THE INFLUENCE OF DIGITALIZATION ON THE INNOVATION STRATEGY OF SMALL AND MEDIUM-SIZED ENTERPRISES

University essay from Högskolan i Gävle/Avdelningen för ekonomi; Högskolan i Gävle/Avdelningen för ekonomi

Abstract: Aim: This study aims to increase the understanding of the influence of digitalization in the development of the innovation strategy of SMEs.  Method: The method used is a multi-case qualitative study using the inductive approach. Nine organizations were examined from three different countries, Sweden, India, and Nigeria, to give the study international comparison. Ten semi-structured interviews were conducted on managers and employees of the selected organizations for the study. Result & Conclusions: The study revealed that digitalization is an opportunity and a tool for developing innovation, which is crucial for the survival of SMEs. The study also showed that most SMEs do not have a clear innovation strategy, and are constrained by several factors such as; time, resources, competence, regulations, prioritizing tasks, managing the human capital and numerous others. However, SMEs can overcome their challenges by developing their dynamic capabilities and utilizing their resources with support from cluster organizations. Such support includes creating the awareness of digitalization, emphasizing the need and importance of crafting an innovation strategy, training, mentoring and funding.  Suggestions for future research: While the study examined SMEs in general, SMEs and clusters within a specific industry or sector are suggested for further study. Also, other factors that can influence the innovation strategy of SMEs should be examined. Furthermore, more research is needed to focus on the implementation of public policies to boost SME development in the area of innovation and the application of digital technologies, as SMEs are crucial to the growth of any economy, and the study revealed different levels and means of implementation of these policies. Contribution of the thesis: This study adds new insights to the literature on international business by conducting a multiple case study on SMEs and organizations supporting SMEs from three different countries with different economies and levels of advancement. A theoretical model was developed and has been to shown support existing studies illustrating that SMEs can adopt digitalization to develop an innovation strategy, through support from cluster organizations. The study provides new perspectives, some of which are ways for SMEs to manage digital transformation and some questions which are suggested for future research.

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