Role of network capability in the relationship between digital ambidexterity and small and medium enterprises’ business performance in an emerging economy

Abstract

Background: Small and medium enterprises (SMEs) in emerging economies encounter resource constraints, impairing performance. In this digital age, resource scarcity is a significant barrier to SMEs competing effectively in the global market. Aim: The study addresses a critical knowledge gap regarding how SMEs can leverage network capabilities (NCs) to enhance the effectiveness of digital ambidexterity (DA) and improve SME business performance (SME BP). Setting: The article examined the role of NC in the relationship between DA and SME BP. Method: The study employed a quantitative cross-sectional design, sampling 370 owners and managers. The data were analysed through regression analysis. Results: Digital ambidexterity had a significant direct positive effect on the mediator variable, NC. Network capability had a significant positive effect on SMEs’ BP. When the mediator variable NC was controlled for, the mediation analysis indicated that DA was a significant predictor of SMEs’ BP. Conclusion: Policymakers should promote SMEs’ DA onboarding initiatives by offering tax breaks to collaborations between large firms and indigenous SMEs. Small and medium enterprises in emerging economies should utilise their networking capabilities to support DA initiatives. Contribution: The findings are significant for SME managers and owners, who should carefully utilise networks to increase their DA and business performance.