Digital transformation of family-owned small businesses: a nexus of internet entrepreneurial self-efficacy, artificial intelligence usage and strategic agility

Purpose The digital transformation of family-owned small businesses (F-OSBs) has become a critical area of research to maintain their economic contribution in today’s rapidly evolving digital landscape. This study examines the effect of internet entrepreneurial self-efficacy on the digital transformation of F-OSBs by mediating strategic agility and moderating artificial intelligence usage. Design/methodology/approach This study employed a cross-sectional survey design to collect primary data from 378 descendent entrepreneurs of F-OSBs in Pakistan’s five major cities. Findings The study revealed that leadership ability, internet marketing, technology utilization, and artificial intelligence used by the F-OSBs can contribute to their digital transformation, but e-commerce ability does not. The strategic agility of the descendant entrepreneur enhances the abilities of e-commerce, leadership, and technology utilization, leading to the digital transformation of F-OSB. However, strategic agility reduces the role of Internet marketing in digital transformation. Artificial intelligence usage moderates leadership’s ability to improve strategic agility but increases technology utilization for strategic agility and digital transformation of F-OSB. Practical implications The digital transformation through a combination of strategic agility and artificial intelligence can increase the F-OSBs' proactive approach to respond to changing market conditions even during economic recessions like COVID-19. Originality/value This study broadens the existing literature by examining the effect of descendent entrepreneur’s internet entrepreneurial self-efficacy, strategic agility, artificial intelligence usage, and their interplay on the digital transformation of F-OSB through the unified theory of acceptance and the use of technology.