Driving SME success through digital readiness and dynamic capabilities in propelling business process digitalization and performance

Abstract

Purpose This study aims to investigate the influence of digital readiness, strategic foresight and strategic flexibility, in driving business processes digitalization (BPD) and performance of small and medium enterprises (SMEs). Design/methodology/approach A conceptual framework is developed through integrating organizational readiness theory (ORT) with the dynamic capabilities view (DCV). The hypotheses are tested using survey data collected from 284 SMEs in Oman. The dataset is analyzed using partial least squares structural equation modeling with the Smart-PLS software. Findings The analysis reveals that digital readiness and strategic flexibility both have a positive influence on BPD and performance. However, strategic foresight has no effect on the same. Moreover, BPD was found to be positively associated with performance. Finally, BPD mediates the effect of digital readiness and strategic flexibility on firm performance but does not mediate the link between strategic foresight and performance. Practical implications This study offers valuable insights for policymakers focused on fostering SME development, as well as for owners and managers of such enterprises, by identifying key drivers of BPD. It also highlights the role of digital readiness, strategic flexibility and BPD in enhancing performance. The findings emphasize the importance of developing and nurturing these critical features to support the digital transformation of SMEs, and ensuring their success. Originality/value This study makes two key contributions. First, to the best of the authors’ knowledge, it is the first study to integrate ORT with DCV, offering new insights into how readiness and dynamic capabilities enhance BPD and performance in SMEs. This approach emphasizes the critical relationship between readiness, dynamic capabilities and BPD in boosting SME performance. Second, this study highlights the mediating role of BPD as a vital link between digital readiness, strategic flexibility and performance outcomes.

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