Influence of digital ambidextrous capabilities on SMEs' transformation performance: The mediating effect of business model innovation

As the global digital transformation process accelerates, how SMEs can successfully achieve digital transformation is currently an important research question in the field of strategic management and a real-life dilemma that entrepreneurs need to address. This study classifies business model innovation into market-driven business model innovation and driving-market business model innovation based on market orientation theory. The relationship between digital ambidextrous capabilities, business model innovation and transformation performance is explored according to the paradigm of ‘capability-behaviour-performance’. This study used SEM and fsQCA to analyze 289 questionnaires collected from middle and senior managers of Chinese SMEs. The results show that digital exploitation capability is positively associated with market-driven business model innovation, while digital exploration capability is positively associated with driving-market business model innovation. In particular, business model innovation plays a fully mediating role in the process of digital ambidextrous capabilities enhancing the transformation performance. Our findings shed new lights on the current debate surrounding the digital transformation of SMEs and will be instructive for both academics and business managers.