Beyond digital adoption: how digital transformation shapes innovation in cultural and creative MSMEs

Digital transformation (DT) is widely recognised as an important driver of innovation, yet how its organisational dimensions relate to firm-level innovation outcomes remains insufficiently understood, particularly in Cultural and Creative Industries (CCIs) dominated by micro, small and medium-sized enterprises (MSMEs). This study examines the relationship between different dimensions of DT and innovation using survey data from 268 CCI MSMEs in the Basque Country. Conceptualising DT as a multidimensional organisational process encompassing external relational, internal organisational and operational (value-chain) dimensions, we estimate regression models linking these dimensions to innovation. The results consistently identify internal organisational capabilities, particularly strategic planning and investment, as central organisational conditions associated with innovation, while external collaboration and value-chain digitalisation are also positively associated with innovation. They further indicate that firms combine these dimensions in different ways, pointing to heterogeneous DT pathways. By unpacking DT into distinct organisational dimensions and showing that these dimensions are jointly and independently associated with innovation, the study refines current applications of the Resource-Based View and dynamic capabilities perspectives in the context of CCIs.