Digital innovation, digital transformation and operational performance: a thematic analysis

Purpose The purpose of this systematic literature review is to extract and synthesize findings of research papers published in high-quality journals to address our specific research questions, find gaps and propose future research agendas. We want to understand the mechanisms by which digital innovation adoption (DIA) and digital transformation (DT) help small and medium enterprises (SMEs) achieve competitive advantage and enhance operational performance, ultimately leading to sustainable competitive advantage (SCA). Design/methodology/approach Fifty-nine studies were selected following the extended PRISMA guidelines as the methodological framework. Findings Four key themes have been generated based on thematic analysis of selected studies, which further helped us to find research gaps, implications and future research scopes. Originality/value DIA can enhance competitive advantage by business model innovation, strategic agility, resilience and foundational organizational capabilities in SMEs. Also, improve operational performance by process management, supply chain optimization and increasing employee productivity. Also, marketing orientation has been used as a complementary lens along with strategic and operational perspectives. The existing literature has not extensively addressed how these viewpoints can be integrated to create an SCA for SMEs. To address this gap, we developed an integrated conceptual framework with the help of key findings and propositions that emerged from the selected studies. We concluded the study by providing propositions for future empirical testing.