Digital marketing adoption as a strategic mediator between capabilities and performance: Evidence from SMEs in Pakistan

Abstract

This paper is based on Technology-Organization-Environment (TOE) model and Capability-Based View (CBV) that explores the impact of managerial digital leadership, ability to create digital content, the ability to perform data analytics, and supporting external digital ecosystems on the performance of SMEs with digital marketing adoption (DMA) being a mediating factor. Quantitative and cross-sectional research design was used to measure the data of 300 owners, managers and marketing professionals of Pakistani SMEs using structured questionnaire. The hypothesis testing and mediation analysis were done using Structural Equation Modeling (SEM). The empirical findings show that the three managerial digital leadership (b = 0.32, p < 0.001), data analytics capability (b = 0.28, p < 0.001), and external digital ecosystem support (b = 0.35, p < 0.001) exert positive effects on the adoption of digital marketing, whereas data analytics capability and the external digital ecosystem support do not show any significant effect of digital marketing adoption. The adoption of digital marketing is associated with a strong effect (> 0.41, p < 0.001) to the performance of SMEs and defines 63% of the variation of DMA and 71% of the performance variation of SMEs.