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Champions of digital transformation? The dynamic capabilities of hidden champions

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  • Wittenstein, Daniel

Abstract

Hidden Champions (HCs) are small- and medium-sized global market leaders that repeatedly show superior innovation capabilities and economic performance. However, empirical evidence on how the digital transformation may affect their success story remains scarce. I argue that HCs show stronger dynamic capabilities which enables them to be better prepared for the digital transformation than non-HCs firms. To test this hypothesis, I use data from the Mannheim Innovation Panel. This allows me to identify a representative set of German HCs and develop a firm digital readiness index, reflecting the use of important digital technologies and applications. An instrumental variable estimation suggests that higher levels of digital readiness lead to an increase in share of revenue from innovations and productivity. In combination with higher average digital readiness levels of HCs compared to non-HCs, my findings indicate that HCs may indeed be better prepared for the digital transformation.

Suggested Citation

  • Wittenstein, Daniel, 2020. "Champions of digital transformation? The dynamic capabilities of hidden champions," ZEW Discussion Papers 20-065, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:20065
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    Cited by:

    1. Evgeny V. Popov & Viktoria L. Simonova & Vitalii V. Cherepanov, 2021. "Digital maturity levels of an industrial enterprise," Journal of New Economy, Ural State University of Economics, vol. 22(2), pages 88-109, July.
    2. Julian Schenkenhofer, 2022. "Hidden champions: a review of the literature & future research avenues," Management Review Quarterly, Springer, vol. 72(2), pages 417-482, June.

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    More about this item

    Keywords

    hidden champions; digital transformation; digital readiness; digital preparedness; performance effects; innovation; dynamic capabilities; instrumental variable estimation;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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