Leveraging Digital Platforms Through Business Model Innovation in SMEs : A Capability Perspective

Abstract

Digital transformation affects all industries and becomes crucial to firms' success. Yet, especially small and medium-sized enterprises (SMEs) lack the competency and capacity to digitalize their processes. Importantly, mere technological solutions are not sufficient for sustained competitive advantage. Firms need to adjust their business model to benefit from digital technologies. We investigate SMEs' capabilities to leverage digital platforms through business model innovation. Our analysis is based on a multi-year case study of a business network of four textile firms, who together built and introduced a platform to collaborate on new product developments. The extent of changes in these firms' business models varies significantly after implementing a digital collaboration platform. We identify critical capabilities enabling firms to leverage the platform through changes in business models. More importantly, we find SMEs' operational capabilities closely related to dynamic capabilities, ultimately determining how firms leverage digital platforms.