Is digitalization a source of innovation? Exploring the role of digital diffusion in SME innovation performance

Sohaib S. Hassan (), Konrad Meisner (), Kevin Krause, Levan Bzhalava and Petra Moog
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Sohaib S. Hassan: University of Siegen
Konrad Meisner: University of Siegen
Kevin Krause: University of Siegen
Levan Bzhalava: Tallinn University of Technology
Petra Moog: University of Siegen

Small Business Economics, 2024, vol. 62, issue 4, No 10, 1469-1491

Abstract: Abstract Drawing on strategic management theory, this study examines the relationship between digitalization and innovation performance in small and medium-sized enterprises (SMEs). We hypothesize that SMEs with higher levels of digital diffusion have higher innovation performance, and that absorptive capacity moderates this relationship. To test this relationship, we use a sample of 1100 German SMEs from the Mannheim Innovation Panel of the Centre for European Economic Research. The results of the multinomial and multivariate probit estimations show that digital diffusion is a significant positive trigger of innovation in SMEs. We also find that absorptive capacity moderates the relationship between digital diffusion and innovation only in the case of product innovation and not for any other type of innovation. Finally, we discuss the implications of our study for research and practice.

Keywords: Innovation; Digitalization; Digital transformation; Dynamic capabilities; SMEs (search for similar items in EconPapers)
JEL-codes: L25 M10 O31 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11187-023-00826-7

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