New
(2026) AI Processed Human Approved
The impact of digital platform introduction on business models in SMEs—The interplay of efficiency and innovation orientation
This study investigates how the introduction of a digital platform drives business model change in small- and medium-sized enterprises (SMEs). Using a longitudinal case study of four German textile firms participating in a joint platform initiative, the authors examine the interplay between organizational capabilities and dynamic platform orientations across three implementation phases.
Problem
While digital platforms provide opportunities for resource-constrained SMEs to collaborate and scale, platform introduction is resource-intensive and frequently fails to produce transformative outcomes. Existing research fails to clarify why similar SMEs sharing the same technological infrastructure and network experience divergent business model outcomes.
Outcome
- All SMEs initially adopt an efficiency-focused platform orientation as a low-risk, resource-conserving entry logic to streamline operations.
- Deep operational embedding of the platform during the efficiency phase strengthens SMEs' digital, agile, and network capabilities.
- Accumulated capabilities allow firms to dynamically shift toward an innovation-focused orientation, enabling transformative business model changes such as co-branding and forming virtual companies.
- SMEs with shallow platform engagement remain locked in an efficiency orientation, achieving only incremental business model improvements.
- Deep operational embedding of the platform during the efficiency phase strengthens SMEs' digital, agile, and network capabilities.
- Accumulated capabilities allow firms to dynamically shift toward an innovation-focused orientation, enabling transformative business model changes such as co-branding and forming virtual companies.
- SMEs with shallow platform engagement remain locked in an efficiency orientation, achieving only incremental business model improvements.
What it means for you
- CIO / IT Executive: On Monday morning, review the platform's user adoption metrics from the past month, specifically looking at the depth of operational embedding (e.g., number of workflows integrated, data points shared) across different teams, and identify any teams demonstrating shallow engagement.
- IT Manager: On Monday morning, schedule a brief check-in with the team responsible for platform integration, asking them to identify one specific, recurring operational task that could be further streamlined through deeper platform usage, and outline the steps to achieve this.
- Business Strategist: On Monday morning, analyze the platform's current capabilities and identify one potential co-branding opportunity with another SME on the platform that leverages existing operational efficiencies but could lead to a novel offering.
- Researcher: On Monday morning, begin compiling a list of the specific operational metrics used by the four case study firms to measure 'efficiency-focused platform orientation' and note down any qualitative data collected on 'deep operational embedding'.
- Policymaker: On Monday morning, initiate a review of existing SME digital platform adoption support programs, focusing on how they encourage 'deep operational embedding' beyond initial efficiency gains and measure long-term transformative outcomes.
Transcript
Host: Welcome back to A.I.S. Insights — powered by Living Knowledge. I’m your host, Anna Ivy Summers. Today, we’re unpacking a fascinating study titled "The impact of digital platform introduction on business models in SMEs—The interplay of efficiency and innovation orientation." Joining me is our lead analyst, Alex Ian Sutherland. Alex, great to have you here.
Expert: Thanks, Anna. It’s a pleasure to be here.
Host: So, Alex, digital platforms like shared marketplaces or custom industry tools are supposed to be absolute game-changers for small and medium-sized enterprises. But in reality, so many SMEs struggle to see real transformation. What is the core problem this study tackles?
Expert: The big puzzle the authors set out to solve is why similar firms, using the exact same technology in the exact same business network, end up with totally different business outcomes. We often assume that if you hand four similar companies a brand-new digital platform, they’ll all innovate in roughly the same way. But in practice, some firms radically transform their business models, while others just get minor speed improvements.
Host: That’s a classic business headache. How did the researchers investigate this?
Expert: They conducted a deep, five-year longitudinal study following four German textile SMEs—a weaver, a knitter, a coater, and a finisher. These firms operated in a tightly linked, highly interdependent production network. They actually built and launched a digital platform together to streamline how they design and produce technical textiles. The researchers tracked them across three distinct phases: before the platform, during its development, and after its public launch.
Host: Fascinating. So, what did they find? Why did their paths diverge?
Expert: It comes down to something the study calls a "dynamic platform orientation"—how a firm’s stance toward the technology evolves over time based on its capabilities. Every single SME in the study started with an efficiency-focused orientation. They used the platform as a low-risk way to fix basic operational headaches, like eliminating redundant phone calls or standardizing product data.
Host: That makes total sense for resource-constrained SMEs. Start small, save costs. But where does the split happen?
Expert: The split happens in how deeply they embedded the platform into their daily operations. Two of the firms—Firms A and B—didn't just use the platform superficially; they deeply integrated it into their internal workflows. By wrestling with the daily operational details of digital coordination, they built up three crucial organizational capabilities: digital skills, agile adaptability, and network collaboration.
Host: Ah, so by using it deeply for efficiency, they built up their organizational muscles!
Expert: Exactly. And once those capabilities matured, Firms A and B were able to dynamically shift toward an innovation-focused orientation. They didn't abandon efficiency; they layered innovation on top of it. They started using the platform to co-develop custom products with clients, launched joint branding, and eventually formed a virtual company to offer total end-to-end services.
Host: Wow, a complete business model transformation! What happened to the other two firms?
Expert: Firms C and D kept their platform use surface-level—just approving orders or forwarding documents without altering their internal practices. Because their engagement was shallow, they didn't build new capabilities. As a result, they stayed locked in a purely efficiency-oriented mindset, getting minor time savings but missing out on transformative growth.
Host: That is such an important distinction. What are the key takeaways here for business leaders and managers navigating digital transformation?
Expert: First, stop trying to force immediate, radical innovation on day one. For resource-constrained SMEs, starting with an efficiency focus isn't a failure—it's a necessary entry strategy. Second, real transformation requires deep operational embedding. If you treat a new digital platform as just an external add-on, you won't build the digital, agile, and network capabilities needed for long-term innovation. Balancing efficiency and innovation isn't about doing both at once; it's a dynamic journey where deep operational efficiency builds the muscle for future innovation.
Host: A true crawl-walk-run strategy powered by capability building. Thank you so much for breaking down this insightful study, Alex.
Expert: My pleasure, Anna.
Host: And thank you to our listeners for tuning into A.I.S. Insights — powered by Living Knowledge. Join us next time as we continue exploring the intersection of business, technology, and strategy.
Expert: Thanks, Anna. It’s a pleasure to be here.
Host: So, Alex, digital platforms like shared marketplaces or custom industry tools are supposed to be absolute game-changers for small and medium-sized enterprises. But in reality, so many SMEs struggle to see real transformation. What is the core problem this study tackles?
Expert: The big puzzle the authors set out to solve is why similar firms, using the exact same technology in the exact same business network, end up with totally different business outcomes. We often assume that if you hand four similar companies a brand-new digital platform, they’ll all innovate in roughly the same way. But in practice, some firms radically transform their business models, while others just get minor speed improvements.
Host: That’s a classic business headache. How did the researchers investigate this?
Expert: They conducted a deep, five-year longitudinal study following four German textile SMEs—a weaver, a knitter, a coater, and a finisher. These firms operated in a tightly linked, highly interdependent production network. They actually built and launched a digital platform together to streamline how they design and produce technical textiles. The researchers tracked them across three distinct phases: before the platform, during its development, and after its public launch.
Host: Fascinating. So, what did they find? Why did their paths diverge?
Expert: It comes down to something the study calls a "dynamic platform orientation"—how a firm’s stance toward the technology evolves over time based on its capabilities. Every single SME in the study started with an efficiency-focused orientation. They used the platform as a low-risk way to fix basic operational headaches, like eliminating redundant phone calls or standardizing product data.
Host: That makes total sense for resource-constrained SMEs. Start small, save costs. But where does the split happen?
Expert: The split happens in how deeply they embedded the platform into their daily operations. Two of the firms—Firms A and B—didn't just use the platform superficially; they deeply integrated it into their internal workflows. By wrestling with the daily operational details of digital coordination, they built up three crucial organizational capabilities: digital skills, agile adaptability, and network collaboration.
Host: Ah, so by using it deeply for efficiency, they built up their organizational muscles!
Expert: Exactly. And once those capabilities matured, Firms A and B were able to dynamically shift toward an innovation-focused orientation. They didn't abandon efficiency; they layered innovation on top of it. They started using the platform to co-develop custom products with clients, launched joint branding, and eventually formed a virtual company to offer total end-to-end services.
Host: Wow, a complete business model transformation! What happened to the other two firms?
Expert: Firms C and D kept their platform use surface-level—just approving orders or forwarding documents without altering their internal practices. Because their engagement was shallow, they didn't build new capabilities. As a result, they stayed locked in a purely efficiency-oriented mindset, getting minor time savings but missing out on transformative growth.
Host: That is such an important distinction. What are the key takeaways here for business leaders and managers navigating digital transformation?
Expert: First, stop trying to force immediate, radical innovation on day one. For resource-constrained SMEs, starting with an efficiency focus isn't a failure—it's a necessary entry strategy. Second, real transformation requires deep operational embedding. If you treat a new digital platform as just an external add-on, you won't build the digital, agile, and network capabilities needed for long-term innovation. Balancing efficiency and innovation isn't about doing both at once; it's a dynamic journey where deep operational efficiency builds the muscle for future innovation.
Host: A true crawl-walk-run strategy powered by capability building. Thank you so much for breaking down this insightful study, Alex.
Expert: My pleasure, Anna.
Host: And thank you to our listeners for tuning into A.I.S. Insights — powered by Living Knowledge. Join us next time as we continue exploring the intersection of business, technology, and strategy.