Title: Digital capabilities and SMEs' performance under technological uncertainty: empirical evidence from an emerging market

Authors: Pham Thu Huong; Dinh Van Hoang; Tran Thi Kieu Minh; Nguyen Thi Hien

Addresses: Vietnam-Japan Institute for Human Resources Development, Foreign Trade University, 91 Chua Lang Street, Dong Da District, Hanoi, 100-000, Vietnam ' Vietnam-Japan Institute for Human Resources Development, Foreign Trade University, 91 Chua Lang Street, Dong Da District, Hanoi, 100-000, Vietnam ' Vietnam-Japan Institute for Human Resources Development, Foreign Trade University, 91 Chua Lang Street, Dong Da District, Hanoi, 100-000, Vietnam ' Vietnam-Japan Institute for Human Resources Development, Foreign Trade University, 91 Chua Lang Street, Dong Da District, Hanoi, 100-000, Vietnam

Abstract: The paper aims to clarify the effect of digital capabilities on firm performance in the context of technological uncertainty, considering the effects of digital innovation and digital leadership based on the theoretical foundation of dynamic capabilities. The research employed a simple random sampling with the survey participation of 213 small and medium-sized enterprises (SMEs) from various fields in Vietnam and then used partial least squares-structural equation modelling (PLS-SEM) as an analysis technique. The findings indicate that there is a positive and statistically significant relationship between digital capabilities and firm performance, with a mediating effect of digital innovation on this relation. Digital leadership as a dynamic capability facilitates SMEs in developing digital capabilities and digital innovation and positively affects firm performance. Technological uncertainty has a direct impact on digital capabilities and digital innovation and has an indirect effect on firm performance. This research makes both theoretical and practical contributions.

Keywords: digital capabilities; digital innovation; firm performance; small and medium-sized enterprises; SMEs; technological uncertainty.

DOI: 10.1504/IJIL.2024.142036

International Journal of Innovation and Learning, 2024 Vol.36 No.4, pp.404 - 424

Received: 06 Aug 2023
Accepted: 15 Oct 2023
Published online: 07 Oct 2024 *

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