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SME Family Firms and Strategic Digital Transformation: Inverting Dualisms Related to Overconfidence

Abstract

The high uncertainties, investments, and demands related to digital transformation are especially crucial for resource constraint small and medium sized family firms. Our qualitative case study resonates with previous research, finding that such firms show low levels of strategizing and a pragmatic-incremental approach to digital transformation, often hindered by their traditionalism. In addition, we reveal that small and medium sized family firms tend to follow a reactive digital transformation. A reactivity trap appears when they operate in strongly regulated industries that demand extensive attention on such institutionalized pressures. Additionally, we draw attention to two inverting dualisms. First, strong top management centralization which is most detrimental to digital transformation as it is accompanied by low digital competence of managers. Second, manager’s overconfidence about their competitive positioning and concurrently discounting and frightening digitalization. In theorizing our findings, we provide propositions and a process model. In the realm of practical implementations, our study suggests digital maturity models for identifying the (relational) status quo of the SME’s digitalization.




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