Digital transformation in SMEs: A taxonomy of externally supported digital innovation projects

Digital transformation is a complex yet indispensable endeavor for SMEs. Hence, SMEs initiate and implement digital innovation projects to drive their digital transformation but face difficulties in the initiation phase, which could lead them to embark on projects with little value. As a remedy, SMEs may collaborate with external digital innovation units to support their project initiations. However, underlying project characteristics are often poorly understood, so much so that initiations often happen ad hoc. The research goal of this article is to develop a taxonomy that supports the initiation of digital innovation projects in SMEs in collaboration with external digital innovation units. The taxonomy development combines both conceptual and empirical perspectives. The former is informed by a structured literature review. The latter emerges from analyzing 210 project reports of German SMEs. The resulting taxonomy comprises 10 dimensions and 30 characteristics. Based on the taxonomy and the analyzed projects, 5 project types are derived by using cluster analysis methods. External digital innovation units can use the taxonomy and the 5 project types to classify and better understand digital innovation projects in SMEs. The article contributes to the body of knowledge and facilitates future research on digital innovation projects in SMEs.