Dynamic Capabilities and Business Model Innovation : A multiple case study in SMEs

Abstract: Background: With the emerging and disruption of new technologies, digital transformationhas heavily impacted on businesses of all kinds, especially SMEs. Consequently, organizations must innovate their business model to adapt the changeable environment in many ways such as providing new products & services, developing new markets, more collaborations with partnership, and investing digital tools to deliver more value to the customers. It is therefore necessary for organizations and academicians to understand the dynamic capabilities framework for the business model innovation. Purpose: The purpose of this study is to find out the role of dynamic capabilities in the digital transformation of business model innovation (BMI) in SMEs. During this process, we also explore digital transformation and make future explanations of the key elements of BMI in our case companies. Method: In order to understand how SMEs build up capabilities for digital transformation inthe business model innovation, we carry out this study by using semi-structured interviews with open answered questions. The interviews consisted of 6 participants in various senior management positions at 5 case companies. The participants are either the company owners or the department managers. Findings: From the interviews, we studied that all the case companies had been in process of digital transformation for a certain extent. In terms of their business model, the digitaltransformation reflects in 3 domains: new digital products & services, new markets & segments,and key partnerships. In addition, companies build dynamic capabilities for their digital business model via a total of 8 activities, including digital scouting, digital learning & planning, digital mind-set, agile working, investment in digital assets, collaboration with partners, creating digital culture, and redesigning organizational structure. Relevant management skills are the enablers throughout the whole innovation process. Finally, our study studies theenabling role of management in building dynamic capabilities and reacting to change.