From Digital Capabilities to Non Linear Growth: The Exponential SME Framework

Abstract

Small and medium-sized enterprises (SMEs) face increasing pressure to navigate digital transformation, yet many struggle to convert digital initiatives into sustainable organisational capability development and growth outcomes. This paper develops the Exponential SME Framework, an integrated conceptual framework that explains how SMEs may progress from digital capability development to non-linear growth potential. Drawing on literature relating to Digital Dynamic Capabilities (DDC), digital transformation practices, organisational transformation, Exponential Organization (ExO) attributes, and SME growth, the framework synthesises previously fragmented streams of research into a coherent conceptual structure. The framework proposes that Digital Dynamic Capabilities provide the foundation for Digital Transformation Practices (DASAT), which contribute to transformations across key organisational domains, including business models, value chains, customer relationships, and organisational culture. These transformations may support the adoption of ExO-like attributes, specifically experimentation, dashboards, autonomy, and community engagement, that enhance organisational adaptability, learning, and responsiveness. Through the interaction of these organisational elements, SMEs may strengthen the conditions associated with non-linear growth potential. The paper contributes to the SME and digital transformation literature by integrating multiple streams of research into a unified framework, clarifying the relationships between capabilities, practices, organisational transformation, and growth-enabling mechanisms, and providing a foundation for future empirical research. The paper also offers managerial and policy implications for strengthening SME digital transformation and growth readiness.