Journal of Business Research 123 (2021) 642–656

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Journal of Business Research

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Digital transformation and customer value creation in Made in Italy SMEs:

A dynamic capabilities perspective
Michela Matarazzo a, *, Lara Penco b, Giorgia Profumo b, Roberto Quaglia c
a
Department of Economic and Business Sciences, G. Marconi University of Rome, Rome, Italy
b
Department of Economics and Business Studies – University of Genoa, Genoa, Italy
c
ESCP Europe, Paris, France

A R T I C L E I N F O A B S T R A C T

Keywords: This study examines the impact of digital transformation on customer value creation in the context of small and
Digital transformation medium-sized firms (SMEs) operating in the Made in Italy sectors, with the aim of understanding how dynamic
Customer value creation capabilities, as enabling mechanisms, may foster digital transformation. We use multi-case study research on the
Dynamic capabilities
digital transformation of six Made in Italy SMEs, belonging to the food, fashion, and furniture design industries.
SME
Made in Italy
The results show that, for the selected SMEs, digital instruments contribute to innovation of their business model,
creating new distribution channels and new ways to create and deliver value to customer segments. The results
highlight the relevance of sensing and learning capabilities as triggers of digital transformation. In addition to the
theoretical contribution to the existing literature on digital transformation and organizational capability, this
study provides some managerial implications for digital transformation in SMEs operating in the Made in Italy
sectors.

1. Introduction (Ghezzi & Cavallo, 2020), while specific studies focusing on SMEs
operating in traditional industries are relatively scarce. Nevertheless,
In recent years, digital transformation has revolutionized the way these firms are recognized as innovative and contribute to economic
companies conduct business, create relationships with consumers, sup­ growth in many countries. Scuotto, Santoro, Bresciani, and Del Giudice
pliers, and other stakeholders (Bresciani, Ferraris, & Del Giudice, 2018; (2017) analyzed the role of ICTs oriented to intra-organizational (in-
Scuotto, Arrigo, Candelo, & Nicotra, 2019), and foster business model house research and development) and inter-organizational (open inno­
innovation and customer value creation. Digital transformation is the vation) processes in promoting SMEs’ innovation performances. Mohd
way in which “a firm employs digital technologies, to develop a new Salleh, Rohde, and Green (2017) focused on the role of Information
digital business model that helps to create and appropriate more value Systems. Jin and Hurd (2018) and Li et al. (2018), using a case study
for the firm” (Verhoef et al., 2019, p.1). Such transformation affects methodology, investigated how digital platforms impact SME entry into
business processes, operational routines, and organizational capabilities the Chinese market. Grandón, Nasco and Mykytyn Jr (2011) analyzed
(Li, Su, Zhang, & Mao, 2018). the adoption of e-commerce by SMEs. However, to the best of our
Digitalization is shaping the traditional interaction between con­ knowledge, understanding how SMEs, operating in traditional in­
sumers and businesses (Taiminen & Karjaluoto, 2015). In particular, dustries, utilize digitalization to shape the process of customer value
consumers have access to dozens of media channels through which to creation requires more in-depth investigation.
communicate actively and effortlessly with firms and other consumers, Regarding the adoption process, the construction of capabilities
passing through a rapidly increasing number of touchpoints on their useful for value creation in the digital context has received limited
customer journey (Verhoef et al., 2019). attention by academics, despite dynamic capabilities framework being
Extant literature has traditionally explored the implementation of one of the most important topics in the strategic management domain
digital technologies in large corporations (Cenamor, Parida, & Wincent, (Li et al., 2018; Warner & Wäger, 2019). Capabilities have been found to
2019) or, in innovative businesses, digital startups, and high-tech giants help firms deal with environmental change (Teece, 2007). This

* Corresponding author.
E-mail addresses: [email protected] (M. Matarazzo), [email protected] (L. Penco), [email protected] (G. Profumo),
[email protected] (R. Quaglia).

https://doi.org/10.1016/j.jbusres.2020.10.033
Received 28 February 2020; Received in revised form 9 October 2020; Accepted 11 October 2020
Available online 21 October 2020
0148-2963/© 2020 Elsevier Inc. All rights reserved.
M. Matarazzo et al. Journal of Business Research 123 (2021) 642–656

literature gap is especially present in the context of SMEs. Literature has 2. Literature review
found that SMEs face increased difficulty in adopting new technologies
due to lacking necessary resources, skills, commitment, and proper un­ 2.1. Digital transformation and SMEs
derstanding of digital opportunities (Giotopoulos, Kontolaimou, Korra,
& Tsakanikas, 2017). Overcoming these difficulties will require SMEs to Digitalization is the exploitation of digital opportunities, while dig­
build various capabilities. In SMEs, some capabilities (e.g., sensing, ital transformation is defined as the process that is used to restructure
searching, and selecting the right source of digital knowledge) reside economies, institutions, and society at the system level (Rachinger,
either in the entrepreneur or in the executive team. The ability to Rauter, Müller, Vorraber, & Schirgi, 2018).
perceive new digital opportunities, to change customers’ interactions, In the context of the company, digital transformation has received
and co-create value with them imply changes in existing routines or increasing attention over the last two decades (Cha, Hwang, & Gregor,
resource configurations as well as building new capabilities. Filling 2015; Morakanyane, Grace, & O’Reilly, 2017; Rachinger et al., 2018;
these gaps is important, because digital technologies are important Galindo-Martín, Castaño-Martínez, & Méndez-Picazo, 2019; Warner &
competitive tools for SMEs, and neglecting them is risky and may seri­ Wäger, 2019). Analyzing the evolution of digital technologies for firm
ously compromise firm survival. Digital technologies provide support strategies, innovation, and business models, companies were mostly
for value creation and customer engagement, which are critical success involved in the application of internal management information systems
factors for SMEs. However, the use of technologies is not without diffi­ such as Enterprise Resource Planning or Customer Relationship Man­
culties and requires a change management and vision that have foun­ agement (Boersma & Kingma, 2005). In this vein, digital transformation
dations in acquisition of new organizational and marketing capabilities. was limited to the application of information systems aimed at
Hence, to fill the literature gap, we ask: How does digital trans­ improving business processes within organizational boundaries to gain
formation change the costumer value creation process of SMEs? What are the efficiency, cost savings, and business process optimization (Besson &
most important dynamic capabilities for digital transformation in SMEs? Rowe, 2012).
To answer these research questions, we present a multiple case In recent years, new digital technologies, such as big data, artificial
research study on the digital transformation of six Made in Italy SMEs, intelligence, and 4.0 machines are revolutionizing the way companies
operating in three B2C industries, called the 3Fs: Fashion (e.g., textile/ do business (Rothberg & Erickson, 2017). However, these digital tech­
clothing, footwear, leather goods, eyewear, jewelry), Food (e.g., pasta, nologies enhance operational efficiency by optimizing process man­
pizza, olive oil, wine, beer), and Furniture (e.g., lighting articles, agement and enhance market orientation through advanced market
ceramic tiles, home faucets). The choice of “Made in Italy” comes from knowledge (Cenamor et al., 2019). Companies are focused on the
the famous connotation of beauty, chic, and genuine products of this application of cross-boundary digital technologies (Li et al., 2018),
umbrella brand, appreciated at the international level (Cerrato & Piva, aimed at transforming the way organizations create value and the way
2012; Fallan & Lees-Maffei, 2014) and connected to the presence of organizations and consumers interact and exchange value (Yadav &
tradition and manual skills. Made in Italy represents a universally Pavlou, 2014). Specifically, digital technologies improve communica­
recognized standard of excellence (Massa & Testa, 2012), which has tion with customers (existing and potential) enabling better under­
gradually assumed a more important meaning than a simple label of standing of requirements and facilitating customized offerings and new
origin (Fortis, 2005). Moreover, as this study focuses on digitalization products tailored to specific customer needs (Barnes et al., 2012).
enhancing the creation of experience and consumer value, Made in Italy The literature has found that digitalization modifies the entire
products are acquired often beyond utilitarian motivation, for hedonic structure of business models (BM) (Osterwalder & Pigneur, 2010; Saebi,
motivation and to gain emotionally enjoyable experiences (Penco, Ser­ Lien, & Foss, 2017; Volberda, Mihalache, Fey, & Lewin, 2017), specif­
ravalle, Profumo, & Viassone, 2020). Lastly, SMEs are common in the ically value proposition and customer relationships (Arnold, Kiel, &
Made in Italy industry, characterized by the strong leadership style of Voigt, 2016; Bouwman, Heikkilä, Heikkilä, Leopold, & Haaker, 2018).
entrepreneurs and founders, often a family, that shapes their approach The “mobile revolution,” with the increasing power of social media and
to innovation and the market (Broccardo, Giacosa, & Ferraris, 2015; analytics, has promoted digital transformation of the customer value
Bresciani, Culasso, Giacosa, & Broccardo, 2016; Vrontis, Bresciani, & creation (Rachinger et al., 2018). New apps, services, platforms, data,
Giacosa, 2016; Bresciani, 2017; Santoro, Vrontis, & Pastore, 2017; and devices “have become a crowded play-ground for all kinds of
Franceschelli, Santoro, & Candelo, 2018). companies that want to tap emerging chances” (Zott & Amit, 2017, p.
This study makes several important contributions to the existing 19). From this perspective, scholarly attention has delved into the
literature. First, focusing on the scope of digital transformation in the diffusion of digital technologies that are focused on value propositions
customer value creation process, we contribute to the digital trans­ and customer relationships. Digitalization and specific technologies are
formation literature for SMEs and provide a rich context for the study of innovating in particular SMEs, operating in high-tech and digital in­
the application of digital instruments for customer value creation. Sec­ dustries as well as traditional ones (Franceschelli et al., 2018; Ferraris,
ond, we contribute to the organizational capability literature, identi­ Monge, & Mueller, 2018; Warner & Wäger, 2019; Ghezzi & Cavallo,
fying the types of digitally based dynamic capabilities required for the 2020).
digital transformation of SMEs. In addition to the theoretical implica­ The diffusion of platforms, such as Alibaba, Amazon.com, and eBay.
tions, this study provides some managerial implications to accomplish com, has modified the process of value delivery (the “place”) and the
the digital transformation of Made in Italy SMEs. relationship with customers of SMEs (Li et al., 2018; Ramaswamy &
The remainder of this paper is organized as follows. Section 2 pro­ Ozcan, 2018; Perren & Kozinets, 2018). Social media, with the
vides the theoretical framework to conduct explorative research by increasing relevance of mobile devices, have radically created new ways
addressing the extant literature on digitalization and organizational of interacting (Taiminen & Karjaluoto, 2015) and are considered by
capabilities of SMEs. Section 3 explains the research design and SMEs as the most important means of communication and value creation
methods. Section 4 describes the major empirical findings of the analysis within the business model. Social media enhances and transforms
and presents the principal outcomes. Finally, Section 5 discusses the customer value propositions and organizes innovative delivery opera­
academic and practical implications, and Section 6 presents the tions (Berman, 2012; Swani, Milne, & Brown, 2013). Augmented reality
concluding remarks. (AR) transforms how individuals interact with physical environments
(Poushneh & Vasquez-Parraga, 2017). AR allows customers to test
products many times before purchase (Owyang, 2010) and to interact
with the brand and other users. Hence, mobile AR facilitates customer
involvement, improving the hedonic value of experience (Kim &

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Forsythe, 2008) and providing users the ability to share experiences having a more active role (Prahalad & Ramaswamy, 2004), contributing
through social networks (Muzellec & O’Raghallaigh, 2018). SMEs can through their joint interactions in the production of several contents
exploit many opportunities of AR to simulate how products appear if (Key, 2017).
customers purchase them (Chandra & Kumar, 2018). Digital trans­ Social media and mobile applications have brought revolutionary
formation can enhance the creation of international markets, which is an ways of implementing corporate brand communication strategies,
important challenge for SMEs (Ferraris, Giachino, Ciampi, & Couturier, encouraging interaction, participation, and cooperation (Lamberton &
2019; Santoro, Ferraris, & Winteler, 2019; Jafari-Sadeghi, 2020). Rose, 2012). They stimulate continuous dialogue with customers, in­
Big Data changes the value creation process, affecting the marketing fluence brand meanings and messages, and dictate product or service
mix: product (e.g., product-service innovation using Big Data without developments. Social media involves users generating content and
waiting for insights from traditional marketing research); price (e.g., connecting with people through a many-to-many approach, rather than
dynamic pricing based on changing consumer demand); place (e.g., the traditional “one-to-many,” which allows customers to create and be
Amazon’s anticipatory shipping); promotion (e.g., use of geospatial data active participants in the process. The interactive nature of these digital
to send specific advertising messages) (Erevelles, Fukawa, & Swayne, media allows sellers to share and exchange information with customers
2016; Yadav & Pavlou, 2014). Consumer analytics based on Big Data are and allows customers to share and exchange information with each
considered one of the most important tools for the competitiveness of other. Some authors (Sawhney, Verona, & Prandelli, 2005) have already
SMEs (O’Connor & Kelly, 2017). Nevertheless, research focused on shown the multitude of innovative real-time technologies that are cen­
digital transformation in SMEs (as a whole phenomenon) and how tral to developing a dialogue with customers throughout the customer
digitalization may change the entire process of consumer value creation journey and influencing one’s overall brand preference (Baxendale,
are still limited. Emma, & Hugh, 2015; Lemon & Verhoef, 2016).
In the pre-acquisition stage of “awareness, consideration, and
2.2. Digital transformation and customer value creation search,” firms have the opportunity to identify, engage, and interact
with current and prospective customers that notice and assess a brand.
Nowadays, the web provides space for creating and sharing knowl­ At this stage, firms can utilize social media, encompassing social
edge that can be accessed easily by new marketing channels through networking, blogging, influencers engagement, paid advertisements,
smartphones and tablets, paving the way for value co-creation through and video and photo virality (Cawsey & Rowley, 2016) as well as
customer engagement processes (Brodie, 2011; Jaakkola & Alexander, augmented reality and conversional commerce (mobile instant
2014). messaging) to support customers in the search process. The aim is to help
Such rapid growth and success of the sharing economy is due to the customers find specific solutions, products, and brands, or connect to
digital platform business model (Parker, Van Alstyne, & Choudary, prospective customers before needs arise, suggesting possible products
2016), including the company website, virtual communities, blogs, or developing new solutions to meet needs. It is important for firms to
vlogs, social media, mobile apps, and other technologies (Rowley, 2008; create experiential value for consumers, increasing interaction and
Gensler, Völckner, Liu-Thompkins, & Wiertz, 2013; Breidbach, Brodie, heightening willingness to purchase a specific brand. Digital technolo­
& Hollebeek, 2014). Among the most common digital marketing chan­ gies can create brand stories and allow consumers to interact with the
nels, social media such as LinkedIn, Facebook, and YouTube, as well as brand in novel, unconventional spaces, such as sensory experiences,
blogs like WordPress and Blogger, and micro-blog platforms including gaming platforms, or mobile applications (Scholz & Smith, 2016),
Twitter and Snapchat provide cost-efficient means to reach a large thereby generating a greater level of consumer entertainment. Once
audience and diffuse product and brand information online. Social successfully used, these platforms build increased brand exposure and
media shares content among an interconnected group of users, most consumer traffic by promoting the brand and developing potential leads
commonly in the form of text, photo, and/or video, using two-way (Xie & Lee, 2015). At this stage, the cognitive (informativeness) and
communication or eliciting user-generated content to create word-of- affective (entertainment) dimensions of customer experience are
mouth effects. predominant.
Another important digital marketing channel is the branded-mobile At the following stages of purchase and post-purchase, firms must
applications that have proven particularly well suited for creating, move from attraction and interest stimulation to development of long-
communicating, and delivering value. The main purpose of mobile ap­ term relationships with customers with highly positive emotions. Digi­
plications is to develop consumer connections and attachment to brands tal tools can increase customer satisfaction along the entire purchase
through information, promotion, and entertainment. Common features process, which is a prerequisite for customer engagement. Chat bots can
are the development of trust, the ability to rate the quality of a product play an important role at the purchase stage by stimulating conversa­
or service and user experience, and the ability to pay quickly and easily tions, answering consumer queries, process product orders, and
for the product or service within the mobile app. providing suggestions and recommendations through the utilization of
These digital technologies allow firms to create an online customer artificial intelligence. At this stage of the customer’s journey, the af­
experiences conceptualized through four dimensions (Bleier, Harmeling, fective component is relevant, because highly positive emotions are
& Palmatier, 2019): connected to satisfaction, retention, and customer commitment. At the
last stage of post-purchase, the positive feelings lead to brand advocacy
(1) Informativeness (cognitive) captures, in an objective manner, the (interaction with others in social networks to spread the word about
functional aspect and value of the customer’ s experience (Ver­ positive experiences with a product, brand or company) and engage­
hoef et al., 2009). ment (inclusion of customers in the value co-creation). At this stage, the
(2) Entertainment (affective) is the immediate pleasure that the social dimension is predominant (Mariani & Matarazzo, 2020),
experience offers, regardless of its ability to facilitate a specific enhancing satisfaction of customer needs, since they become fans in
shopping task (Babin, Darden, & Griffin, 1994). interactions with other current or potential customers.
(3) Social presence (social) refers to the warmth, sociability, and
feeling of human contact that a webpage confers (Gefen & Straub, 2.3. Building dynamic capabilities for customer value creation
2003).
(4) Sensory appeal (sensory) includes aspects that stimulate sight, Dynamic capabilities are “higher-level competences that determine
sound, smell, taste, or touch (Gentile, Spiller, & Noci, 2007). the firm’s ability to integrate, build and reconfigure internal and
external resources/competences to address, and possibly shape, rapidly
In a digitalized world, experiences are co-created by customers changing business environments” (Teece, 2012, p. 1395) and are usually

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used to explain how firms respond to rapid and technological change and make dynamic capabilities unique, valuable, and recognizable for
(Eisenhardt & Martin, 2000; Teece, 2007). These types of capabilities the customers.
may play an important role in the process of a company’s digital Managerial decisions determine how the firm “creates, shapes and
transformation. Teece, Pisano, and Shuen (1997) identified a dynamic deploys capabilities” (Teece, Peteraf, & Leih, 2016, p. 19). Dynamic
capability as the firm’s ability to address rapidly changing situations, capabilities require the organization (especially top management) to
and consequently, the use (and usefulness) of dynamic capabilities is develop ideas, validate them, and realign assets and competences for
greater in vibrant environments, such as those influenced by digital new requirements. Therefore, sensing, learning, integrating, and coor­
technologies. Digital transformation is shaping profound changes in dinating are the result of a process within a leadership executive team
society, industries, and firms, with implications for different aspects of (Kor & Mesko, 2013; Martin, 2011), particularly in the case of SMEs,
organizations: technology management, strategy, business models, where the role of the owners, often a family, is essential.
processes, and corporate value creation. Especially in SMEs, the CEO is a key person in the decision-making
Dynamic capabilities ensure that a firm’s ordinary capabilities process regarding dynamic capabilities (Goerzig & Bauernhansl,
change over time (Rindova & Kotha, 2001). Ordinary capabilities enable 2018). Garbellano and Da Veiga (2019) confirmed that, in SMEs, the
the firm to perform operational tasks such as accounting, human re­ dynamic capabilities useful in industry 4.0 “reside” in people, especially
sources management, logistics, and marketing, but they are easily in who has the responsibility to “orchestrate” (Teece, 2014), combine,
replicable in a digital environment and no longer support a durable and organize resources to create value. Some capabilities (e.g., sensing,
competitive advantage. In contrast, dynamic capabilities, managing the searching, and selecting the right source of digital knowledge) either
change in a firm’s ordinary capabilities (Teece, 2007), are harder to reside solely with the entrepreneur or is shared among closest collabo­
replicate (Teece, 2014) and support the evolution of a company toward rators; others (e.g., integrating and orchestrating internal and external
pathways far from its “comfort zone” (Helfat & Winter, 2011). In a assets, physical and digital resources) reside with the executive team;
changing environment, the role of such capabilities is to reconfigure and still others are spread granularly among many people.
ordinary capabilities to fit new challenges and deploy new capabilities. In SMEs, “entrepreneurs invested in new digital technologies more
Following Pavlou and El Sawy (2011), who combined Teece et al. based on their intuition than on detailed cost-benefit analysis” (Gar­
(1997) and Teece (2007) conceptualizations, the dynamic capabilities bellano & Da Veiga, 2019, p. 476). The decision to introduce new
useful in the reconfiguration process may be divided into four clusters of technologies may be influenced by the youngest collaborators or by
activities: family members, often sons and daughters of the entrepreneur who
“used” digital technologies to be involved in the company’s family and
(1) Sensing: identify, develop, co-develop, and assess digitalization to reinvigorate sluggish business.
trends and technological opportunities in relation to customer Therefore, a diversified team of managers, with complementary
needs. The ability to spot, interpret, and pursue digital technol­ knowledge and skills, is necessary to succeed in sensing opportunities,
ogies (infrastructure, content, channels, services, e-business learning and coordinating organizational resources, capabilities and
application, etc.) can create customer value. Digital technologies processes, and facilitating digital transformation. Such a transforming
improve the gathering of relevant marketing intelligence infor­ process requires a range of new capabilities with regard to the workforce
mation, which is a crucial action of the sensing capability. By to stem the challenges of digitalization in SMEs (Hubschmid-Vierheilig,
sensing and analyzing the new context of the customer, this Rohrer, & Mitsakis, 2019).
capability enables enterprises to gain deep insight into customer
motivations and to create personalized customer value (Goerzig 3. Methods
& Bauernhansl, 2018).
(2) Learning: renovation of existing capabilities with new knowledge. 3.1. Procedure
Once an opportunity is identified, an organization must redeploy
and redirect resources and mobilize novel ones through learning The empirical data for this study were collected by applying a mul­
activities devoted to finding new solutions and creating new tiple case study approach (Eisenhardt, 1989; Yin, 1994; Cunningham,
knowledge. For example, a whole range of new capabilities is 1997; Eisenhardt & Graebner, 2007). The decision to adopt this meth­
needed to help the company face the challenges of digitalization, odology is derived from two motivations: the research scope (digital
and the learning process is useful for addressing customer needs transformation, value creation, and the capability perspective) and firm
and opportunities emerging from digital transformation to cap­ type (SMEs). Regarding research scope, the case study methodology is
ture value. Warner and Wäger (2019) reported that digitalization consistent with research questions based on “how” and “why.” Quali­
has encouraged smaller firms to seize opportunities by exper­ tative research is appropriate when the emphasis is on the development
imenting with the decoupling and disintermediation of existing of a conceptual framework and the identification of critical factors and
value chains. other key variables. Regarding firm type, since SMEs tend not to disclose
(3) Integrating: integration of new knowledge “into a collective sys­ strategic and organizational information, direct contact is essential to
tem to deploy the new configurations of operational capabilities” understanding these profiles. Moreover, multiple cases enable a more
(Pavlou & El Sawy, 2011, p. 245). As the redeployed and new generalizable and robust theory than a single case (Del Giudice et al.,
knowledge is mostly owned by individuals and capabilities reside 2017; Dezi, Santoro, Gabteni, & Pellicelli, 2018; Eisenhardt & Graebner,
at a collective level, such knowledge must be disseminated within 2007). The research has been conducted according to the guidelines and
the business unit. suggestions for qualitative methodologies provided by the literature
(4) Coordinating: asset “orchestration;” the ability to organize and (Yin, 2003).
deploy tasks, resources, and activities into new ordinary capa­ We conducted several in-depth and semi-structured interviews based
bilities. Structures, practices, and processes are included in on face-to-face meetings using a semi-structured questionnaire, which
reconfiguring capabilities. Such transforming capabilities are allows for comparisons across the selected companies, as suggested by
essential to realize the full potential of strategic change (Teece & Massingham (2004). We interviewed entrepreneurs and managers
Linden, 2017). In our view, leadership promotes commitment, responsible for corporate and business strategies and digitalization.
and new ways of allocating resources belong to the firm’s coor­ Marketing profiles (e.g. distribution channels, promotion, consumer
dinating capabilities. interactions, and consumer value) were explained by the entrepreneurs
(sometimes with the help of the marketing manager), since in SMEs
Each organization has its own way to integrate the four dimensions these aspects are intimately connected to the entrepreneurial vision and

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the strategic orientation. relationship between digitalization and customer value creation, with a
The questionnaire was aimed at evaluating the digital transformation focus on capabilities. We begin our data analyses with abundant de­
in terms of: (1) transformation of the relationship with the customer scriptions of the six Italian cases belonging to the Made in Italy sectors
within the business model (Teece & Linden, 2017; Zott & Amit, 2017); (two for each “F” of Made in Italy). All the analyzed cases are family
(2) digital tools and distribution channels for customer value creation businesses, with entrepreneurs in the leading role. Table 1 summarizes
within the consumer journey (Sashi, 2012); (3) leadership and major the research cases in terms of the profile of the companies, strategies,
triggers of digital transformation (Teece, 2007); and (4) main resources channels, and digital tools.
(Teece, 2012) and main capabilities (Sensing, Learning, Integrating, and Fratelli Carli is focused on olive oil and Mediterranean specialties,
Coordinating). such as preserves in oil and sauces. Founded in 1911 its strategy is
First (1), we asked if the digital transformation affected the business characterized by segmenting the market using the distribution channel,
model transformation, with particular regard to marketing channels and exclusively home delivery. The company seeks a differentiation advan­
social media marketing, modifying the consumer segments and the tage in terms of product quality and customer service. Investments in
value proposition (e.g., from B2B to B2C). Second (2), consistent with CRM and digital marketing tools have led to a better brand position.
Sashi (2012) and Lemon and Verhoef (2016), we described the different Over the years, Fratelli Carli has diversified its portfolio by adding a line
stages of the consumer journey (pre-purchase, purchase, and post- of cosmetics (Mediterranea) to the traditional oil and food specialties.
purchase phases) to identify if and how digital transformation helps This diversification strategy has been driven by synergies in sharing
enhance customer value in each stage. Regarding leadership and major channels, logistics systems, and customer databases.
triggers of digital transformation (3), interviewees were invited to De Matteis Agroalimentare is a producer of durum wheat pasta,
identify the external factors that stimulated the process of digital founded in 1993 by two entrepreneurial families that were in the con­
transformation and the most relevant elements of the structure. struction business for more than 50 years. Initially, it was a mill and
Regarding dynamic capabilities (4), the questionnaire collected infor­ small pasta factory, but with a significant growth rate, it became a world
mation on who guided the digital transformation process and percep­ player in the pasta industry, appreciated by international customers. De
tions of utility of ordinary resources and capabilities, together with the Matteis is one of the few pasta companies in Italy with its own mill and
different dynamic capabilities (sensing, learning, integrating and coor­ an integrated wheat-pasta production chain. It has a control laboratory
dinating). As entrepreneurs and managers may not be familiar with the inside the mill to select the best wheat and ensure that it meets strict
dynamic capabilities framework, an explanation of capabilities was standards of product quality. The premium brand of the company,
added. “pasta Armando,” is made of 100% Italian durum wheat from the
Each interview lasted nearly two hours and was conducted by at least “Armando” production chain, based on an agreement with more than
two authors to guarantee comparison between researchers. A semi- 1500 farmers and 16,000 cultivated hectares. By signing the agreement,
structured interview guide was used. Interviewers encouraged man­ the producer, farmers, and agronomists are committed to producing
agers to free reporting, and there was no forced answer if the informants Italian high-quality raw material, sealing an authentic tie existing be­
had no recollection. To avoid confining respondents to a set of pre- tween land, wheat, and pasta.
established answers, we introduced general and open questions to Freddy, established 1976 by Carlo Freddi, focuses on dance and
encourage interviewees to share information, and then we continued fitness apparel. Freddy’s strength is its uniqueness or its philosophy:
with more specific questions to fine-tune the discussion into the areas of “The Art of Movement.” Its strategy is characterized by creativity and
relevance of the study. There were difficulties to confine the discussion product innovation, and in 2013, Freddy launched the WR.UP® pants
within the questionnaire structure and explain the concept of dynamic designed to sculpt the female body by redefining the thighs and back­
capabilities. side. In recent years, other products have been designed using tech­
All answers were audio-recorded, transcribed, and translated from nology and have been patented by Freddy. The new 100% Made in Italy
Italian to English. They were independently analyzed by each author capsule collection, entirely conceived, designed, and manufactured in
and discussed together to reduce subjectivity in interpretation of the Italy, was launched in 2017.
data. When necessary, we conducted follow-up correspondence with the Essequadro is an Italian producer of handmade eyewear with 50
respondents via e-mail and telephone to clarify some points. years of experience, craftsmanship, and creativity. Every piece of
Interviews’ content was analyzed by performing an open coding eyewear is made using only Italian raw material and made of an Italian
practice, a method suitable to study complex phenomena through the alloy of medical steel. “It is the only firm in the center-south of Italy that is
coding of labels, concepts, and words used to produce theory from in­ totally vertically integrated being out of the Safilo and Luxottica system, the
terviews, rather than the mere finding of facts (Ghezzi & Cavallo, 2020). biggest Italian players in the eyewear industry.” The entire production
Interviews were codified through textual analysis and archived using the cycle, encompassing 72 phases, 120 h of tumbling, and about 40 days of
software package NVivo 12 to “make sense” of the data and develop a work, is internal and constructed in its factories, without external sup­
complete understanding of the cases. plies. Other key activities of the value chain include R&D, design, pro­
In addition to primary data from interviews, secondary data from totyping, colors selection, production proof, and web marketing. In
documents, such as business publications, corporate presentations, 2015, the firm received an award from the Institute for the Protection of
internet-based information, and newspapers, were gathered. We trian­ Italian Manufacturers, recognizing the quality of craftsmanship of
gulated these data with the primary data, analyzing the results and Essequadro with a special certificate.
coherence and reinforcing the knowledge of each company. The data B.Home Interiors (GioBagnara) was established in the late 1990s.
were analyzed following the protocols for qualitative data analysis. The The founder, Giorgio Bagnara, noted that leather from the fashion in­
analysis was carried out using an interpretative method (Eisenhardt & dustry was not considered as a material for home accessories, and they
Graebner, 2007). The main research was conducted in 2019. Given the started using it in the design and furniture industry. The company
longitudinal approach, however, we collected primary and secondary became renowned for its expertise and Italian craftmanship, and its
information from the previous ten years (2009–2018). founder became a partner of several interior decorators and yacht and
jet designers. In 2015, GioBagnara expanded its leather portfolio with
3.2. Cases’ selection and company profiles the acquisition of the saddle leather specialist Rabitti 1969. Giorgio
Bagnara entrusted Stéphane Parmentier (who began his career working
In line with exploratory research, the cases were selected not because for Karl Lagerfeld before deciding to devote himself to architecture in
they are a representative sample in statistical terms, rather they were 2002) with the creative direction of the company. He has designed
considered able to provide significant insights concerning the numerous stunning creations for the brand, increasing the reputation of

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Table 1
Profiles of selected companies.
Company Profiles/Strategic Year of Size: % Number of Strategic paths Position of the
Business Units foundation Revenues and Foreign international markets respondent
and location Employees sale

Fratelli Carli S.p.A. Food: Olive Oil / 1911 155 million 30% EU (Germany, Focus on a market niche: home Family
Mediterranean food Imperia euros France, Switzerland), delivery/e-commerce Entrepreneur
specialties 150 UK, US High differentiation: brand Responsible for
Cosmetics employees image Cosmetics Division
Diversification (cosmetics:
Mediterranea)
Internationalization (FDI and
export)
De Matteis Food: Pasta 1993 155 million 80% More than 40 Focus on a market niche: tasty Family
Agroalimentare Flumeri euros countries, mainly in and genuine pasta made of 100% Entrepreneur
S.p.A. (Avellino) 270 EU and US high quality Italian wheat CEO and General
employees High differentiation: brand Director
image embodying the Italian
genuine pasta
Contractual vertical integration
with farmers and agronomists
Internationalization
(partnerships with large retailers
and export)
Freddy S.p.A Fashion: Dance and 1976 45 million 95% EU (Germany), US, Focus on a market niche: apparel Member of the
Fitness Chiavari euros UK, China, Australia for dance and fitness Board of Directors
(Genova) and 130 Product innovation: patents CFO
Milan employees (shaping pants)
High differentiation: brand
image and new Made in Italy line
Contractual vertical integration
with suppliers
Internationalization (FDI and
export)
Essequadro S.r.l. Fashion: Eyewear 2011 3 million 30% EU (all), UK, US, Focus on a market niche: Marketing
Ariano Irpino euros Cuba, Israel Turkey eyewear with a high handicraft Manager
(Avellino) 36 employees Tunisia and design content
High differentiation: brand
image embodying Italian culture
Total vertical integration
internationalization (FDI and
export)
B.Home Interiors S. Furniture: Design 1996 Genova 7 million 95% More than 100 Focus on a market niche: Founder/
r.l. (GioBagnara) euros Countries: Cina, EU furniture based on leather entrepreneur
57 employees (Germany), UK High differentiation: brand CEO
image embodying handicraft and
design content (Made in Italy)
Vertical integration
Internationalization (export)
SOVET S.r.l. Furniture: Design 1990 Biancade 8 million 80% More than 80 Focus on a market niche: Founder/
(Treviso) euros Countries: furniture based on glass with entrepreneur +
30 employees EU (Spain, Italy, other raw materials Marketing
France, Germany, High differentiation: brand Director
Belgium), US, image embodying Italian culture
Australia and Made in Italy value
Total vertical integration
Internationalization (export)

Source: Author’s elaboration.

the company in the design world. 4. Results and main findings

SOVET was founded in the late 1980s by six Treviso glassmakers. In
1990, it was taken over by the current owner, Guido Porcellato, who 4.1. Digital transformation and impact on BM and customer value
transformed it into a successful company, establishing it as a new pro­ creation
tagonist in the world of Made in Italy design furniture. SOVET began to
collaborate with internationally renowned studios. The DIVETRO The analyzed SMEs are established in mature Made in Italy industries
collection was born in 2003, developed together with the prestigious with “traditional ways of doing businesses,” but all have set up a digital
Spanish studio Lievore Altherr Molina. SOVET presents a product line of transformation process for shaping relationships with customers and
furnishings and accessories made by the most sophisticated and original changing the traditional business model (Table 2).
glass, such as innovative carbon-treated glass or a combination of glass Fratelli Carli was established in 1911 as a B2C company and was
with other materials like wood, steel, ceramic, and aluminum. characterized by direct marketing, selling via a printed flier/catalogue
or phone with home delivery. Customer value creation is connected to
home delivery. In October 1996, Fratelli Carli decided to invest in an e-
commerce website (“it was a natural evolution”). In recent years, they
have invested in physical stores (flagship stores) to bring the product

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Table 2
Business model changes and value creation processes.
Customer segments within the International Channels Digital tools Pre-Purchase Purchase Post-
Business Model customers employed Phase Phase Purchase
Phase

Fratelli Carli S.p.A. Prior Business Model: New international Oil: Social media Social media and Social media Social
B2C via mailing customers Home delivery Web (shop Web (shop Web (shop media
Replaced business model: Mailing window and e- window and e- window and e- QR Code
E-commerce Call center commerce) commerce) commerce) CRM
Omnichannel E-commerce CRM CRM QR code
More intense relationship with Cosmetics: Same + Big Data Big Data Analysis CRM
customers Physical store Analysis
Marketplaces
(Amazon)
De Matteis Prior Business Model: New international Agents and App for B2B Social media N.A. Social
Agroalimentare B2B production for private customers distributors present Web (shop Food influencer media
S.p.A. labels and B2C own brands Targeted web in many window and e- Videos
(medium and high end advertising campaigns international commerce)
market) to the end market in markets Social media
Replaced business model: foreign countries E-commerce Big data
Focus on a premium brand Marketplaces Analysis
based on an agreement with
farmers and agronomists to
produce pasta with the best
quality of wheat
Freddy S.p.A Prior Business Model: New international Agents and App for B2C Social media and Social media Social
B2B customers distributors present App for B2B Web Web media
Replaced business model: in many Web (shop App QR code CRM
B2C international window and e- CRM CRM
E-commerce markets commerce) Big Data Analysis Chatbot
Omnichannel E-commerce Social media Chatbot Smart wall
More intense relationship with Marketplaces CRM Smart wall
customers Flagship stores Big data
Analysis
Chat bot
Smart wall
Essequadro S.r.l. Prior Business Model: New international Agents and App for B2B Social media Web Social
B2B production for private customers distributors present Web (shop media
labels companies Better knowledge of in many window and e-
Replaced business model: foreign market target international commerce)
B2B production with own markets Social media
brands E-commerce CRM
B2C e-commerce Marketplaces Big data
Direct relationships with Analysis
customers
B.Home Interiors S. Prior Business Model: New international International Social media Social media Web (shop Social
r.l. (GioBagnara) B2B production customers Exhibitions Web (shop window) media
Replaced business model: Better knowledge of Architects/Interior, window) Online
Increase of the direct foreign market target yacht, and plane Online catalogue
relationships with customers designers catalogue
Shopping malls
focused on Design
Marketplace focused
on design (Artedona)
Agents and
distributors present
in many
international
markets
SOVET S.r.l. Prior Business Model: B2B New international Interior designers / Web (shop Social media Web (shop Social
production markets Architects window and e- window and e- media
Replaced business model: Better knowledge of Agents and commerce) commerce)
Increased direct relationships foreign market target distributors present Social media
with customers in many CRM
international Big data
markets Analysis (work
E-commerce in progress)
Marketplaces

Source: Author’ s elaboration.

closer to the consumer, enhancing value creation. Moreover, Fratelli De Matteis does not sell directly to the end customer. Thanks to
Carli is a partner of some digital marketplaces (e.g., Amazon), especially digitalization, De Matteis developed and strengthened a direct rela­
for the Mediterranean brand. All marketing channels (mailing/phone, e- tionship upstream with the farmers and downstream with modern dis­
commerce, digital platforms, physical stores) are integrated to enhance tribution channels. In particular, they partnered with the most advanced
the number of touchpoints and serve the customer along the consumer retailers on “a shared database to upload all the technical information on the
journey. products. There are some platforms where the data can be uploaded directly

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by the suppliers, and we are reaching total integration. The ownership of the Freddy’s website and Amazon (“we are both vendor and seller”) and
information is shared, involving a significant change in the process.” Since flagship store. Now Freddy is promoting “brick and click revolution”
85% of De Matteis’s revenue is made by exports and the company is aimed at reinforcing the omnichannel strategy to enhance the customer
present in 45 countries, the possibility of creating a strong partnership experience both online and offline: “Even though it is far more convenient
with major grocery retailers abroad allowed the company to consolidate to shop online, the majority of individuals still prefer to buy their goods in a
its position in foreign markets and to gain greater visibility among in­ physical store.” At the moment, Freddy has 47 Brick & Click stores
ternational customers. In addition, despite De Matteis not developing worldwide. Freddy’s stores support digital engagement through a
the Amazon channel on its own, its products are sold on Amazon by its touchscreen (smart wall) that allows consumers to experience a virtual
business customers (“you finish to sell on Amazon regardless of your specific dressing room connected to social networks, to complete the purchasing
willingness to do it”). This is inducing management to think about the experience with additional information (product, intended use, cross
opportunity to use this marketplace to increase foreign market share and selling), and to make online purchases or reservations (interaction be­
spread knowledge of the company’s products among the international tween the stores).
consumers, especially for the premium brand “pasta Armando.” Essequadro was traditionally a contractor focused on manufacturing
Through the years, Freddy has changed its relationship with eyewear for private label firms. It is mainly a B2B firm, selling to the end
customer segments, creating digital channels. Freddy was traditionally a consumer through a network of agents and professional optical shops
B2B company, and the most important distribution channel was the that build the customer experience and promote customer engagement.
wholesale. With digitalization, Freddy is a B2C company that uses With digitalization, Essequadro had the opportunity to serve many
several marketing channels: traditional (wholesale), e-commerce via business customers through the online channel and to grow the

Fig. 1. Codes clustered by word similarity. Source: Author’s elaboration with NVivo 12.

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development of its own brands: Essedue, KYME sunglasses (recently QR-Code is used only by Fratelli Carli and is applied to each product
acquired at 51%), Bzp Eyewear, and Silvian Heach. In 2016, Essequadro as an electronic label. It is useful in purchasing or post-purchasing
created its first foreign branch in Germany and, in the same year, its phases, in terms of product information (i.e., characteristics, in­
network of sales agents in France. The company entered the United gredients, and nutrition elements), traceability, and valorization of the
States, Russia, Hong Kong, Singapore, China, and Tunisia. Currently, it branded products for the customers. Therefore, it mainly strengthens the
continues to grow internationally. “The traditional distribution channels cognitive dimension of customer experience, which is of paramount
are still the most important channels to sell our products abroad, as we have importance for consumers who want to know more about the product.
an e-commerce website that we use to directly sell our products abroad. Despite De Matteis acknowledging that the QR-Code would be a natural
Eyewear is a particular product, since on the one hand, the design, style, and step for an integrated supply chain a product like pasta Armando, there
fashion are very important drivers in purchasing decisions, while on the other are technical problems related to packaging that present high adjust­
hand, it is a medical device with special needs.” ment costs.
For SOVET, digitalization helped re-shape the internal production However, the most important benefits for all companies in the study
process (SOVET invested in Industry 4.0 technologies) and increase the stemming from digital transformation are related to the cross-
direct relationships with the customer. Adopting digital tools was valorization of social media, CRM, and big data analytics. Social
“necessary to make our products known around the world; print advertising is media are relevant in each phase of the consumer journey and in each
impossible.” dimension of customer experience. For De Matteis, social media pro­
For GioBagnara, digitalization supports the creation of direct vides a great opportunity to directly keep connected with consumers,
customer relationships, enhancing the visibility of the products because food is a traditional product that requires involving an inter­
internationally. mediary distributor. Social media are appropriate for the dynamic
This is evident by examining the cluster analysis by codes based on change that the food sector is experiencing, which is characterized by a
word similarity provided by NVivo12 (Fig. 1), where “digital trans­ new kind of consumer that wants to connect with the product for a
formation” belongs to the same cluster of “CRM” and “customer unique experience. Thanks to social media, De Matteis can accompany
relationships.” the consumer along the entire consumer journey, trying to create
Regarding the most important instruments and their use in the experiential value for consumers, increase interactions, and hence
different stages of the consumer journey, we examined if and how digital heighten willingness to purchase. “In relation to this trend, we use social
transformation helps enhance consumer value creation in each stage. media to make consumers live our world through the recipes and the several
The examined companies employ different types of digital instruments ways of cooking our pasta.” An instrument that is often used to reach these
oriented to various targets (consumers, distributors, and suppliers) with types of experiences is an influencer, which companies must accurately
diverse aims. Websites are used mainly as shop windows, and they are choose. For example, Alessandro Borghese, one of the most important
especially useful for the pre-purchase phase to satisfy consumers’ in­ Italian food influencers, with several hundred thousand followers on his
formation needs and for developing brand awareness. Freddy and Fra­ social pages, provides crucial testimonies. The objective is to stimulate
telli Carli’s websites are e-commerce platforms. the consumer’s affect by providing pleasure connected to the cooking
The use of app technology for the end consumer is quite moderate experience through a series of viral videos.
among the selected companies. Only Freddy employs a consumer- In addition, social media are tools to help consumers understand the
oriented App, which allows consumers to create a “dialogue” and integrated chain of pasta Armando and the background of the product,
interact with other digital instruments: website, social media, and smart including food safety and the quality of the wheat. This generates pos­
wall. Freddy uses a “simple” chatbot: “It is not able to answer all consumer itive feelings and emotions towards the brand, increase customer satis­
queries and accomplish the entire consumer journey,” but it helps con­ faction and retention, which are the prerequisites of customer
sumers interact with the company, stimulating conversations. These engagement.
digital instruments are useful, especially during the pre-purchase and Regarding international markets, the company uses the social media
purchase phases, for developing consumer awareness. Fratelli Carli for its foreign business customers in the pre-purchase stage to promote
recognizes that App and chatbot technologies have great potential, but its products to a specific target market. For example, they reach inter­
they do not have them currently: “It is not easy to have an App for us…In national consumers that live close to the supermarkets where the
the past, we had a forum… at the moment the chatbot is not a priority. We products are distributed. “We did this kind of promotion with the Delhaize
prefer to use and select social media that are consistent with our target.” Apps chain in Belgium and Spain, where we advertised videos through the Face­
are used mainly for the supply-side, with a functional aim, for devel­ book pages of a large-scale retailer”.
oping an informative experience. This result is confirmed by cluster For Essequadro, Instagram and Facebook provide the opportunity to
analysis (Fig. 1), in which “App” and “informativeness” belong to the communicate worldwide brand meanings and messages expressing the
same cluster. culture of Italian eyewear embodied by firms with low financial in­
De Matteis has developed a supplier-oriented App, which has the vestments. “The company cooperates with bloggers, influencers, and celeb­
objective of talking to a huge community of farmers to give them agronomic rities to promote the brand online through exclusive partnerships and special
and commercial information. For example, we can remember that the dates editions of its models.” In addition, social media are of paramount
for certain types of treatment are approaching or we give information on the importance to trigger the affective dimension of the customer experi­
weather or on some risks that may derive from climatic conditions. We ence and generate positive emotions toward the brand. Although it is
alternate this kind of information with marketing ones, focused on commu­ mainly a B2B company, since the distribution is linked to the network of
nication initiatives related to the Armando brand to keep the two worlds of optical shops, social media enables the firm to create a direct connection
production and distribution connected.” Essequadro and Freddy offer an with the end market. Social media help customers, especially in the pre-
App tailored for B2B, with the aim of facilitating communication and purchase phase, allowing the company to develop knowledge and
supply chain information with distributors (wholesalers and retailing strengthen brand awareness and brand identity. “The design of each
partners). For Essequadro, “each new optician is registered on the system, collection is based on different markets, needs of different customers, and the
receiving the information to login the private area where they are constantly customs of different cultures. For Germany, and more generally North Eu­
supported through customer care service and can place orders simply using ropean people, we need to develop a tailored collection that is adapted to the
their computers in the shops, or by smartphone, through the App available for different characteristics of faces…In addition, we are used to launching
Android and IOS.” With this tool, they can know stock availability, see specific online marketing campaigns tailored to specific market targets
order history, download official marketing materials, and send after- worldwide.”
sales requests. For Freddy, Twitter is considered less effective than Instagram and

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Facebook, while Tik Tok is a great dilemma. “Instagram is also an purchase phase. Considering the specific features of the furniture design
important selling instrument,” since photos and posts are clickable and industry, digitalization of the catalogue (and the creation of 3D images)
connect to the virtual store (pre-purchase phase + purchase phase). is one of the most important “services” for interior designers and ar­
Instagram allows consumers to post photos and videos regarding the chitect studios, which provide the furnishing products in an Augmented
products. In this way, the company attempts to trigger the affective Reality to show the results of services and provide customers with an
dimension and the social dimension of the customer experience, in immersive experience.
which delighted and loyal customers share their experience with others, Social media are useful for Big Data Analysis. Reading the comments
thereby becoming advocates for the product, brand, or company. The and the extraction of hidden insight about consumer behavior on social
same is true for Fratelli Carli, which uses social media to create a media, together with the exploitation and the interpretation of the in­
community that shares recommendations about the use of products sights, helps companies shape customer value creation on the basis of
(especially in the cosmetics segment), which is useful in the post- consumers’ profiles. Product innovation is tested using consumer ana­
purchase phase. lytics, without waiting for traditional marketing research. Moreover, it
Analyzing the results of the cluster analysis provides evidence that is possible to develop a tailored customer experience by applying dy­
social media enhances the experiential dimension of “social presence” namic pricing based on changing consumer demand and by launching
together with “entertainment,” thereby improving the customer personal promotions. This develops a tailored customer experience for
experience. the most advanced stage of the value-creation process: customer
For GioBagnara and SOVET, Instagram is the most powerful instru­ engagement during the entire customer journey from pre-purchase to
ment to show the products, which is especially important during the pre- post-purchase phase.

Table 3
Capabilities for digital transformation.
Major trigger of digital Leader in the Main resources Capabilities: Capabilities: Capabilities:
transformation digitalization Sensing Learning Integration/
process coordinating

Fratelli Carli S.p. Curiosity “of the first Family Human Resources Scanning for Analysis of external New organizational
A. mover in the Italian e- Technology technological trends environment functions related to
commerce domain” Reputation Scanning of new Learning from others (big digital
New digital technology consumer behaviors players) New human resources
development Hiring of new human devoted to coordinating
resources the omni-channel
process distribution
De Matteis High technological Family + Human resources New demand Cultural mentality of Continuous adaptation
Agroalimentare standard of business marketing Technology forecasting methods workers based on learning of the organization to
S.p.A. customers (large-scale function Relationship capital based on Artificial from the environment the changeable
retailers) (upstream with Intelligence Hiring of new human environment
Curiosity of top farmers/agronomists Online market resources (flexibility)
management toward and downstream with researches to test Development of team
the potentiality of the the distribution consumer behavior working at the inter-
new digital network) functional level
technologies
Freddy S.p.A New digital technology Family + CFO Human Resources Imitative behavior Organizational learning: New organizational
development Technology related to digital willingness to learn functions related to
marketing different ways of doing digital
Scanning of new business, new tools and Reorganization of
consumer behaviors instruments processes and tasks
Hiring of new human
resources
Essequadro S.r.l. Young age of the Family + Human Resources Imitative behavior Organizational learning: New organizational
company and of the marketing Relationship capital related to digital Trends analysis functions related to
entrepreneur, manager (with sales network) marketing Marketing research digital
management, and Scanning for fashion Willingness to learn Better integration
employers and digital trends different ways of doing between design/graphic
New digital technology emerging from the big business and marketing
development players (like Gucci, Hiring of new human departments
Celine, etc.) resources
Customers knowledge
through social media
B.Home Interiors Young age of the Entrepreneur Human Resources Scanning for digital Organizational learning: New organizational
S.r.l. company and wife Relationship capital trends emerging from Trends analysis functions related to
(GioBagnara) New digital technology (with interior designers the big players (like Marketing research digital (marketing)
development and press) Armani, Casa, etc.) Willingness to learn
different ways of doing
business
Hiring of new human
resources
SOVET S.r.l. New digital technology Family + Human Resources Scanning for digital Organizational learning: New organizational
development marketing Relationship capital trends Trends analysis functions related to
manager (with distribution Marketing research digital (marketing)
network) Willingness to learn Better integration
different ways of doing between design/graphic
business and marketing
Hiring of new human departments
resources

Source: Author’ s elaboration.

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De Matteis is developing a project of Artificial Intelligence to forecast For De Matteis, sensing and coordination capabilities are crucial for
demand to plan industrial activities and provide product when needed value creation in the digitalization process. “Sensing means paying
and in the right quantities. The model is based on algorithms that use the attention to all the external stimuli, to read and interpret the market. Coor­
company’s historical data combined with external databases. In the dination means having the capabilities to continuously change the company’s
United States, the company will study the seasonality of the pasta processes, to adapt them to environmental changes.”
market linking it to some national celebrations, to forecast demand For Freddy and for Essequadro, sensing follows the trends. For
peaks and declines. SOVET: “Sensing is important. We have always been innovative. Personally, I
Chatbot and smart walls are not very used in the case study com­ take inspiration from others to update myself, and I take inspiration to do
panies, most of which operate B2B. The cluster analysis indicates that something different; [sensing is] listening to consumers to understand their
smart walls increase customer experience related to the “sensory appeal” hidden needs.”
dimension. Considering that SMEs tend to be “digital followers” of bigger firms,
the learning capability is the other most important capability in the
4.2. Digital transformation and the role of dynamic capabilities. value creation process triggered by digital transformation. For Fratelli
Carli, “the ability to learn is something new that needs to be applied to old
As all the investigated companies are family firms, family entrepre­ processes…listening, looking for what happens; so you do not have to just
neurs are directly involved in the strategic governance, supported by watch in your country, maybe look all around.” Freddy considers the
external managers. This is typical for SME in Italy. Hence, in all cases, learning capability the principal driver of value creation in digital
the decision to implement a digital transformation was driven by the transformation: “Learning is applying knowledge about mechanisms that
entrepreneurial family with the help of top management (see Table 3). there were not before …it requires efforts from everyone.”
Lucio Carli says: “The family started the digitalization process! I wanted As Essequadro is a trend follower, capable learning comes from big
the first e-commerce and I promoted the use of new digital marketing media.” companies that create fashion trends and are crucial drivers of innova­
New managers may help to identify the most suitable solutions “in a tion and competition. Learning capabilities are defined as “learning from
world that is moving at an exponential rate.” For De Matteis, the entre­ the market…we have an innate ability to listen to the market.” This ability
preneurial family promoted the digital transformation of the company as derives first from the family firm origin (i.e., a family of opticians) and
an integral part of the corporate strategy developed by Marco De Matteis second from the cross-reading of web, social media, and magazines to
and his sister, Gabriella. At a more operative level, the marketing understand “what Gucci means, what Celine means” and “what the market
function was an internal driver, while more advanced business cus­ wants.” From this perspective, learning capabilities are enhanced by the
tomers requiring high digital standards constitute an external driver. It use of digital instruments that help deeply understand fashion trends
appears similar for Freddy: “Carlo Freddy and the family promoted the and customer needs. It is clear that “learning focuses on using market
digital transformation that allows us to become a B2C company.” For intelligence to create new knowledge” (Pavlou & El Sawy, 2011, p. 244).
Essequadro, the digital transformation and the intense use of social For GioBagnara: “it is important to learn from Armani Casa magazine and
media marketing were initially promoted by the entrepreneurial family. others design trend setters to understand the best ways to show products.”
In the case of GioBagnara, the founder, Giovanni, played a pivotal role in Such a learning process led to hiring new managers, focusing on e-
the introduction of digital instruments, particularly social media. commerce and social media marketing in collaboration with external
Therefore, we found evidence of the criticality that leaders (owner and/ professional communication agencies. All the companies invested in
or managers of SMEs) recognize the potential of digitally enabled technological resources and in new human resources that accomplished
growth (North, Aramburu, & Oswaldo, 2019). Dynamic capabilities organizational renewal required by digitization. Such new figures need
useful in digital transformation are anchored in the ideas and perfor­ to be coordinated and integrated in existing organizational structures to
mance of individuals, specifically entrepreneurs (Vial, 2019) that sup­ avoid conflicts and change resistance from extant functions. The re­
port, build, and maintain such competences, which are responsible for lations among all these variables are shown in Fig. 2, in which “HR and
decision-making related to dynamic capabilities topics (Goerzig & organization,” “change resistance,” and “integrating and coordinating”
Bauernhansl, 2018). are clustered.
Following Pavlou and El Sawy (2011), we asked the interviewees to
identify the most important dynamic capabilities useful for digital
transformation. We created a Hierarchical Chart on NVivo 12 based on
the text coded as “capabilities,” distinguished in “sensing,” “learning,”
and “integrating and coordinating.” It is evident that the dynamic ca­
pabilities on which our respondents focus more the attention were
sensing and learning, for different reasons.
The ability to understand the potential of digital technologies (tools,
content, distribution channels, services, e-business applications) to
create customer value is considered a determinant for Fratelli Carli,
which invested in a digital channel in 1996, when e-commerce in Italy
was less diffused. The sensing capability is defined by Lucio Carli as “the
ability to seize opportunities and therefore to reach a balance between the old
and the new,” which follows Teece et al. (1997), for whom it was
necessary to surveil market trends and new technologies to sense and
seize opportunities. Sensing a new context of the customer enables the
firm to gain deep insight into customer motivations and the proper mix
of traditional and digital instruments. For Essequadro, the family’s
sensing capability is considered the most important driver of a firm’s
competitiveness and digital transformation. Sensing is defined as the
capacity to scan emerging fashion trends promoted by big players (e. g.,
Gucci, Celine, etc.), especially on social media with the most attractive
digital/social media marketing solutions: “We have a good ability to sense Fig. 2. Hierarchical chart compared by number of coding references. Source:
and seize opportunities. We look ahead!” Author’s elaboration with NVivo 12.

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5. Discussion continues with customer satisfaction and commitment, and arrives at

customer engagement. During this process, companies gradually
The results help to understand how digital transformation is chang­ improve sensing capabilities that enhance all the dimensions of
ing the customer value creation process of SMEs (RQ1). According to customer experience.
Lemon and Verhoef (2016), digitalization leads all companies to try to As the sampled firms are SMEs, learning is crucial for the design of
create a seamless experience with customers along different channels digital transformation: SMEs tend to study trends and ways of doing
and touch points, combining online and offline channels. Through business from bigger competitors. Hence, for SMEs, digital trans­
digitalization and integration of different distribution and communica­ formation is a learning process that requires effective capabilities to
tion channels, firms seek to enhance the purchasing experience, add integrate technology, business, and learning strategies (Wang, 2008),
information, and stimulate interactions and conversations between and the process of hiring new human resources has been the necessary
consumers and companies at each stage of the consumer’s journey. condition, following Hubschmid-Vierheilig et al. (2019). These new staff
The new business models, mainly based on customer engagement, members have been inserted into organizational structures and new
are primarily influenced by a change in the distribution channels ori­ organizational functions to deal with e-commerce and digital marketing
ented to an omni-channel strategy. Along the consumer journey, digital departments have been created. Moreover, considering that these new
tools enhance different dimensions of the customer experience, partic­ organizational functions interact with traditional functions, organiza­
ularly informativeness, entertainment, and social presence. From the tions had to reshape to meet the digital opportunities. The knowledge
cluster analysis provided by NVivo12 (Fig. 1), Apps are used mainly for from new staff was useful for disseminating a digital “culture” in the
developing functional experiences and increasing the gathered infor­ companies, and the training of “old” employees was fundamental.
mation for the customers, while social media are the principal tools with Companies tried to revamp existing operational capabilities with
which SMEs expand affective experiences, such as “social presence” and learning, new knowledge, and skills (Teece, 2007), but as knowledge
“entertainment.” from the learning process was mostly held by new employees, it had to
Following Taiminen and Karjaluoto (2015), the results confirm that be integrated at all levels (Teece et al., 1997).
social media have radically created new ways of interacting and are the Therefore, the capability to integrate and coordinate digital knowl­
most important means of communication and value creation within the edge throughout organization was fundamental for all the selected
business model, enhancing entertainment during the pre-purchase phase companies, and the development of cross-functional teams and flexible
and the social presence during the post-purchase phase. The selected organizations were the main instruments. Moreover, the coordinating
companies invested in Instagram and Facebook, which are aimed at capabilities were important to the integration of different distribution
implementing and improving corporate brand communication strategies (e-commerce) and communication channels (website and social media),
and encouraging interaction, participation, and collaboration with following an omni-channel logic. To enhance the purchasing experience,
consumers. Social media encompasses social networking, blogging, adding information and stimulating interactions and conversations be­
influencers’ engagement in promoting the brand, paid advertisements, tween consumers and companies at each stage of the consumer journey
video, and photo virally spread. required a strong integration and coordination among the different
On the basis of the previous results, digitalization drives changes to activities.
key components of the business model, including companies operating Based on previous results and after carefully examining the current
in the traditional business, which confirms Ferraris et al. (2018) and literature, this study develops seven research propositions. The research
Warner and Wäger (2019). Moreover, according to Ashley and Tuten propositions are linking the various analyzed constructs: digital trans­
(2015), digital technologies help SMEs overcome the disadvantage of formation, customer value, and dynamic capabilities. Therefore:
size, allowing the generation and communication of content and
engagement of consumers, as well as the quick development of brand Proposition 1: Digital transformation can facilitate customer value
image at a lower cost. This is true for international markets, where creation through the adoption of several digital technologies that
digital instruments are becoming essential for engaging new customers, support all stages of customer journey.
creating relationships and brand affection, directly selling products Proposition 2: The omni-channel strategy can improve customer
abroad, and better understanding consumer needs and changing value creation during the purchase phase, enhancing informative­
attitudes. ness, entertainment, and sensory appeal.
Following Vial (2019), our results confirm that SMEs use digital Proposition 3: Apps and social media can facilitate customer value
technologies to strengthen customer relationships through the different creation during the pre-purchase phase, enhancing informativeness
marketing channels and touch points of the consumer journey. In the and entertainment.
cluster that includes “digital transformation” and “CRM,” “customer Proposition 4: Social media can improve customer value creation
relationship” and “consumer insights” are included. These digital tools during the post-purchase phase, enhancing entertainment and social
are used by SMEs for having an intense co-creation to better understand dimension.
consumer desires and future trends for higher product success. Proposition 5: Sensing can support the start of digital transformation,
The case studies contribute also to understand the most important enabling customer value creation.
dynamic capabilities for digital transformation in SMEs (RQ2). Specif­ Proposition 6: Learning can facilitate the design of digital trans­
ically, they help to obtain a broader comprehension of the specific role formation, enabling customer value creation.
played by dynamic capabilities as facilitators of digital transformation. Proposition 7: Coordinating and integrating capabilities can support
Sensing is the first driver of digital transformation and is trigged by the omni-channel strategy, which enhances customer value creation.
the entrepreneur/family members. In SMEs, the willingness to transform
the relationship with the customer is the desire of the company’s owner 6. Conclusions, implications, and limitations
(Goerzig & Bauernhansl, 2018).
The adoption of various types of technology, mainly social networks, This study scrutinizes how SMEs operating in traditional industries
allows companies to build a direct and emotional relationship with have changed business models and customer value creation processes
customers, which develops a company’s understanding of consumer due to digital transformation. Given that the latter is a phenomenon
desires, feelings, and needs. Through the affective and social di­ generated by the adoption of digital technologies and tools, our work
mensions, companies may refine sensing capabilities in deep connection attempts to identify the most important dynamic capabilities that help
with customers. According to Sashi (2012), through digital technologies, companies create value for customers through effective use of digital
companies trigger a virtual circle that starts from customer interaction, technologies.

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M. Matarazzo et al. Journal of Business Research 123 (2021) 642–656

While previous studies on digital transformation and value creation study design that does not provide static generalizations, yet it offers a
focused on the consequences of technology adoption, we provide further “steppingstone” to building new theory. In this sense, this is a pilot study
understanding from the perspective of dynamic capabilities as facilita­ for other analyses. Further studies are needed to extend the number of
tors of digital transformation. To the best of our knowledge, this is the case studies, by including other SMEs operating in other the Made in
first attempt to connect digital technology adoption, dynamic capabil­ Italy sectors. Second, considering that Italy is a country characterized by
ities, and value creation processes of SMEs. Our analysis was not limited a strong difference between northern and southern regions, geograph­
to social media, but it was extended to more complex technologies such ical context in which the Made in Italy SMEs are operating could be
as Big Data Analytics, Apps, QR codes, and chatbots, which are less useful. Future comparative research could consider differences between
prevalent among SMEs. In particular, we aimed to understand how types of Made in Italy SMEs, including geographical position, industry
customer value is created and co-created at the different stages of the focus, brand positioning, governance structure, and age, thereby
customer journey and the specific role played by the different kinds of enlarging the possibility of analyzing different applications and triggers
dynamic capabilities supporting the adoption of digital technologies. To of digital transformation. Third, the number of investigated variables
this aim, we considered the online customer experience conceptualized could be expanded by adding other factors related to the digital trans­
by Bleier et al. (2019) through the four dimensions of informativeness, formation, such as the production/logistics phase (Industry 4.0) and the
entertainment, social presence, and sensory appeal. micro foundations of the organization (e.g., human resource
The context of analysis is represented by SMEs operating in the Made management).
in Italy sectors. From the analysis of six case studies (belonging to the
fashion, food, and furniture industries), it emerges that the investigated
SMEs are inclined to use digital instruments in the distribution, Acknowledgments
communication, and market analysis phases, which shape their business
models. In particular, digital instruments (e.g., social media, Apps, The authors thank all the respondents of the selected companies for
chatbots, big data) help modify the process of consumer value creation, their availability in sharing information and experiences and the editors
generating new distribution channels that are integrated in an omni- and reviewers for their valuable advises.
channel perspective, which provide deeper and new relationships with
consumers. Moreover, the study shows that sensing and learning capa­
Funding
bilities are essential to pursue proper digital transformation and that the
entrepreneurs or the family owners drive these capabilities. Integrating
This research did not receive any specific grant from funding
and coordinating capabilities are natural consequences, which are
agencies in the public, commercial, or not-for-profit sectors.
driven more by managers.
This study provides theoretical and practical implications. First, this
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Michela Matarazzo is Professor of International Business at G. Marconi University of
SMEs. Journal of Small Business and Enterprise Development, 22(4), 633–651.
Rome where she serves as Director of the first level Master degree in Global Marketing and
Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations
Foreign Trade. She has been an elected board member at the Società Italiana Management
of (sustainable) enterprise performance. Strategic Management Journal, 28(13),
(2013–2018). She has served (and currently serves) as Track Co-chair at several confer­
1319–1350.
ences. Her research interests include international business with a special focus on con­
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sumer behaviour, country image, international corporate reputation, SMEs’
Journal of Management Studies, 49(8), 1395–1401.
internationalization and market entry modes, also in relation to the digital context. She has
Teece, D. J. (2014). A dynamic capabilities-based entrepreneurial theory of the
authored, co-authored, more than 80 publications, including journal articles, conference
multinational enterprise. Journal of International Business Studies, 45(1), 8–37.
papers, book chapters and 3 books on firms’ internationalization and cross-border
Teece, D. J., & Linden, G. (2017). Business models, value capture, and the digital
acquisitions.
enterprise. Journal of Organization Design, 6(1), 1–14.
Teece, D., Peteraf, M., & Leih, S. (2016). Dynamic capabilities and organizational agility:
Risk, uncertainty, and strategy in the innovation economy. California Management Lara Penco is Professor of Business Strategy and Strategic Management&Corporate
Review, 58(4), 13–35. Strategy in the University of Genoa, Department of Economics and Business Studies. She
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic holds a phd. in “Service Management” from the same University. She is Member of C.I.E.L.
management. Strategic Management Journal, 18(7), 509–533. I., the Italian Center of Excellence on Logistics Transports and Infrastructures. Her research
Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Dong, J. Q., Fabian, N., & interests lie in strategic management, corporate strategy and governance. She is Track
Haenlein, M. (2019). Digital transformation: A multidisciplinary reflection and Chair of Euram Conference – SIG “Entrepreneurship” and member of the Editorial Board of
research agenda. Journal of Business Research. https://doi.org/10.1016/j. several international journals and author of books and papers published on academic
jbusres.2019.09.022. national and international Journals.
Verhoef, P. C., Lemon, K. N., Parasuraman, A., Roggeveen, A., Tsiros, M., &
Schlesinger, L. A. (2009). Customer experience creation: Determinants, dynamics
Giorgia Profumo is Professor of Management, Department of Economics and Business
and management strategies. Journal of Retailing, 85(1), 31–41.
Studies, University of Genoa, where she teaches “Management” and “Advanced Market­
Vial, G. (2019). Understanding digital transformation: A review and a research agenda.
ing”. She holds a phd. in “Service Management” from the same University and she has been
Journal of Strategic Information Systems, 28, 118–144.
Assistant Professor of Management in the Faculty of Economics, University of Naples
Volberda, H., Mihalache, O., Fey, C., & Lewin, A. Y. (2017). Management and
“Parthenope”. Her main research interests are: corporate communication, consumer
organization review special issue ‘Business Model Innovation in Transforming
empowerment and corporate governance, with a focus on service industries. She is
Economies’. Management and Organization Review, 13(3), 689–692.
member of the Editorial Board of “Corporate Governance and Organizational Behavior
Vrontis, D., Bresciani, S., & Giacosa, E. (2016). Tradition and innovation in Italian wine
Review”, “Corporate Board: Role, Duties and Composition” and “Corporate Governance
family businesses. British Food Journal, 118(8), 1883–2189.
and Research & Development Studies - CGR&D” and author of several books and papers on
Wang, C. L. (2008). Entrepreneurial orientation, learning orientation, and firm
qualified national and international Journals.
performance. Entrepreneurship Theory and Practice, 32(4), 635–657.
Warner, K. S., & Wäger, M. (2019). Building dynamic capabilities for digital
transformation: An ongoing process of strategic renewal. Long Range Planning, 52(3), Roberto Quaglia is a Professor of Strategy and Management at ESCP Europe and a
326–349. consultant focused on Keynote Speeches, Action Workshops and Teaching Modules. He
Xie, K., & Lee, Y. (2015). Social media and brand purchase: Quantifying the effects of serves companies, family businesses and entrepreneurial ventures.
exposures to earned and owned social media activities in a two-stage decision
making model. Journal of Management Information Systems, 32(2), 204–238.

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