IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v99y2025ics1059056025001340.html
   My bibliography  Save this article

Digital maturity, dynamic capabilities and innovation performance in high-tech SMEs

Author

Listed:
  • Jie, Honglan
  • Gooi, Leong Mow
  • Lou, Yanchun

Abstract

The rapid advancement of digital technologies has positioned digital transformation as a strategic imperative for firms seeking to enhance innovation and competitiveness. However, existing research predominantly focuses on large corporations, overlooking how high-tech small and medium-sized enterprises (SMEs) navigate digitalization to drive innovation performance. Addressing this gap, this study examines the role of digital maturity in fostering innovation within high-tech SMEs, with a particular emphasis on the mediating effect of dynamic capabilities. Using survey data from 587 high-tech SMEs in China, analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM), the findings reveal that digital maturity positively influences both dynamic capabilities and innovation performance. Additionally, dynamic capabilities serve as a crucial mediating mechanism between digital maturity and innovation performance, reinforcing the importance of organizational agility and resource reconfiguration in digital transformation. However, the moderating effect of digital maturity on the relationship between dynamic capabilities and innovation performance was not supported, indicating that achieving higher digital maturity alone does not necessarily strengthen this linkage. These insights contribute to the broader discourse on digital transformation by demonstrating that a strategic alignment between digital maturity and dynamic capabilities is essential for high-tech SMEs to achieve sustainable innovation. The findings provide actionable implications for managers and policymakers seeking to optimize digital strategies and enhance competitiveness in rapidly evolving technological landscapes.

Suggested Citation

  • Jie, Honglan & Gooi, Leong Mow & Lou, Yanchun, 2025. "Digital maturity, dynamic capabilities and innovation performance in high-tech SMEs," International Review of Economics & Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025001340
    DOI: 10.1016/j.iref.2025.103971
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056025001340
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2025.103971?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Pengpeng Yue & Aslihan Gizem Korkmaz & Zhichao Yin & Haigang Zhou, 2022. "The rise of digital finance: Financial inclusion or debt trap," Papers 2201.09221, arXiv.org.
    2. Liang, Peng & Liang, Lin & Tang, Xinhui, 2024. "The impact of digital-oriented mergers and acquisitions on enterprise labor demand," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    3. Llopis-Albert, Carlos & Rubio, Francisco & Valero, Francisco, 2021. "Impact of digital transformation on the automotive industry," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    4. Hess, Thomas & Matt, Christian & Benlian, Alexander & Wiesböck, Florian, 2016. "Options for Formulating a Digital Transformation Strategy," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 81032, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    5. Niu, Geng & Jin, XiaoShu & Wang, Qi & Zhou, Yang, 2022. "Broadband infrastructure and digital financial inclusion in rural China," China Economic Review, Elsevier, vol. 76(C).
    6. Ates, Aylin & Acur, Nuran, 2022. "Making obsolescence obsolete: Execution of digital transformation in a high-tech manufacturing SME," Journal of Business Research, Elsevier, vol. 152(C), pages 336-348.
    7. Trang Doan Do & Ha An Thi Pham & Eleftherios I. Thalassinos & Hoang Anh Le, 2022. "The Impact of Digital Transformation on Performance: Evidence from Vietnamese Commercial Banks," JRFM, MDPI, vol. 15(1), pages 1-15, January.
    8. Lei Guo & Luying Xu, 2021. "The Effects of Digital Transformation on Firm Performance: Evidence from China’s Manufacturing Sector," Sustainability, MDPI, vol. 13(22), pages 1-18, November.
    9. Jafari-Sadeghi, Vahid & Amoozad Mahdiraji, Hannan & Busso, Donatella & Yahiaoui, Dorra, 2022. "Towards agility in international high-tech SMEs: Exploring key drivers and main outcomes of dynamic capabilities," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    10. Nambisan, Satish & Wright, Mike & Feldman, Maryann, 2019. "The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    11. Christopher A. Williams & Daniel Schallmo & Eusebio Scornavacca, 2022. "HOW APPLICABLE ARE DIGITAL MATURITY MODELS TO SMEs?: A CONCEPTUAL FRAMEWORK AND EMPIRICAL VALIDATION APPROACH," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 26(03), pages 1-32, April.
    12. Gebauer, Heiko & Fleisch, Elgar & Lamprecht, Claudio & Wortmann, Felix, 2020. "Growth paths for overcoming the digitalization paradox," Business Horizons, Elsevier, vol. 63(3), pages 313-323.
    13. Kathleen M. Eisenhardt & Jeffrey A. Martin, 2000. "Dynamic capabilities: what are they?," Strategic Management Journal, Wiley Blackwell, vol. 21(10‐11), pages 1105-1121, October.
    14. Verhoef, Peter C. & Broekhuizen, Thijs & Bart, Yakov & Bhattacharya, Abhi & Qi Dong, John & Fabian, Nicolai & Haenlein, Michael, 2021. "Digital transformation: A multidisciplinary reflection and research agenda," Journal of Business Research, Elsevier, vol. 122(C), pages 889-901.
    15. Dai, Jiapeng, 2025. "Is policy pilot a viable path to sustainable development? Attention allocation perspective," International Review of Financial Analysis, Elsevier, vol. 98(C).
    16. Maha Khemakhem Jardak & Salah Ben Hamad, 2022. "The effect of digital transformation on firm performance: evidence from Swedish listed companies," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 23(4), pages 329-348, May.
    17. Ferreira, João J.M. & Fernandes, Cristina I. & Ferreira, Fernando A.F., 2019. "To be or not to be digital, that is the question: Firm innovation and performance," Journal of Business Research, Elsevier, vol. 101(C), pages 583-590.
    18. Ye, Xiang & Yue, Pengpeng, 2024. "What matters to reshaping consumption patterns in China? Digital inclusion and supply chain," Finance Research Letters, Elsevier, vol. 59(C).
    19. Yue, Pengpeng & Korkmaz, Aslihan Gizem & Yin, Zhichao & Zhou, Haigang, 2022. "The rise of digital finance: Financial inclusion or debt trap?," Finance Research Letters, Elsevier, vol. 47(PA).
    20. Lieselot Danneels & Stijn Viaene, 2022. "Identifying Digital Transformation Paradoxes," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 64(4), pages 483-500, August.
    21. Wamba, Samuel Fosso & Gunasekaran, Angappa & Akter, Shahriar & Ren, Steven Ji-fan & Dubey, Rameshwar & Childe, Stephen J., 2017. "Big data analytics and firm performance: Effects of dynamic capabilities," Journal of Business Research, Elsevier, vol. 70(C), pages 356-365.
    22. Xu, Dandan & Guo, Dongli & Yue, Pengpeng & Li, Mengshi, 2024. "Household green consumption: Does digital inclusion matter?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    23. Sajda Qureshi, 2022. "Digital transformation at the margins: a battle for the soul of self-sovereignty," Information Technology for Development, Taylor & Francis Journals, vol. 28(2), pages 215-229, April.
    24. Hess, Thomas & Matt, Christian & Benlian, Alexander & Wiesböck, Florian, 2016. "Options for Formulating a Digital Transformation Strategy," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 82423, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    25. Zhou, Linjiang & Shi, Xiaochuan & Bao, Yaxiong & Gao, Lihua & Ma, Chao, 2023. "Explainable artificial intelligence for digital finance and consumption upgrading," Finance Research Letters, Elsevier, vol. 58(PC).
    26. Matt, C. & Hess, Thomas & Benlian, Alexander, 2015. "Digital Transformation Strategies," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 75002, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    27. Farzaneh, Mandana & Wilden, Ralf & Afshari, Leila & Mehralian, Gholamhossein, 2022. "Dynamic capabilities and innovation ambidexterity: The roles of intellectual capital and innovation orientation," Journal of Business Research, Elsevier, vol. 148(C), pages 47-59.
    28. Christian Matt & Thomas Hess & Alexander Benlian, 2015. "Digital Transformation Strategies," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(5), pages 339-343, October.
    29. Ju, Xiangui & Ferreira, Fernando A.F. & Wang, Min, 2020. "Innovation, agile project management and firm performance in a public sector-dominated economy: Empirical evidence from high-tech small and medium-sized enterprises in China," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    30. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    31. Szu-Yu Kuo, 2024. "Improving innovation performance through learning capability and adaptive capability: The moderating role of big data analytics," Knowledge Management Research & Practice, Taylor & Francis Journals, vol. 22(4), pages 364-376, July.
    32. Giacomo Buzzao & Francesco Rizzi, 2021. "On the conceptualization and measurement of dynamic capabilities for sustainability: Building theory through a systematic literature review," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 135-175, January.
    33. Lin, Yini & Wu, Lei-Yu, 2014. "Exploring the role of dynamic capabilities in firm performance under the resource-based view framework," Journal of Business Research, Elsevier, vol. 67(3), pages 407-413.
    34. Lijie Feng & Zhenzhen Zhao & Jinfeng Wang & Ke Zhang, 2022. "The Impact of Knowledge Management Capabilities on Innovation Performance from Dynamic Capabilities Perspective: Moderating the Role of Environmental Dynamism," Sustainability, MDPI, vol. 14(8), pages 1-19, April.
    35. John Hulland, 1999. "Use of partial least squares (PLS) in strategic management research: a review of four recent studies," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 195-204, February.
    36. Mikalef, Patrick & Boura, Maria & Lekakos, George & Krogstie, John, 2019. "Big data analytics and firm performance: Findings from a mixed-method approach," Journal of Business Research, Elsevier, vol. 98(C), pages 261-276.
    37. Zahid Yousaf & Magdalena Radulescu & Crenguta Ileana Sinisi & Luminita Serbanescu & Loredana Maria Păunescu, 2021. "Towards Sustainable Digital Innovation of SMEs from the Developing Countries in the Context of the Digital Economy and Frugal Environment," Sustainability, MDPI, vol. 13(10), pages 1-28, May.
    38. Matt, C. & Hess, Thomas & Benlian, Alexander, 2015. "Digital Transformation Strategies," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 75202, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    39. Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    40. Wu, Hang & Chen, Jin & Jiao, Hao, 2016. "Dynamic capabilities as a mediator linking international diversification and innovation performance of firms in an emerging economy," Journal of Business Research, Elsevier, vol. 69(8), pages 2678-2686.
    41. Hao, Jing & Peng, Mengzu & He, Wenjia, 2023. "Digital finance development and bank liquidity creation," International Review of Financial Analysis, Elsevier, vol. 90(C).
    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. Li, Pengcheng & Guo, Xiaochuan & Wang, Fengzheng & Zhang, Qifeng, 2025. "Digital transformation and corporate innovation boundaries: Role of supply chain concentration and transparency," International Review of Financial Analysis, Elsevier, vol. 98(C).
    2. Xing, Manjiang & Gong, Chi & Moon, Gyu-Hyen & Ge, Xiaohong, 2025. "Digital economy, dual innovation capability and enterprise labor productivity," International Review of Financial Analysis, Elsevier, vol. 101(C).
    3. Van, Huong Vu & Kim, Cuong Ly, 2025. "Does increased digital transformation decrease corporate cash holdings? The moderating role of business environment quality," Finance Research Letters, Elsevier, vol. 75(C).
    4. Ding, Qiaoying & He, Wensheng & Deng, Yanfang, 2025. "Can tax reduction incentive policy promote corporate digital and intelligent transformation?," International Review of Financial Analysis, Elsevier, vol. 99(C).
    5. Liu, Jintao & Wang, Xiuhai, 2025. "Exploring the driving effect of the digital economy on rural labor force's occupational transformation: Based on analysis of CFPS panel data," International Review of Financial Analysis, Elsevier, vol. 101(C).
    6. Zhang, Qixin & Xiang, Zhiqiang & Xiang, Zhiguo, 2025. "New media supervision, digital transformation, and corporate green investment," Finance Research Letters, Elsevier, vol. 76(C).
    7. Song, Dandan & Tan, Zhidong & Wang, Wei & Zhai, Rui-Xiang, 2025. "Digital transformation and corporate social responsibility engagement: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 97(C).
    8. Chen, Keren & Zhao, Shenghan & Jiang, Gaozhe & He, Yafeng & Li, Hui, 2025. "The green innovation effect of the digital economy," International Review of Economics & Finance, Elsevier, vol. 99(C).
    9. Jinkai Liang & Ke Du & Dandan Chen, 2023. "The Effect of Digitalization on Ambidextrous Innovation in Manufacturing Enterprises: A Perspective of Empowering and Enabling," Sustainability, MDPI, vol. 15(16), pages 1-23, August.
    10. Li, Yuantian & Xu, Haoyu & Li, Huiru & Xu, Yingming, 2025. "Digital economy, environmental regulations, and green economic development," Finance Research Letters, Elsevier, vol. 75(C).
    11. Zhang, Yujin & Ye, Shujun & Liu, Jie & Zhang, Lulu & Li, Jiayi, 2025. "Can digital transformation of commercial banks reduce green credit risks?," International Review of Financial Analysis, Elsevier, vol. 99(C).
    12. Zhang, Li & Song, Xinwei, 2025. "Managerial overconfidence and corporate digital transformation," Finance Research Letters, Elsevier, vol. 75(C).
    13. Wang, Bing & Liu, Yanyan & Yang, Xiangyu, 2024. "Digital economy and urban entrepreneurial activity," Finance Research Letters, Elsevier, vol. 66(C).
    14. Xu, Guiyang, 2025. "KIBS Clustering, digital financial inclusion, and economic growth quality," Finance Research Letters, Elsevier, vol. 72(C).
    15. Liu, Yuanyuan & Liu, Qianqian & Wei, Yanqiu, 2025. "Digital finance, internal control, and audit quality," Finance Research Letters, Elsevier, vol. 76(C).
    16. Wang, Wei & Cao, QiangYuan & Li, Zhouyang & Zhu, JinYing, 2025. "Digital transformation and corporate environmental performance," Finance Research Letters, Elsevier, vol. 76(C).
    17. Li, Haibo & Xiao, Biyun, 2025. "Strengthening provincial export resilience through the digital economy: Analysis of impacts, global value chain integration, and regional disparities in China," Finance Research Letters, Elsevier, vol. 76(C).
    18. Tortora, Debora & Chierici, Roberto & Farina Briamonte, Massimiliano & Tiscini, Riccardo, 2021. "‘I digitize so I exist’. Searching for critical capabilities affecting firms’ digital innovation," Journal of Business Research, Elsevier, vol. 129(C), pages 193-204.
    19. Guo, Bin & Zhang, Jiale & Tan, Ziyan, 2024. "Firm digitalization as strategic response: An integrated model based on the awareness-motivation-capability (AMC) framework," Technological Forecasting and Social Change, Elsevier, vol. 205(C).
    20. Liu, Dongming & Tu, Yongqian & Chen, Zhangzhang & Zheng, Yinglong, 2025. "Analysis of the synergistic effect of digital financial inclusion and social security on crime governance based on regional differences," International Review of Economics & Finance, Elsevier, vol. 98(C).

    More about this item

    Keywords

    Digital maturity; Digital transformation; Dynamic capabilities; Innovation performance;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

    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:eee:reveco:v:99:y:2025:i:c:s1059056025001340. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    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.