Twin transformation: a catalyst for African entrepreneurial innovation

Purpose Small and medium-sized enterprises (SMEs) in Africa face significant challenges in achieving simultaneous digital and sustainable transformation (twin transformation or TT) due to resource constraints and institutional complexity. While antecedents of sustainable and digital transformation have been well-researched separately, insights into TT, particularly capability development, remain scarce. This study investigates how TT can serve as a strategic response to the socio-economic hardships of South African SMEs. Design/methodology/approach This study employs an exploratory, qualitative research approach, involving 50 semi-structured interviews with SMEs in South Africa, Germany and Austria with interviewees across different hierarchical levels. The interview data were qualitatively analyzed, utilizing the Gioia methodology to explore enablers and barriers (E&B) of TT. A fuzzy-set qualitative comparative analysis (fsQCA) identified E&B combinations and dynamic capabilities (DC) as catalysts shaping TT adoption. Findings The findings uncover how SMEs develop DCs by identifying key dimensions, including E&B, that provide a compass towards TT. The study emphasizes the role of Leadership and Culture, outlines DC across core dimensions and identifies region-specific pathways through which E&B influence TT. By comparing South African SMEs with those in two developed economies, the study underscores the influence of regulatory environments, cultural attitudes and market dynamics in shaping TT pathways for South African SMEs. The study derives an integrated, empirically grounded framework illustrating TT from a DC perspective. Originality/value The results offer novel, actionable insights into how South African SMEs harness innovation and capability-building to drive TT. Thereby, this study guides scholars, practitioners and policymakers in fostering TT across Africa.