Managing Technological Innovation: Dynamic Capabilities, Collaborative Innovation, and Born-Digital SMEs' Performance

In contrast to the digital transformation of the incumbents, born-digital small- and medium-sized enterprises (SMEs) embrace digital logic in the organization's design, processes, and governance from the very start. So far, scholars have focused on the digital transformation of the incumbents; thus, little is known about how dynamic capabilities, collaborative innovation, and firm performance interact in the context of born-digital SMEs—a new generation of digital firms with no legacy of the incumbent firm. Therefore, the study's research question is how dynamic capabilities and collaborative innovation affect the performance of born-digital SMEs. We aim to investigate the impact of the dynamic capabilities of born-digital SMEs on their performance when collaborative innovations mediate it. The empirical research was based on 268 complete viable responses from born-digital SMEs in the U.S., Sweden, and Lithuania. The study results show that dynamic capabilities' effect on born-digital SMEs' performance is more potent when mediated by collaborative innovations. Furthermore, the study highlights that although the impact of dynamic capabilities on partnership networks and relational collaboration is significant, only relational collaboration significantly affects the performance of born-digital SMEs. Our study contributes to the management of technology literature by advancing knowledge on dynamic capabilities and collaborative innovation of born-digital SMEs. In addition, we are exposing the limited role of partnership networks in born-digital SMEs' superior performance and spotlighting the significance of relational collaboration—cocreating innovative products and services and sharing the cocreated value among the relevant partners.