Digital Transformation and Organizational Performance in Chinese Retail SMEs: Unpacking the Mediating Role of Organizational Resilience

Abstract

Purpose: Retail SMEs in China operate in a highly volatile digital commerce ecosystem with rapidly shifting consumer demand, intense platform-based competition, and frequent technological and regulatory changes. This study examines how digital transformation (DT) improves firm performance by strengthening organizational resilience (OR) and whether environmental dynamism (ED) moderates the resilience–performance relationship. Design/methodology/approach: A quantitative survey was conducted with retail SMEs, and the conceptual model was tested using PLS-SEM to assess measurement properties and estimate direct, mediating, and moderating effects. Findings: The results show that DT directly improves firm performance and significantly enhances OR, indicating that digital initiatives in retail SMEs create value by boosting efficiency, market responsiveness, and the ability to withstand shocks and adapt quickly. OR partially mediates the DT–performance link, showing that resilience is a key capability through which DT yields superior business outcomes. ED positively moderates the OR–performance relationship, meaning that the performance benefits of organizational resilience increase under high market and technological volatility. Research limitations/implications: This study uses cross-sectional, self-reported data, limiting causal inference and potentially introducing common method bias. Future research should apply longitudinal or multi-source designs and examine additional mechanisms (e.g., organizational agility, innovation capability) and contextual contingencies (e.g., competitive intensity, regulatory turbulence). Practical implications: For managers of Chinese retail SMEs, the findings highlight the need to prioritize DT initiatives that improve real-time environmental sensing, speed up data-driven decisions, and enable rapid operational reconfiguration—dynamic capabilities that underpin resilience in highly volatile retail settings. Policymakers can strengthen these SMEs’ competitiveness by offering targeted capability-building programs (e.g., digital literacy, data analytics training, resilience-focused technology upgrades) and by enhancing digital infrastructure and governance to reduce excessive environmental uncertainty for small retailers. Originality/value: This study extends understanding of DT in retail SMEs by explaining when and how DT improves performance: it identifies OR as a central capability mechanism and ED as a key boundary condition in a dynamic, platform-mediated retail context.