Business failure experience and digitalization in micro and small enterprises in emerging markets: the role of knowledge exploitation capabilities

Abstract

This study offers new insights into the association between business failure experience and digitalization in emerging markets. The study also provides contextual evidence about the extent to which micro and small enterprises can leverage knowledge exploitation capabilities for digitalization in resource-constrained economies, where micro and small enterprises are the most ubiquitous form of business entities. Using a survey dataset of 274 firms from Ghana, the study finds a negative association between learning from business failure experience and digitalization. This relationship is attenuated by knowledge exploitation capabilities. This study contributes to the literature on digitalization in emerging markets as well as the knowledge-based theory of the firm. We provide implications for managerial practice, noting that managers with prior entrepreneurial failure experience should focus on developing and leveraging knowledge capabilities to achieve a successful digitalization drive.