A Conceptual Framework on Business Strategy–Innovation and MSMEs’ Performance: Digital Business Ecosystem as Catalysts

Abstract

— This study aims to synthesize existing literature and develop a conceptual framework that explains the relationship between business strategy, innovation, and Micro, Small and Medium Enterprises (MSMEs) performance, as well as to examine the role of the digital business ecosystem in strengthening this relationship. This paper adopts content analysis and a review of multidisciplinary literature that primarily relate to MSMEs ’ sector, digital business ecosystem, and financial performance. MSMEs performance is actualized through the integration of business strategy and innovation within a digital business ecosystem supported by digital technologies, enabling MSMEs to improve efficiency, market access, and competitiveness. In the future, digitally engaged MSMEs are likely to enhance their performance more effectively and sustainably. This study assists MSME owners, managers, and policymakers in better understanding the role of business strategy, innovation, and digital business ecosystems while recognizing performance improvement opportunities through digital engagement. To the best of the authors ’ knowledge, this is the first paper to establish a conceptual framework integrating business strategy, innovation, and the digital business ecosystem to explain MSMEs performance, as this integrated perspective remains relatively new and underexplored in existing literature, thereby enriching the concept and providing directions for future research.