Digital maturity, dynamic capabilities and innovation performance in high-tech SMEs

Honglan Jie, Leong Mow Gooi and Yanchun Lou

International Review of Economics & Finance, 2025, vol. 99, issue C

Abstract: The rapid advancement of digital technologies has positioned digital transformation as a strategic imperative for firms seeking to enhance innovation and competitiveness. However, existing research predominantly focuses on large corporations, overlooking how high-tech small and medium-sized enterprises (SMEs) navigate digitalization to drive innovation performance. Addressing this gap, this study examines the role of digital maturity in fostering innovation within high-tech SMEs, with a particular emphasis on the mediating effect of dynamic capabilities. Using survey data from 587 high-tech SMEs in China, analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM), the findings reveal that digital maturity positively influences both dynamic capabilities and innovation performance. Additionally, dynamic capabilities serve as a crucial mediating mechanism between digital maturity and innovation performance, reinforcing the importance of organizational agility and resource reconfiguration in digital transformation. However, the moderating effect of digital maturity on the relationship between dynamic capabilities and innovation performance was not supported, indicating that achieving higher digital maturity alone does not necessarily strengthen this linkage. These insights contribute to the broader discourse on digital transformation by demonstrating that a strategic alignment between digital maturity and dynamic capabilities is essential for high-tech SMEs to achieve sustainable innovation. The findings provide actionable implications for managers and policymakers seeking to optimize digital strategies and enhance competitiveness in rapidly evolving technological landscapes.

Keywords: Digital maturity; Digital transformation; Dynamic capabilities; Innovation performance (search for similar items in EconPapers)
JEL-codes: L25 M15 O32 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025001340

DOI: 10.1016/j.iref.2025.103971

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