Digital transformation of SMEs’ Business Models in the post-pandemic era An Effectuation Perspective
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Аннотация
Introduction 1
Chapter 1. Description of the research background 2
1.1. Research background 2
1.1.1. Macro-background 2
1.1.2. Theoretical background 3
1.2. Purpose and significance of the study 5
1.3. Research Methodology and Framework 6
1.3.1. Research methodology 6
1.3.2. Research roadmap 6
Chapter 2. Literature review 7
2.1. Definition of selected concepts 7
2.1.1. Definition of digitization 8
2.1.2. Definition of digital transformation 8
2.1.3. Business models 9
2.2. Small and medium-sized enterprises (SMEs) 11
2.2.1. Definition of SMEs 11
2.2.2. Digital transformation of SMEs 11
2.3. Effectuation Theory 12
2.3.1. Definition of effectuation 12
2.3.2. Digital business model transformation from an effectuation perspective 15
Chapter 3. Research design 16
3.1 Research hypothesis and model 16
3.1.1. Effectuation and SME’s Digital Transformation Performance 16
3.1.2. Dynamism and complexity positively moderate on the relationship between effectuation and
SME business model digital transformation performance 17
3.1.3. Research theoretical model 18
3.2 Questionnaire Design 19
3.2.1. Object of research 19
3.2.2. Data collection 19
3.2.3. Research method 2 0
3.3. Selection and measurement of variables 2 1
3.3.1. Variable measurements 2 1
3.3.2. Independent variable - Effectuation 2 1
3.3.3. Dependent variable - SME digital transformation performance 2 1
3.3.4. Moderating variable - Environmental dynamism and complexity 2 2
3.3.5. Control variables 2 2
Chapter 4. The empirical analysis 2 3
4.1. Reliability Analysis and Factor Analysis of the scale 2 3
4.2. Reliability tests and factor analysis for each scale dimension 2 9
4.3. Statistical analysis of data 3 4
Chapter 5. Discussion and conclusions 4 0
5.1. Conclusions of the study 4 0
5.1.1. Effectuation is a multidimensional concept 40
5.1.2. Significant positive relationship between effectuation and SME digital performance 4 0
5.1.3. Environmental uncertainty negatively moderate on the relationship between effectuation and
SME digital performance 4 1
5.2. Research contributions and shortages 4 1
5.2.1. Research contributions 4 1
5.2.2. Research Shortages 4 2
References List 4 3
Appendix 5 1
Introduction 1
Chapter 1. Description of the research background 2
1.1. Research background 2
1.1.1. Macro-background 2
1.1.2. Theoretical background 3
1.2. Purpose and significance of the study 5
1.3. Research Methodology and Framework 6
1.3.1. Research methodology 6
1.3.2. Research roadmap 6
Chapter 2. Literature review 7
2.1. Definition of selected concepts 7
2.1.1. Definition of digitization 8
2.1.2. Definition of digital transformation 8
2.1.3. Business models 9
2.2. Small and medium-sized enterprises (SMEs) 11
2.2.1. Definition of SMEs 11
2.2.2. Digital transformation of SMEs 11
2.3. Effectuation Theory 12
2.3.1. Definition of effectuation 12
2.3.2. Digital business model transformation from an effectuation perspective 15
Chapter 3. Research design 16
3.1 Research hypothesis and model 16
3.1.1. Effectuation and SME’s Digital Transformation Performance 16
3.1.2. Dynamism and complexity positively moderate on the relationship between effectuation and
SME business model digital transformation performance 17
3.1.3. Research theoretical model 18
3.2 Questionnaire Design 19
3.2.1. Object of research 19
3.2.2. Data collection 19
3.2.3. Research method 2 0
3.3. Selection and measurement of variables 2 1
3.3.1. Variable measurements 2 1
3.3.2. Independent variable - Effectuation 2 1
3.3.3. Dependent variable - SME digital transformation performance 2 1
3.3.4. Moderating variable - Environmental dynamism and complexity 2 2
3.3.5. Control variables 2 2
Chapter 4. The empirical analysis 2 3
4.1. Reliability Analysis and Factor Analysis of the scale 2 3
4.2. Reliability tests and factor analysis for each scale dimension 2 9
4.3. Statistical analysis of data 3 4
Chapter 5. Discussion and conclusions 4 0
5.1. Conclusions of the study 4 0
5.1.1. Effectuation is a multidimensional concept 40
5.1.2. Significant positive relationship between effectuation and SME digital performance 4 0
5.1.3. Environmental uncertainty negatively moderate on the relationship between effectuation and
SME digital performance 4 1
5.2. Research contributions and shortages 4 1
5.2.1. Research contributions 4 1
5.2.2. Research Shortages 4 2
References List 4 3
Appendix 5 1
In the development of the world economy, SMEs play a unique and important role in increasing employment, stabilizing growth and promoting innovation. The impact of COVID-19 on various types of economic entities around the world shows an unbalanced character: SMEs is smaller in capital size and less able to cope with risks, and therefore suffer more from the impact of the epidemic. Many large enterprises have a relatively high level of digital transformation and are able to quickly adjust their production and management strategies and production plans, and are less affected by the pandemic. However, many small and medium-sized enterprises have a lower level of digitalization and have experienced lower operating income and difficulties in resuming production and work. In the post-pandemic era, it is significant to accelerate the digital transformation of SMEs. On the one hand, digitization can help SMEs manage better with the effects of uncertainty; On the other hand, it is a crucial tool for businesses to gain future sustainable competitiveness.
At the same time, we must be aware of the reality that despite the importance of digital transformation is self-evident, in reality, not all enterprises are actively involved in the transformation. In the case of China, only about 25% of SMEs have implemented the transformation so far. According to existing studies, the reasons are mostly due to the poor digital technology base, lack of capital and digital talent, etc.
Based on the above background, we would like to further understand how SMEs is surviving in the face of the huge impact of the pandemic for them. How do they participate in the current wave of digitalization? What is the decision logic of entrepreneurs in this process?
In this thesis, we will develop our research based on entrepreneurial theory-effectuation theory. Specifically, we will explore the relationship between entrepreneurs’ decision logic and the digital performance of SMEs’ business model transformation; Then, we will try to analyze the impact of environmental uncertainty on this relationship from a microscopic perspective. In terms of specific research methodology, we will use quantitative analysis to verify and answer the queries we have raised. The final results, on the one hand, we expect to expand and enrich the research content and context of effectuation theory; On the other hand, we also hope to provide support to SMEs in their digital transformation decision-making.
At the same time, we must be aware of the reality that despite the importance of digital transformation is self-evident, in reality, not all enterprises are actively involved in the transformation. In the case of China, only about 25% of SMEs have implemented the transformation so far. According to existing studies, the reasons are mostly due to the poor digital technology base, lack of capital and digital talent, etc.
Based on the above background, we would like to further understand how SMEs is surviving in the face of the huge impact of the pandemic for them. How do they participate in the current wave of digitalization? What is the decision logic of entrepreneurs in this process?
In this thesis, we will develop our research based on entrepreneurial theory-effectuation theory. Specifically, we will explore the relationship between entrepreneurs’ decision logic and the digital performance of SMEs’ business model transformation; Then, we will try to analyze the impact of environmental uncertainty on this relationship from a microscopic perspective. In terms of specific research methodology, we will use quantitative analysis to verify and answer the queries we have raised. The final results, on the one hand, we expect to expand and enrich the research content and context of effectuation theory; On the other hand, we also hope to provide support to SMEs in their digital transformation decision-making.
5.1. Conclusions of the study
Based on existing research, this thesis has explored the relationship between the subdimensions of effectuation theory and digital transformation performance of SMEs’ business models, rather than with traditional financial performance. We have used principal component analysis and hierarchical linear regression to conduct our research. Given that SMEs are currently struggling with the dual effects of the digital wave and the pandemic, we also examined the moderating effect of environmental uncertainty on the relationship between effectuation and SMEs’ digital transformation performance. The specific findings obtained through quantitative analysis of this paper are as follows.
5.1.1. Effectuation is a multidimensional concept
SMEs are surviving start-ups, and therefore in many ways SMEs have similar characteristics to start-ups. Faced with the wave of digital transformation and the impact of the pandemic, the entrepreneurial decisions of SME entrepreneurs remain a complex process that encompasses the interaction of various factors, and studying the entrepreneurial process from one aspect alone cannot reveal the essence of entrepreneurship. A general view that has emerged from the research of many scholars is that entrepreneurial behavior is a multidimensional concept. The factor and validation analyses of our data obtained from the questionnaire in this paper also suggest that effectuation is a multidimensional theoretical concept consisting mainly of affordable loss, experimentation, organizational flexibility and pre-commitment.
5.1.2. Significant positive relationship between effectuation and SME digital performance
In this thesis, the results of the questionnaire for SME entrepreneurs show that although entrepreneurs may not be aware of the implications of their behavioral logic, in the current context of digital transformation, they are actively seeking established resources, such as their social connections, professional experience, and knowledge, in the face of shrinking market demand, supply chain disruptions, and logistical obstacles. The focus of companies is also shifting from the expected growth of financial returns to the basic survivability and sustainability of the company.
In the process of digital transformation, on the one hand, due to technical and financial constraints, SMEs will be less concerned about competitor threats and prioritize their own development compared to established companies. On the other hand, they will seek contractual commitments with stakeholders, eventually forming strategic alliances, even if they may be temporary. In the current risk-filled and uncertain environment, cooperation is often more likely to improve their survival rate than competition.
In addition, SMEs are relatively free of strict organizational structures and complex administrative hierarchies, so they are able to adapt themselves quickly and promptly in the face of change. Within the limits of tolerable losses, firms will be allowed to make partial, gradual business model adjustments to adapt to the new environment. This explains why our analytic result supports a positive relationship between organizational flexibility, experimentation, affordable and pre-commitment, and SME digital performance.
5.1.3. Environmental dynamism and complexity negatively moderate on the relationship between effectuation and SME digital performance
According to our findings, there is a significant but negative moderating effect on the relationship between effectuation and SME digital performance for the two dimensions of environmental uncertainty-environmental dynamism and environmental complexity, as previously hypothesized. Since the independent variable—effectuation is positively related to the dependent variable—digital performance, we argue that environmental uncertainty somewhat weaken the positive relationship between SME digital performance and effectuation. We believe that the reason may be that, since the context of the study is in a situation, where the unprecedented pandemic is still not completely over and the industry has not fully recovered; Meanwhile, the new round of technological change has still not made a significant breakthrough, so in such an environmental context, it affects the willingness of the entrepreneurs; Also, even if entrepreneurs try to implement digital change, for SMEs, the digital performance presented for a short time cannot indicate the complete success of the company in the transformation....
Based on existing research, this thesis has explored the relationship between the subdimensions of effectuation theory and digital transformation performance of SMEs’ business models, rather than with traditional financial performance. We have used principal component analysis and hierarchical linear regression to conduct our research. Given that SMEs are currently struggling with the dual effects of the digital wave and the pandemic, we also examined the moderating effect of environmental uncertainty on the relationship between effectuation and SMEs’ digital transformation performance. The specific findings obtained through quantitative analysis of this paper are as follows.
5.1.1. Effectuation is a multidimensional concept
SMEs are surviving start-ups, and therefore in many ways SMEs have similar characteristics to start-ups. Faced with the wave of digital transformation and the impact of the pandemic, the entrepreneurial decisions of SME entrepreneurs remain a complex process that encompasses the interaction of various factors, and studying the entrepreneurial process from one aspect alone cannot reveal the essence of entrepreneurship. A general view that has emerged from the research of many scholars is that entrepreneurial behavior is a multidimensional concept. The factor and validation analyses of our data obtained from the questionnaire in this paper also suggest that effectuation is a multidimensional theoretical concept consisting mainly of affordable loss, experimentation, organizational flexibility and pre-commitment.
5.1.2. Significant positive relationship between effectuation and SME digital performance
In this thesis, the results of the questionnaire for SME entrepreneurs show that although entrepreneurs may not be aware of the implications of their behavioral logic, in the current context of digital transformation, they are actively seeking established resources, such as their social connections, professional experience, and knowledge, in the face of shrinking market demand, supply chain disruptions, and logistical obstacles. The focus of companies is also shifting from the expected growth of financial returns to the basic survivability and sustainability of the company.
In the process of digital transformation, on the one hand, due to technical and financial constraints, SMEs will be less concerned about competitor threats and prioritize their own development compared to established companies. On the other hand, they will seek contractual commitments with stakeholders, eventually forming strategic alliances, even if they may be temporary. In the current risk-filled and uncertain environment, cooperation is often more likely to improve their survival rate than competition.
In addition, SMEs are relatively free of strict organizational structures and complex administrative hierarchies, so they are able to adapt themselves quickly and promptly in the face of change. Within the limits of tolerable losses, firms will be allowed to make partial, gradual business model adjustments to adapt to the new environment. This explains why our analytic result supports a positive relationship between organizational flexibility, experimentation, affordable and pre-commitment, and SME digital performance.
5.1.3. Environmental dynamism and complexity negatively moderate on the relationship between effectuation and SME digital performance
According to our findings, there is a significant but negative moderating effect on the relationship between effectuation and SME digital performance for the two dimensions of environmental uncertainty-environmental dynamism and environmental complexity, as previously hypothesized. Since the independent variable—effectuation is positively related to the dependent variable—digital performance, we argue that environmental uncertainty somewhat weaken the positive relationship between SME digital performance and effectuation. We believe that the reason may be that, since the context of the study is in a situation, where the unprecedented pandemic is still not completely over and the industry has not fully recovered; Meanwhile, the new round of technological change has still not made a significant breakthrough, so in such an environmental context, it affects the willingness of the entrepreneurs; Also, even if entrepreneurs try to implement digital change, for SMEs, the digital performance presented for a short time cannot indicate the complete success of the company in the transformation....
