IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025issue-4p1510-1530.html
   My bibliography  Save this article

Digital Capabilities and Product Innovation: A Strategic Nexus for Market Success

Author

Listed:
  • Samsuden N.S

    (Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia)

  • Zulkarnaini N.A.S

    (Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia)

  • Shah Rollah Abdul Wahab

    (Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia)

  • Shahrial Bungsu

    (Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia Business Diploma and Financial Programmes Sunway College Johor Bahru 81100 Malaysia)

Abstract

The research aims to explore the dynamic relationship between digital capability (DC) and business performance (BP), focusing on the relationship mediated by product innovation (PI) in the retail industry. Design/Methodology/Approach: Data was gathered from 330 retail SMEs in Johor, Malaysia, using a quantitative research approach. Analysis was conducted using partial least squares structural equation modelling (PLS-SEM). Research findings: DC is significantly associated with PI and BP. PI directly relates to BP and mediates the relationship between DC and BP, while CI does not moderate it. Theoretical Contribution/Originality: This study pioneers empirical research on the relationship between DC, PI, CI, and BP within retail Bumiputera SMEs in Malaysia. It contributes to the RBV theory by examining how DC influences BP as a strategic resource. The study’s result implies that DC and PI are key drivers of BP regardless of the CI in the market. This study demonstrates how PI is a mediating factor essential to boosting BP. Practitioner/Policy Implication: This study highlights the importance of DC for Bumiputera SMEs in Johor, Malaysia. By promoting DC and providing tailored support programs, the Malaysian government can boost their competitiveness, innovation, and global reach.

Suggested Citation

  • Samsuden N.S & Zulkarnaini N.A.S & Shah Rollah Abdul Wahab & Shahrial Bungsu, 2025. "Digital Capabilities and Product Innovation: A Strategic Nexus for Market Success," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(4), pages 1510-1530, April.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-4:p:1510-1530
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-4/1510-1530.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/digital-capabilities-and-product-innovation-a-strategic-nexus-for-market-success/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhang Zhen & Zahid Yousaf & Magdalena Radulescu & Muhammad Yasir, 2021. "Nexus of Digital Organizational Culture, Capabilities, Organizational Readiness, and Innovation: Investigation of SMEs Operating in the Digital Economy," Sustainability, MDPI, vol. 13(2), pages 1-15, January.
    2. Daniel Prajogo & Christopher M. Mcdermott, 2014. "Antecedents of Service Innovation in SMEs: Comparing the Effects of External and Internal Factors," Journal of Small Business Management, Taylor & Francis Journals, vol. 52(3), pages 521-540, July.
    3. Bharat Arora & Zillur Rahman, 2017. "Information technology capability as competitive advantage in emerging markets," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 12(3), pages 447-463, July.
    4. Hardy Loh Rahim & Mohd Ali Bahari Abdul Kadir & Che Asniza Osman & Hardi Emrie Rosly & Adlan Ahmad Bakri, 2019. "The Essentials and Challenges of Online Business Among Bumiputera SME Entrepreneurs in Malaysia," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 45-55, December.
    5. Seonghye Lee & Hae Young Oh & Jeongil Choi, 2020. "Service Design Management and Organizational Innovation Performance," Sustainability, MDPI, vol. 13(1), pages 1-18, December.
    6. Jun Hong Park & Sang Ho Kook & Hyeonu Im & Soomin Eum & Chulung Lee, 2018. "Fabless Semiconductor Firms’ Financial Performance Determinant Factors: Product Platform Efficiency and Technological Capability," Sustainability, MDPI, vol. 10(10), pages 1-22, September.
    7. Zhaozhi Wang & Shoufu Lin & Yang Chen & Oleksii Lyulyov & Tetyana Pimonenko, 2023. "Digitalization Effect on Business Performance: Role of Business Model Innovation," Sustainability, MDPI, vol. 15(11), pages 1-19, June.
    8. Samppa Suoniemi & Lars Meyer-Waarden & Andreas Munzel & Alex Ricardo Zablah & Detmar Straub, 2020. "Big data and firm performance: The roles of market-directed capabilities and business strategy," Post-Print hal-02957479, HAL.
    9. Jozef Bucko & Lukáš Kakalejčík & Martina Ferencová, 2018. "Online shopping: Factors that affect consumer purchasing behaviour," Cogent Business & Management, Taylor & Francis Journals, vol. 5(1), pages 1535751-153, January.
    10. Clay M. Voorhees & Michael K. Brady & Roger Calantone & Edward Ramirez, 2016. "Discriminant validity testing in marketing: an analysis, causes for concern, and proposed remedies," Journal of the Academy of Marketing Science, Springer, vol. 44(1), pages 119-134, January.
    11. Kim, Jungho & Kollmann, Trevor & Palangkaraya, Alfons & Webster, Elizabeth, 2022. "Does local technological specialisation, diversity and dynamic competition enhance firm creation?," Research Policy, Elsevier, vol. 51(7).
    12. Ernest Awuku & Paul Mensah Agyei & Eric Gonu, 2023. "Service innovation practices and customer loyalty in the telecommunication industry," PLOS ONE, Public Library of Science, vol. 18(3), pages 1-18, March.
    13. Usai, A. & Fiano, F. & Messeni Petruzzelli, A. & Paoloni, P. & Farina Briamonte, M. & Orlando, B., 2021. "Unveiling the impact of the adoption of digital technologies on firms’ innovation performance," Journal of Business Research, Elsevier, vol. 133(C), pages 327-336.
    14. Sisira Kumara Naradda Gamage & EMS Ekanayake & GAKNJ Abeyrathne & RPIR Prasanna & JMSB Jayasundara & PSK Rajapakshe, 2020. "A Review of Global Challenges and Survival Strategies of Small and Medium Enterprises (SMEs)," Economies, MDPI, vol. 8(4), pages 1-24, October.
    15. Jiatong Yu & Taesoo Moon, 2021. "Impact of Digital Strategic Orientation on Organizational Performance through Digital Competence," Sustainability, MDPI, vol. 13(17), pages 1-15, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xiao Han & Yang Zheng, 2022. "Driving Elements of Enterprise Digital Transformation Based on the Perspective of Dynamic Evolution," Sustainability, MDPI, vol. 14(16), pages 1-19, August.
    2. Xin Xie & Shaokang Wu & Ghulam Subhani & Sakina, 2025. "Analyzing how digital orientation contributes to organizational innovation and environmental, social and governance performance through digital inclusion and capabilities," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-22, December.
    3. Daniela Roxana Vuță & Eliza Nichifor & Ioana Bianca Chițu & Gabriel Brătucu, 2022. "Digital Transformation—Top Priority in Difficult Times: The Case Study of Romanian Micro-Enterprises and SMEs," Sustainability, MDPI, vol. 14(17), pages 1-14, August.
    4. Oliveira, Mariana & Zancul, Eduardo & Salerno, Mario Sergio, 2024. "Capability building for digital transformation through design thinking," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    5. Koroma, Jonathan & Rongting, Zhou & Muhideen, Sayibu & Akintunde, Tosin Yinka & Amosun, Tunde Simeon & Dauda, Sahr James & Sawaneh, Ibrahim Abdulai, 2022. "Assessing citizens' behavior towards blockchain cryptocurrency adoption in the Mano River Union States: Mediation, moderation role of trust and ethical issues," Technology in Society, Elsevier, vol. 68(C).
    6. Ganlin Pu & Md. Qamruzzaman & Ahmed Muneeb Mehta & Farah Naz Naqvi & Salma Karim, 2021. "Innovative Finance, Technological Adaptation and SMEs Sustainability: The Mediating Role of Government Support during COVID-19 Pandemic," Sustainability, MDPI, vol. 13(16), pages 1-27, August.
    7. Bandara, KBTUK & Jayasundara, JMSB & Naradda Gamage, Sisira Kumara & Ekanayake, EMS & Rajapackshe, PSK & Abeyrathne, GAKNJ & Prasanna, RPIR, 2020. "Entrepreneurial Marketing & Performance of Small & Medium Enterprises in Developed and Developing Economies: A Conceptual Exploration," MPRA Paper 104341, University Library of Munich, Germany.
    8. Jiatong Yu & Jiajue Wang & Taesoo Moon, 2022. "Influence of Digital Transformation Capability on Operational Performance," Sustainability, MDPI, vol. 14(13), pages 1-20, June.
    9. Zenker, Sebastian & Braun, Erik & Petersen, Sibylle, 2017. "Branding the destination versus the place: The effects of brand complexity and identification for residents and visitors," Tourism Management, Elsevier, vol. 58(C), pages 15-27.
    10. Chuks Otioma, 2023. "IT Capability, Organisational Learning and Innovation Performance of Firms in Kenya," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(3), pages 3489-3517, September.
    11. Han, Wucheng & Li, Xiaoyu & Zhu, Weijie & Lu, Ruoyu & Zu, Xu, 2024. "Knowledge digitization and high-tech firm performance: A moderated mediation model incorporating business model innovation and entrepreneurial orientation," Technology in Society, Elsevier, vol. 77(C).
    12. Chen, Yanyan & Mandler, Timo & Meyer-Waarden, Lars, 2021. "Three decades of research on loyalty programs: A literature review and future research agenda," Journal of Business Research, Elsevier, vol. 124(C), pages 179-197.
    13. Wang, Le & Luo, Xin (Robert) & Li, Han, 2022. "Envy or conformity? An empirical investigation of peer influence on the purchase of non-functional items in mobile free-to-play games," Journal of Business Research, Elsevier, vol. 147(C), pages 308-324.
    14. Mukhamad Najib & Abdul Aziz Abdul Rahman & Abror Abror & Riani Rachmawati & Megawati Simanjuntak & Prita Prasetya & Dwi Suhartanto & Farah Fahma, 2021. "Leaders’ Support of Sustainable Innovation and Business Sustainability in Developing Countries: Evidence from Small and Medium Food Processing Enterprises," Sustainability, MDPI, vol. 13(23), pages 1-19, November.
    15. Radicic, Dragana & Petković, Saša, 2023. "Impact of digitalization on technological innovations in small and medium-sized enterprises (SMEs)," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    16. Tang, Chaoli & Dong, Shuyun & Zhou, Rui, 2025. "The impact of digitalization on corporate resilience," International Review of Economics & Finance, Elsevier, vol. 97(C).
    17. Renyan Mu & Jianhua Rao & Junda Zhu, 2025. "Empowering Breakthrough Innovations Through Digital Technology: The Effects of Digital Technology Depth and Breadth," Sustainability, MDPI, vol. 17(5), pages 1-30, February.
    18. Ekene Cynthia Onukwulu & Mercy Odochi-Agho & Nsisong Louis Eyo-Udo, 2024. "Innovations in Supplier Evaluation: Frameworks and Techniques for Supply Chain Resilience," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 11(12), pages 610-623, December.
    19. Chatterjee, Sheshadri & Chaudhuri, Ranjan & Vrontis, Demetris & Thrassou, Alkis & Ghosh, Soumya Kanti, 2021. "Adoption of artificial intelligence-integrated CRM systems in agile organizations in India," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    20. Mahadzirah Mohamad & Asyraf Afthanorhan* & Zainudin Awang & Morliyati Mohammad, 2019. "Comparison Between CB-SEM and PLS-SEM: Testing and Confirming the Maqasid Syariah Quality of Life Measurement Model," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(3), pages 608-614, 03-2019.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:9:y:2025:issue-4:p:1510-1530. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.