IDEAS home Printed from https://ideas.repec.org/a/wsi/jecxxx/v31y2023i02ns0218495823500073.html
   My bibliography  Save this article

The Impact of Digital Capability on Firm Performance and Growth in Incumbent SMEs

Author

Listed:
  • Sanna Joensuu-Salo

    (Seinäjoki University of Applied Sciences, Finland)

  • Marko Matalamäki

    (Seinäjoki University of Applied Sciences, Finland)

Abstract

This study examines the effect of digital capability on firm performance and firm growth. We apply the resource-based view and especially its expansion of the dynamic capabilities perspective to illustrate how digital capability is positively related to firm performance and firm growth, and how firm size is a relevant factor in explaining digital capability in incumbent SMEs. The context of this study is Finnish SMEs. The data were gathered from 242 SME owner-managers and analysed with structural equation modelling. The results show that smaller firms have less digital capability than larger SMEs and that smaller firms struggle with performance indicators. Digital capability is positively related to firm performance and firm growth. Our results indicate that although several factors explain and alter the course of firm growth, digital capability can boost the opportunity creation process, and aid survival in the face of competition. Digital capability is an important resource in SMEs and allows firms to safeguard the sustainability of their business model. We argue that digital capability is strongly related to SME’s management practices and SME owner/manager’s commitment to responding to digital transformation. This research sheds light on the importance of strategic leaders’ perceptions of digital capability on incumbent SMEs’ competitive advantage, and contributes both entrepreneurship theory and practice.

Suggested Citation

  • Sanna Joensuu-Salo & Marko Matalamäki, 2023. "The Impact of Digital Capability on Firm Performance and Growth in Incumbent SMEs," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 31(02), pages 211-232, June.
    • Handle: RePEc:wsi:jecxxx:v:31:y:2023:i:02:n:s0218495823500073
    DOI: 10.1142/S0218495823500073
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0218495823500073
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0218495823500073?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rahmani, Amir & Aboojafari, Roohallah & Bonyadi Naeini, Ali & Mashayekh, Javad, 2024. "Adoption of digital innovation for resource efficiency and sustainability in the metal industry," Resources Policy, Elsevier, vol. 90(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:jecxxx:v:31:y:2023:i:02:n:s0218495823500073. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/jec/jec.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.