This study evaluates the direct and indirect effects of adopting a digital service innovation strategy and the degree of digitalization related to IoT technologies on SMEs’ innovation and performance.
The empirical application uses a covariance-based structural equation modeling analysis (CB-SEM) on a sample of 3,360 manufacturing SMEs from 17 Latin American countries and Spain for 2022.
The main findings suggest that the adoption of a digital service innovation strategy is a potent contributor to firms’ digitalization and performance. Additionally, the results indicate that the degree of digitalization positively impacts innovation and that a digital service innovation strategy is a significant factor explaining how businesses capitalize on digitalization through enhanced innovation and how firms connect innovation to performance.
This paper shed more light on the intricate relationship between investments in digital technologies (in this case, IoT technologies) and innovation among manufacturing SMEs. The empirical evidence from the study suggests that innovation serves as a mechanism to enhance the degree of digitalization of IoT technologies within manufacturing SMEs in a positive sequential chain, supporting the integration of firm’s digital service innovation strategy with actions directed toward improving performance.
