The Role of Dynamic Capabilities as a Mediating Factor in Enhancing the Innovative Performance of SMEs: Integrating Transformational Readiness, Digital Literacy, and Strategic Agility

  • Damarsari Ratnasahara Elisabeth Department of Management, STIE Mahardhika Surabaya
  • Mochamad Fatchurrohman Department of Digital Business, STIE Mahardhika Surabaya
  • Shobikin Department of Management, STIE Mahardhika Surabaya
Keywords: Dynamic Capabilities, Innovative Performance, East Java SMEs, Transformational Change Readiness, Strategic Agility

Abstract

This study examines the mediating role of dynamic capabilities in the relationship between transformational change readiness, digital financial literacy, strategic agility, and the innovative performance of SMEs in East Java. Integrating the Dynamic Capability Theory and Institutional Logics perspective, the research provides a comprehensive understanding of innovation drivers in SMEs within a distinctive local ecosystem context. Employing an explanatory quantitative approach, the study conducted a survey of 125 digitally transformed SMEs in East Java. Data were analyzed using Structural Equation Modeling (SEM) with AMOS software to test measurement and structural models, along with mediation analysis using Sobel Test. Research instruments were validated through confirmatory factor analysis (CFA) and reliability testing. The results indicate that transformational change readiness, digital financial literacy, and strategic agility significantly influence dynamic capabilities formation. However, dynamic capabilities function not as full mediators but as complementary factors that strengthen the direct effects of independent variables on innovative performance. The integration of Dynamic Capability Theory and Institutional Logics reveals that SME innovation in East Java is predominantly driven by community logic and local collaborations rather than pure dynamic capabilities. This study contributes theoretically by developing an integrative model that combines dynamic capability and institutional logic approaches, while offering novel insights into dynamic capabilities implementation among SMEs in specific socio-cultural contexts.

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Published
2026-05-17
How to Cite
Damarsari Ratnasahara Elisabeth, Mochamad Fatchurrohman, & Shobikin. (2026). The Role of Dynamic Capabilities as a Mediating Factor in Enhancing the Innovative Performance of SMEs: Integrating Transformational Readiness, Digital Literacy, and Strategic Agility. International Journal of Economics, Business and Innovation Research, 5(03), 2257=2275. https://doi.org/10.63922/ijebir.v5i03.3649