Abstract
Small and medium-sized enterprises (SMEs) are regarded as the backbone of most economies worldwide. They are key role players in job creation, economic growth and poverty alleviation. SMEs face many challenges such as resource constraints; a lack
of skills, innovation, digital skills and finances; and continuous changes in the business
environment. One such change is the Fourth Industrial Revolution, also referred to as
Industry 4.0. Industry 4.0 offers many advantages, yet it has disrupted SMEs in all industries on account of the many challenges that SMEs face. SMEs lag in the adoption of digital technologies and are still using conventional methods as part of their business models, which poses a threat to their survival and competitiveness. Industry 4.0 comprises many constructs, including digitalisation and digital transformation. While digitalisation and digital transformation require a business to make changes to its business model, and business model innovation (BMI) offers such an opportunity, no study has combined the BMI process with digital transformation to determine if SMEs are digitally transforming their business models. The overall aim of the study was to determine the degree to which South African and Dutch SMEs are digitally transforming their business models. To achieve the overall objective, the study
aimed to (1) review existing literature in the field of digitalisation, digital transformation, and business model innovation, (2) review the current state of the use of digitalisation and business model innovation in South African and Dutch SMEs, (3) develop a conceptual model to assess if South African and Dutch SMEs are achieving business
model innovation through digital transformation and determine how this affects their
overall business performance and (4) assess whether South African and Dutch SMEs
are achieving business model innovation through digital transformation and determine the impact this has on their overall business performance.
This study followed a five-stage approach. The first stage consisted of a preliminary
literature review to explore current research and debates on digitalisation, digital transformation and BMI, with a particular focus on SMEs. In the second stage, a
narrative review was conducted to examine the literature with the aim of identifying
and analysing the constructs underlying the three concepts of digitalisation, digital transformation and BMI. The third stage was a Delphi study conducted with South African and Dutch SMEs and scholarly experts in the closely related fields of
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entrepreneurship, technology, business management and innovation to identify the
main and sub-factors that enable digital transformation for BMI in SMEs. The fourth
stage was a systematic review to identify the dimensions that are included in digital maturity models and to determine ways in which BMI is achieved. The last stage consisted of developing and empirically testing a research model based on the results
of stages 3 and 4.
The narrative review conducted in stage 2 was qualitative in nature; thematic analysis
was used to analyse the findings against the aim of the study, which was to fill the gap
on ways in which BMI should be pursued through digital transformation, by developing a conceptual framework. The findings of the narrative review suggest that digitalisation and digital transformation require digital capabilities and a digital strategy. In addition,
business model innovation requires digital transformation in the realms of customercentricity, resources, processes and profit. These findings led to the formulation of several propositions, by which the commonalities between the three constructs were also mapped. This resulted in the development of a conceptual framework which can assist in the development of future instruments that can guide businesses to digitally
transform existing business model elements.
Following the narrative review, a Delphi study was conducted. The Delphi study
identified two important internal organisational factors that drive digital transformation for BMI in SMEs: (1) a renewal of business strategy and (2) a renewal of business
culture. Within each of these internal organisational factors, several sub-factors were identified.
The Delphi study was followed by two systematic reviews. The first systematic review identified the dimensions that are included in digital maturity models used to measure the level of digitalisation in business models of SMEs. The results of the review identified nine dimensions: (1) strategy, (2) leadership, (3) culture, (4) organisation,
(5) people/employees, (6) technology, (7) processes, (8) products and (9) customers. Furthermore, 16 parameters were identified that measure each of the nine
dimensions. The second systematic review aimed to determine how SMEs can achieve BMI. This review focused on the activities, steps and tools needed to successfully achieve BMI. The study placed specific emphasis on the inclusion of
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digital technology in these frameworks. The results show that the most common BMI frameworks in literature include (1) the Business Model Canvas, (2) the St. Gallen Business Model Navigator and (3) the Cambridge business model innovation framework. Yet only a few studies incorporate digital technologies as a single dimension into the BMI framework.
The findings of the aforementioned studies led to the development of a research model. This research model was developed and empirically tested on South African and Dutch SMEs. The results indicate that BMI through digital transformation has a positive impact on the overall business performance of SMEs. In addition, the flexibility
of the organisational structure and strategic renewal acts as moderator between the relationship of BMI through digital transformation and business performance.
The overall findings of the study expand the existing body of knowledge by filling the
knowledge gap on digitalisation, digital transformation and BMI. The proposed framework that resulted from this study guides SME owners and managers in ways to
achieve BMI through identifying potential areas to integrate digital technologies, which is unique in its nature. In addition, the study offers insight into the most important dimensions that contribute to SMEs’ overall level of digitalisation, which is critical to measure the level of digitalisation in SMEs business models. Following this, this study
is one of the first to conduct an empirical research study to assess the degree to which South African and Dutch SMEs are digitally transforming their business models. The
findings emphasise the importance of digital transformation of the business model, as
this will positively influence overall business performance. SME owners and managers
can therefore use the measuring instrument to assess the degree to which their
business model has been digitally transformed. The instrument could also highlight areas of concern and for improvement.
Keywords: SMEs; Business model innovation; Digitalisation; Digital transformation