The study investigated the mediating effect of competitive strategy and adaptive capability in the relationship between digital transformation and performance of small- and medium-scale enterprises (SMEs).
The study sampled 362 SMEs selected through convenience sampling. A self-administered structured questionnaire was used to collect the data, while the partial-least square structural equation modeling (PLS-SEM) technique was employed for the data analysis using the SmartPLS v.4 software.
Results show that digital transformation significantly influences performance of SMEs. Besides, the mediation analyses showed that both competitive strategies (low-cost and differentiation) as well as adaptive capability mediate the relationship between digital transformation and SMEs performance.
The results underscore the importance and need for SMEs to align their digital transformation initiatives with strategic positioning to drive competitive advantage and enhance performance, given that digital transformation alone may not be enough to drive performance.
The study is one of the first to provide evidence of the indirect effect of competitive strategies and adaptive capability in the relationship between digital transformation and performance in the context of SMEs, contributing to the broadening of knowledge in the field.
