SMEs and digital transformation during a crisis: The emergence of resilience as a second-order dynamic capability in an entrepreneurial ecosystem

In this research, we examine how small and medium enterprises (SMEs) build their resilience capability during a crisis, through the adoption of digital technologies. Utilizing a qualitative approach grounded in case studies of eight entrepreneurs from India who had to radically change their business models and operations during the COVID-19 pandemic, we develop a multilevel model of resilience capability: at the micro (entrepreneur), meso (organizational), and macro (entrepreneurial ecosystem) levels. In developing resilience, the SMEs alternate their focus: from concentrating on the core to moving toward the periphery of their organizational boundaries, highlighting a shifting play of the three first-order dynamic capabilities of sensing, seizing, and transforming. By affording SMEs an opportunity to transform themselves by embracing digital technologies, the crisis leads to the emergence of resilience capability as a second-order dynamic capability.