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

Author

Listed:
  • Sohaib S. Hassan

    (University of Siegen
    Constructor University)

  • Konrad Meisner

    (University of Siegen)

  • Kevin Krause

    (University of Siegen)

  • Levan Bzhalava

    (Tallinn University of Technology
    University of Turku)

  • Petra Moog

    (University of Siegen
    Institut Für Innovation Und Entrepreneurship, ZHAW School of Management and Law)

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.

Suggested Citation

  • Sohaib S. Hassan & Konrad Meisner & Kevin Krause & Levan Bzhalava & Petra Moog, 2024. "Is digitalization a source of innovation? Exploring the role of digital diffusion in SME innovation performance," Small Business Economics, Springer, vol. 62(4), pages 1469-1491, April.
    • Handle: RePEc:kap:sbusec:v:62:y:2024:i:4:d:10.1007_s11187-023-00826-7
    DOI: 10.1007/s11187-023-00826-7
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    More about this item

    Keywords

    Innovation; Digitalization; Digital transformation; Dynamic capabilities; SMEs;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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