Small and medium enterprise (SME) digitalisation involves the reinforcement, modification, and renewal of business models with the help of digital technologies. It is widely considered imperative for SMEs to stay relevant in the digital age. Yet, little is known about the conditions under which SME digitalisation improves the performance of SMEs in the IS literature. Guided by the SME literature, we postulate that the business value of SME digitalisation – based on its impact on improving financial firm performance – is dependent on two factors that are particularly relevant to SMEs due to their smallness and flexibility: radical orientation and organisational rigidity. Using data from multiple waves of surveys in 2019–2020 and archival financial data from Dutch SMEs, we demonstrate that the positive impact of SME digitalisation on performance improvement strongly depends on SME characteristics. SMEs who are oriented towards radical change and are more rigid are disadvantaged and attain lower returns on SME digitalisation.

Given the strategic importance of digital transformation, IS research pays meticulous attention to identifying its key drivers, including awareness, motivation, and capability. Nevertheless, the interaction and synergy among these drivers remain conceptually and empirically understudied. Our study tries to address this research gap. We first consider digital proactiveness as awareness, change commitment as motivation, and organizational flexibility as the capability driver of digital transformation. Drawing on systems theory, this study proposes the synergy of these three key drivers in steering digital transformation. Recent data from 206 Dutch firms support the existence of synergy, showing that digital proactiveness , change commitment, and organizational flexibility contribute jointly to digital transformation. Our analysis reveals that the effect of organizational flexibility on digital transformation is highest when digital proactiveness and change commitment are both at a high level. This study extends our understanding of the complementary and synergistic digital transformation drivers and broadens research in this tradition by considering the synergy of awareness, motivational, and capability drivers in driving digital transformation.

Information technology (IT) increasingly changes the ways through which firms develop and commercialize innovation. Prior studies have mainly focused on the direct effect of IT use on innovation performance, while little is known about how IT use for different purposes in the innovation processes leads to innovation performance at the organizational level. Drawing on the routine-based absorptive capacity (AC) framework, we conceptualize IT use for knowledge search and relational search as IT-enabled internal and external AC routines and unveil the hierarchical benefits resulting from IT use for innovation. We propose a model in which firms need to purposefully use IT to search for knowledge in the new product development process or search for relationships in the collaborative innovation process, leading to first-order benefits (i.e., internal innovation benefits and open innovation benefits) and, in turn, second-order benefits (i.e., innovation performance). By using a unique data set from 1028 German firms between 2003 and 2007, we find that IT use for knowledge search enhances internal innovation benefits, whereas IT use for relational search increases open innovation benefits. More importantly, internal and open innovation benefits mediate the relationships between IT use for knowledge and relational search and various innovation performance measures. Taken together, our findings shed light on a deeper understanding of the digital innovation value chain.

Firms’ use of information technology (IT) has been suggested to be an important enabler of knowledge production, leading to innovation outcomes in the form of patent inventions. However the innovation process through which IT use influences patent inventions is largely unclear. We draw on the knowledge recombination perspective and develop a model that explains the innovation process through which IT use influences innovation outcomes by looking into a firm’s efforts to recombine existing knowledge (i.e., knowledge recombinant intensity) and the scope of knowledge that is recombined by a firm (i.e., knowledge recombinant diversity). We also distinguish innovation outcomes in terms of patent quantity and quality. Using a large-scale panel dataset, we show that IT use has a stronger impact on knowledge recombinant intensity relative to knowledge recombinant diversity. Moreover, knowledge recombinant intensity and knowledge recombinant diversity play key mediating roles in the relationships between IT use and patent inventions. The impact of IT use on patent quantity is partially mediated, while the impact of IT use on patent quality is fully mediated. Our findings indicate that while IT use can directly affect patent quantity, its impact on patent quality must be channelled through a firm’s knowledge recombinant efforts and scope.