifest themselves at three levels of analysis: (a) the entrepreneur/manager; (b) the firm; and (c) the environment external to the firm. The empirical research presented in this paper is based on a representative survey of SMEs in Spain. The results highlight that both internal skills and external sources of knowledge regarding information and communication technology (ICT) through consultants, suppliers, universities and technological centers constitute critical and complementary drivers for digital innovation in SMEs. The analysis also reveals the importance of an explicit digital transformation strategy in the company and the distribution of responsibilities regarding digitalization beyond the leadership of the entrepreneur/manager. Likewise, the complex use of the Internet by entrepreneurs/managers is observed to favor digital product innovation, whereas their growth ambition stimulates digital process innovation. The results also indicate that the relevance of the aforementioned determinants varies somewhat for microenterprises compared to other SMEs.