DIGITAL BUSINESS MODEL INNOVATION IN SMEs: THE ROLES OF ENTREPRENEURIAL LEADERSHIP AND GOVERNMENT SUPPORT

Abstract

Digital business model innovation (DBMI) is a new business model domain which is increasingly attracting interest in an attempt to resolve challenges to digital transformation. It is known as a crucial research field of business model. However, the empirical studies on SMEs focusing on digital business model innovation in a developing country are relatively scant. Previous studies have concentrated mostly on any two or three elements of DBMI. Thus, this research attempts to bridge the knowledge gap by focusing on all elements of DBMI to reveal valuable insights. Grounded in upper echelon and institutional theories, this study investigates the relationship between entrepreneurial leadership, government support with digital business model innovation (DBMI). Preliminary interviews were conducted with four members of top management from different SMEs in Malaysia to determine whether the literature and anecdotal evidence can reflect real-life business circumstances. The empirical data were collected from 132 Malaysian small and medium-sized enterprises (SMEs) using the purposive sampling technique. As predicted, the empirical findings show that entrepreneurial leadership and government support positively affect DBMI (value creation innovation, value proposition innovation, value delivery innovation, and value capture innovation). This research is novel as it the first study unravelling the pivotal role of entrepreneurial leadership and government support in promoting DBMI adoption to achieve superior performance in the digital sphere. It bridges the literature gaps on the driving factors of DBMI adoption. Present study contributes to the DBMI literature with the empirical evidence from SMEs. This study would complement prior findings on the role of entrepreneurial leadership and government support in business model innovation, e-business and e-commerce. The findings of the present study have various implications for SMEs and practitioners that plan to adopt DBMI in various industries. This model can be incorporated as a strategy by SMEs in both developing and developed countries to increase their competitiveness. Future studies could examine other factors that may contribute to DBMI and its associated outcomes in other contexts.