Effect of Digital Transformation on Smart Business Model Adoption in Retail Firms: Evidence from fsQCA

Abstract

As smart business model innovation has become a strategic priority for retail companies looking to improve their competitiveness, digital transformation has emerged as a strategic imperative. But the research to date generally only considers the individual impacts of digital transformation capabilities, with linear analytical approaches, offering limited knowledge about the interactions of capabilities in the adoption of smart business models. This study aims to fill this gap by exploring the configurational pathway to the adoption of smart business models within retail companies in China. The study is based on Dynamic Capabilities Theory and the Technology–Organization–Environment (TOE) Framework that considers the roles of digital leadership, digital technology capability, organizational agility, digital skills, and customer digital orientation. A structured questionnaire with five-point Likert-scale measures was used to collect data from 130 managers from Chinese retail companies. The data were analysed using Fuzzy-set Qualitative Comparative Analysis (fsQCA), which was used to draw out the necessary and sufficient conditions and configurations for high smart business model adoption. The findings show that the necessary condition for smart business model adoption is capability with digital technology. In addition, three other types of digital transformation capabilities are found, showing that smart business models can be adopted on multiple strategic paths within retail. The findings also validate the concepts of equifinality and causal asymmetry which means that the configurations that contribute to successful adoption of a business model are different from those that contribute to unsuccessful adoption. It makes a contribution to the literature on digital transformation and business model innovation by using a configurational approach to capability integration and it expands the use of fsQCA in the research on digital transformation. The results also provide valuable recommendations for retail managers and policy makers looking to push digital transformation faster and to create smart and sustainable business models in an ever-competitive digital economy.