Digital Transformation Driving SME Business Model Innovation: A Dynamic Capabilities Perspective

The purpose of this paper is to propose a research model to investigate the relationships between dynamic capabilities, business model innovation, and business performance. The moderating role of digital transformation in the research model is also examined. A total of 262 managers in Chinese small and medium-sized enterprises (SMEs) were enrolled via an online questionnaire. Data is scrutinized by partial least square structural equation modeling (PLS-SEM) using SmartPLS 3.0. The findings of this study reveal that dynamic capabilities can positively affect business model innovation and business performance. Furthermore, business model innovation partially mediates the relationship between dynamic capabilities and business performance. Meanwhile, digital transformation has a positive moderating role in the aforementioned relationships. These findings bridge the research gaps in extant literature and contribute to theoretical and practical implications for SMEs.