Digital Transformation in Family-owned Mittelstand Firms: a Dynamic Capabilities Perspective

Abstract

Digital technologies are increasingly affecting industries worldwide. Although their adoption is studied extensively from a technical point of view, research lacks profound insight into how to approach digital transformation from a management perspective. In particular, it is unclear how small and medium-sized firms with resource constraints handle the adoption of digital technologies. This paper addresses this gap by drawing on rich data from 76 semi-structured interviews in a multiple-case study of 15 family-owned Mittelstand firms from Germany, Austria, and Switzerland. All of these firms are active in the manufacturing industry but vary in terms of their progress in adopting digital technologies. Based on within-case as well as cross-case pattern analysis, we find that the adoption of digital technologies by Mittelstand firms is a process consisting of three phases, namely, digitization, digitalization, and digital transformation, and we reveal specific dynamic capabilities required throughout this process. Moreover, we identify four combinations of specific enablers and barriers that support or hinder the development of dynamic capabilities and thus accelerate or impede the advancement of the process of adopting digital technologies.