Business model pivoting and digital technologies in turbulent environments

Abstract

PurposeThis paper aims to draw on the Dynamic Capabilities View to discuss how small and medium enterprises (SMEs) use digital technologies to develop digital capabilities that will enable them to change their current business model and trajectory, that is, to pivot-within turbulent environments, and subsequently to survive and grow.Design/methodology/approachThe authors collected and analysed qualitative data from 26 SMEs in South-East England that have used digital technologies to pivot during the pandemic. The data was collected via in-depth semi-structured interviews. The authors analysed the data by creating first-order concepts, second-order themes, and aggregating dimensions.FindingsThe findings suggest that (1) digital technologies enable pivoting by facilitating the creation of the following digital capability types: “digital sensing”, “digital seizing” and “digital transforming”; (2) Each of these digital capability types is underpinned by micro-foundations (sub-capabilities) and shaped by the digital culture of the organisation. (3) these capabilities are triggered by the turbulent environment and the existing digital technologies, and are shaped by the digital culture.Originality/valueThe authors contribute to the literature of digital entrepreneurship as the authors illustrate (1) how the micro-foundations of digital capabilities, as facilitated by digital technologies, assist pivoting; and (2) the process from key activities during pivoting to second-order themes that represent micro-foundations to digital (dynamic) capabilities for pivoting in turbulent environments. The study highlights the importance of digital pivoting for businesses in the UK Southeast that have many aspirations for growth and innovation, whilst striving to address multiple challenges including digital divide and literacy, inflation and cost of living crisis, as well as supply chain issues.

Pivoting business models in SMEs

“…The advent of new technologies (e.g., apps, big data analytics, and social media) provides new avenues for SMEs to decipher trends in the marketplace, interact with customers, improve business processes, and customize offerings. In this paper, Balta et al (2023) investigate how digital technologies foster the development of dynamic capabilities in SMEs, thereby facilitating their ability to pivot in volatile environments. To address their research goals, the authors interviewed twenty-six SME owners/entrepreneurs based in the southeast United Kingdom.…”

Building new business models in MSMEs: digital capabilities, global value chains integration and the moderating role of entrepreneurial failure

“…According to Teece (2007), a company's dynamic capabilities are those that enable the integration, construction and reconfiguration of internal and external resources/competencies to deal with and potentially shape ever-changing business environments. The dynamic capabilities view (Teece et al, 1997) explains how companies respond to rapid and technological changes, extending the RBV (Barney, 1991(Barney, , 2001 that helps understand how different, difficultto-imitate resources are combined to create capabilities that generate superior performance (Balta et al, 2023). Teece (2016) argues that a dynamic capability is a higher-order capability that serves as a theory of competitive advantage for a company operating in a highly dynamic and turbulent environment.…”

“…The integration of digital technology has transformed traditional dynamic capabilities, creating multiple dimensions of digital capabilities with an impact on entrepreneurship and sustainable business model innovation (Anwar et al, 2022;Evans et al, 2017;Gao et al, 2022;Wang et al, 2023). The practical application of digital technology to dynamic capabilities, particularly in stages ranging from creativity to production, plays a crucial role in data collection and processing, formulating new value propositions and promoting an efficient and cyclical value creation process (Audretsch et al, 2022;Balta et al, 2023;Gao et al, 2022).…”

“…Innovative business models for MSMEs cover a wide range of strategies, including customer-centricity, digital transformation, innovation and collaboration, sustainability and corporate social responsibility, optimization of the value chain, sharing economy and peer-to-peer models (Ferreira et al., 2022;Huikkola et al., 2022). Digital capabilities are a critical factor in the competitiveness, innovation and growth of MSMEs, enabling them to be better positioned to navigate the challenges and opportunities presented by the digital economy (Aloulou et al, 2023;Balta et al, 2023;Wang et al., 2023). They are understood as the organization's ability to effectively leverage digital technologies and tools to enhance various aspects of their operations, encompassing a range of skills, resources and strategies (Balta et al, 2023;Wang et al., 2023;Eechoud and Ganzaroli, 2023).…”

“…Digital capabilities are a critical factor in the competitiveness, innovation and growth of MSMEs, enabling them to be better positioned to navigate the challenges and opportunities presented by the digital economy (Aloulou et al, 2023;Balta et al, 2023;Wang et al., 2023). They are understood as the organization's ability to effectively leverage digital technologies and tools to enhance various aspects of their operations, encompassing a range of skills, resources and strategies (Balta et al, 2023;Wang et al., 2023;Eechoud and Ganzaroli, 2023). Global value chain integration opens new opportunities, diversification and learning experiences that can shape innovative approaches.…”