Digitalization and Entrepreneurial Orientation : An exploratory study of digitalization in Swedish SMEs

Abstract: Digitalization has changed the business environment for all businesses, whether large or small. As the multitude of digital solutions for the business world continuously develop and evolve, investigating how companies can better take advantage of digitalization is crucial for gaining and retaining competitive advantage. The current research field regarding digitalization is rather novel and has been heavily focusing on how digitalization can improve businesses, and which technical solutions may work best for companies. Thus, switching the focus and studying how companies can improve their digitalization presents an alternative perspective for the current research. As the research field has stressed the importance of studying digitalization within SMEs due to the lack of knowledge and know-how in smaller companies, we examine digitalization in the context of SMEs. In order to examine aspects that may be beneficial for digitalization, we chose to use entrepreneurial orientation as a lense. Entrepreneurial orientation considers a set of characteristics resulting in a level of entrepreneurship in all sizes of companies, and it is found to improve business performance. In order to develop a comprehensive theoretical framework regarding entrepreneurial orientation and digitalization, the following research question was formed: How is the digitalization of Swedish SMEs facilitated by Entrepreneurial Orientation? For gaining a comprehensive understanding on how digitalization is implemented to the business models of SMEs in Sweden, and how entrepreneurial orientation facilitates the implementation of digitalization, our theoretical framework is built upon three theories: entrepreneurial opportunities; digitalization; and entrepreneurial orientation. The construct used for observing entrepreneurial orientation consists of five elements: proactiveness, risk taking, innovativeness, autonomy and competitive aggressiveness. The study was conducted in Sweden through semi-structured interviews. The data was collected from small- to medium sized companies that all had implemented digitalization in their business models and were mature. The interviewees were all in managerial positions in the firms, either as CEOs or COOs. The semi-structured interviews resulted in rich data that provided us with insights in terms of digitalization, how digitalization is implemented to the business models of SMEs, and how the elements of entrepreneurial orientation play a role in this implementation. The results indicated that digitalization begins by making smaller changes to business models (e.g. adopting business systems). Gradually, the existing systems are completely replaced by digitalization, and the companies move on to exploring digitalization in terms of new products and services. In this process, entrepreneurial orientation has a facilitating effect through i.a. higher levels of risk taking, emphasis on being early in adopting new solutions, improved productivity and efficiency through innovativeness, and increased trust for employees to make decisions and to perform projects autonomously. The only element that did not show any clear indications in terms of digitalization was competitive aggressiveness, as SMEs do not use digitalization directly as a source of competitive advantage, but rather as a way to improve other aspects in their business models and thereby gain competitive advantage.