Digital business model innovation among small and medium-sized enterprises (SMEs)

Abstract

Digital business model innovation (DBMI) has been acknowledged as a new business norm which allows for increased competitiveness. By adopting the dynamic capabilities theory, this research aims to investigate the adoption of DBMI among small and medium-sized enterprises (SMEs) in a developing country. The qualitative data were collected using semi-structured virtual interviews with SMEs. The findings revealed that the SMEs have redesigned their DBMI through value creation innovation, which refers to the use of new digital technology, new capability, and strong collaboration with new partners to streamline the business processes. SMEs innovate their value proposition by focusing on new product and service offerings and creating profitable customer relationships. Interestingly, SMEs also implement value delivery innovation, utilizing new delivery channels to target new market segments. In terms of value capture innovation, SMEs are concerned with obtaining new sources of revenues at a lower cost structure. Research studies on DBMI in Malaysia are scarce. The originality of this research lies in the exploration of DBMI in the real-life business context, and the insights it will provide to SMEs and practitioners in the midst of adopting DBMI. The findings offer valuable insights for SMEs, practitioners, and policymakers in emerging economies.