Digital Transformation Capabilities in Manufacturing SMEs: Gaining Agility through IT Capability Configurations

Abstract

Adopting a capability-based view of digital transformation as a 2nd-order ‘dynamic’ capability, this paper investigates how 1st-order dynamic and operational IT capabilities are strategically configured and aligned by manufacturing SMEs in order to gain organizational agility. Resulting from a fuzzy-set qualitative comparative analysis (fsQCA) of 67 Canadian SMEs, our results show that a high level of organizational agility is concretized when these firms align at least three dynamic IT capabilities and one operational IT capability. Through three high-performing configurations composed of the sensing, learning, coordinating and integrating dynamic IT capabilities along with the IT management capability and e-business capability, we demonstrate which capabilities are present to achieve a high level of organizational agility, and under what environmental condition they manifest themselves. Providing a richer description and deeper understanding of the interrelationships between the IT capabilities required by manufacturing SMEs’ digital transformation, our contributions are both practical and theoretical.