Abstract
New digital paradigms have prompted many firms to innovate their business models. Consequently, new sets of dynamic capabilities are required to cope with these new digital paradigms. We examine the heterogeneity of organizations’ dynamic capabilities and introduce such capabilities as a key driver of digital business model innovation (BMI) in family and non-family firms operating in environments with different levels of dynamism. Based on unique survey data from 1,444 German family and non-family firms, we examine dynamic capabilities in terms of knowledge exploitation, entrepreneurial capability, risk management, networking, development and change management, and market and customer knowledge, showing that this wide range of heterogeneous dynamic capabilities in combination fully mediates the positive relationship between family influence and digital BMI. Moreover, we find that the mediation effect is stronger for firms operating in environments with high dynamism. However, when examined one-by-one, our findings reveal that not all of the different capabilities play the same role and matter in a dynamic environment. Taken together, these findings highlight that the effect of family influence on digital innovation is more complex than previously thought, which holds important implications for the digital innovation and family business innovation literatures, and offers important insights into the crucial role of capabilities and environmental dynamism in the digital economy."