Digital barriers and capabilities in aspirant emerging-market SMEs: A resource-adaptive dynamic capabilities model of transformation phases

Digital transformation is disruptive yet invaluable, but existing research tend to depict it as a linear and static progression, paying limited attention to the evolving combinations of resources and capabilities needed to sustain momentum as organisational routines, processes, and culture shift. These limitations are especially evident in resource-constrained SMEs in China's traditional sectors, an aspirant emerging market where digital transformation is promoted as a national priority. Pressed to compete digitally with limited experience, SME managers and employees confront cognitive and micro-foundational barriers that differ substantially from those in advanced economies. However, few studies examine how key SME stakeholders interpret digital change, overcome cognitive bias, and develop the capabilities required for meaningful transformation. Using a multi-case study and in-depth interviews, we investigate the temporal dynamics of digital transformation through the lens of dynamic capabilities. We identify four micro-foundational capabilities that shape SMEs' capacity to sense opportunities, mobilise resources, reconfigure operations, and sustain their transformation trajectory. The findings also reveal that digital transformation unfolds across four cyclical phases: exploring, scaling, optimising, and sustaining. By developing a process-based, resource-adaptive model and a typology of phase-specific triggers, capability requirements, and stakeholder roles, we reconceptualise digital transformation in traditional SMEs in aspirant emerging markets as a fluid and cyclical process in which each phase presents distinct challenges that require synchronised, dynamic, and adaptive micro-foundational capabilities.