How can SMEs successfully navigate VUCA environment: the role of agility in the digital transformation era

Abstract

Organizational agility, that is the ability to anticipate or respond quickly to external changes, is essential to survive and compete in today's turbulent landscape, characterized by technological advancements and digitalization. Research on capabilities that enable firms to be agile in the so called VUCA environments, is still nascent. Hence, it is important to explore the antecedents of firm agility and to identify the factors enabling them to better compete. Even more so in the case of SMEs, as they are more vulnerable in hypercompetitive business environments and at the same time agility has been less studied in this context. Focusing on SMEs, the study investigates three antecedents of agility, namely digital technologies capability, relational capability and innovation capability, and the effects of agility on three outcomes, namely financial performance, product, and process innovation. Our findings indicate that these capabilities contribute to build organizational agility in SMEs and that, in turn, agility has a positive impact on performance, thus confirming that agility contributes to the success of SMEs and that digital technologies play a central role in this process. Thus, it is of strategic importance for SMEs to increase their efforts to develop these capabilities to build enduring businesses. They should nurture a relational and innovative culture, as well as transform their business culture starting from digital technologies.