Abstract:Digital transformation offers new opportunities and challenges for SMEs with scarce resources to perform digital innovation by using digital technology for the value creation. This study conceptualized the digital innovation value chain based on the theory of innovation value chain and networks. Then, empirical model was tested using data from 267 Chinese digital SMEs for examining the relationships between adoption of digital technology, digital products innovation, digital service innovation, business model innovation and business networks and personal networks. Structural equation modeling (SEM) showed there are some positive relationships between the path of adoption of digital technology to SMEs’ market share and profit level. Moreover, fuzzy-set qualitative comparatives analysis (fsQCA) was used in this research to reveal the presence of equifinality by distinguishing various configurations in which these antecedent conditions influence market share and profit level. The study contributes practically for SMEs to take various paths of digital innovation into consideration and to put accurate calculations for the policy making.