Boosting SMEs’ digital transformation: the role of dynamic capabilities in cultivating digital leadership and digital culture

Digital transformation is crucial for the competitiveness of small and medium-sized enterprises (SMEs), yet many SMEs struggle with its implementation. Although digital leadership and digital culture are two established facilitators of digital transformation, their antecedents remain highly understudied. Drawing on the dynamic capabilities framework, we hypothesize that dynamic capabilities promote digital leadership and digital culture in SMEs. Our empirical study builds on questionnaire data from 98 SMEs located in Southern Germany. The findings support the enabling role of dynamic capabilities, indicating that dynamic capabilities enhance digital leadership and digital culture. Contrary to our expectations, the hypothesized mediation effects between dynamic capabilities, digital leadership, and digital culture were not supported, indicating that the translation mechanisms between digital leadership and digital culture might be less direct and straightforward than previously presumed. Thus, dynamic capabilities emerge as critical, yet separate, enablers of digital leadership and digital culture. By positioning dynamic capabilities as antecedents rather than outcomes, this study provides a novel perspective on central enablers of digital transformation, extending dynamic capabilities theory into this context. Overall, our findings offer important implications for facilitating SMEs’ digital transformation, highlighting dynamic capabilities as essential for fostering digital leadership and digital culture. Despite its significance, our study faces some limitations that hinder the generalizability of our findings, including relatively small sample size or specific sample context. Future research should replicate and extend our analyses using larger and more diverse samples.