Building Digital Capabilities in Manufacturing SMEs

The Resource-Based View (RBV) posits that firms controlling and managing identical resources may exhibit divergent performance due to the development of distinct capabilities. These organisational capabilities, defined as an organisation’s ability to utilise its tangible or intangible assets to perform tasks or activities that enhance performance, are pivotal in securing competitive advantages. Capabilities are bifurcated into two dimensions: capacity and maturity. Capacity pertains to the resources that an organisation manages and controls, while maturity denotes proficiency in utilising the capacity for value creation that aligns with strategic objectives. In the contemporary business landscape, digitalisation has emerged as a significant avenue for Small and Medium Enterprises (SMEs) to carve out competitive advantages. However, it is noteworthy that 70% of digital transformation initiatives fail to contribute to business performance [5], underscoring the importance of successful digitalisation applications in streamlining business processes. Digitalisation capabilities, which refer to the ability to generate value from data produced, gathered, and stored by digital technologies in alignment with business strategy, can be cultivated through digital capacity and digital maturity. This research employs a theoretical framework to foster digital capabilities within organisations, the applicability of which was demonstrated via a longitudinal case study in a Turkish manufacturing SME. The findings reveal various strategies to adapt different digital technologies for value creation and business promotion within its industry. The journey of digitalisation in manufacturing SMEs presents several gaps that require attention, and it is crucial to align digital capabilities with the company’s strategic objectives.