DIGITAL TRANSFORMATION, BUSINESS MODEL INNOVATION, AND SME COMPETITIVENESS: THE MEDIATING ROLE OF SME PERFORMANCE AND THE MODERATING ROLE OF STAKEHOLDER COLLABORATION
Abstract
This study examines the effects of digital transformation and business model innovation on SME competitiveness in East Java, with SME performance serving as a mediating variable and stakeholder collaboration as a moderating variable. Employing a quantitative explanatory research design, data were collected through a cross-sectional survey of Micro, Small, and Medium Enterprises (SMEs) operating in East Java. The data were analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The results indicate that digital transformation and business model innovation have significant positive effects on SME performance. SME performance, in turn, significantly enhances SME competitiveness, confirming its role as a partial mediator in the relationships between digital transformation, business model innovation, and competitiveness. In addition, both digital transformation and business model innovation exert direct positive effects on SME competitiveness, suggesting that they function as strategic capabilities that extend beyond performance outcomes alone. The findings further reveal that stakeholder collaboration does not directly moderate the relationships leading to competitiveness; however, it indirectly strengthens SMEs’ internal processes by enhancing the effectiveness of digital transformation and business model innovation in improving performance. This study contributes to the literature by integrating the Resource-Based View, Dynamic Capability Theory, and Stakeholder Theory into a unified empirical framework for explaining SME competitiveness in an emerging economy context. Practically, the findings highlight the importance of aligning digital transformation with business model innovation and strengthening collaborative ecosystems to enhance SME performance and achieve sustainable competitiveness.
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