Exploring SMEs innovation paths with augmented and virtual reality technologies

Purpose Augmented reality (AR) and virtual reality (VR) are increasingly recognized among technologies potentially driving the digital innovation of small and medium-sized enterprises (SMEs). Nevertheless, the implications of AR/VR adoption in innovation processes have yet to receive much attention to date, with the need to explore the issues facilitating a systematic implementation in the SME context. This study aims to investigate the possible innovation paths of SMEs as a result of AR/VR adoption. Design/methodology/approach The authors performed a multiple case study research involving six Italian SMEs in manufacturing and service sectors that are investing in AR and/or VR solutions and are digitally innovating thanks to these technologies. Findings AR/VR solutions lead to different types of innovation in SMEs, i.e. for innovating product or service offerings, business processes or even the business model, when AR/VR extends to the company business logic. SMEs demonstrate being able to leverage internal sources with the essential commitment of top management and low resistance of employees in all kinds of AR/VR-enabled innovations. Conversely, they involve different external innovation sources according to the type of innovation pursued. Organizational issues emerged as more relevant than technological issues. Practical implications Results contribute to the literature on digital transformation of SMEs and provide managerial guidance on innovation sources and organizational issues to be considered to effectively deploy AR/VR solutions into specific innovation paths. Originality/value This study explores the impact of emergent technologies in the innovation process along with multiple perspectives, degree of complexity, and strategic importance in the SME context