How entrepreneurial SMEs compete through digital platforms: The roles of digital platform capability, network capability and ambidexterity

TLDR

Digitalization offers entrepreneurial SMEs unprecedented opportunities, yet many lack resources or face inertia that limits their ability to capitalize on these prospects. The study examines how digital platform and network capabilities influence entrepreneurial SMEs’ financial performance, and how exploitation and exploration orientations moderate this relationship. The authors analyze data from 230 entrepreneurial SMEs to assess the indirect effect of digital platform capability on performance via network capability and the moderating roles of exploitation and exploration orientations. Results show that digital platform capability boosts performance indirectly through network capability, with exploitation negatively moderating and exploration positively moderating this effect, indicating that aligning platform capability with orientation improves performance.

Abstract

Digitalization offers unprecedented opportunities for entrepreneurial small and medium-sized enterprises (SMEs). However, many entrepreneurial SMEs lack resources and capabilities or suffer from inertia, which hampers these opportunities. This study investigates how entrepreneurial SMEs can enhance performance through digital platforms. Specifically, the study examines the effect of digital platform capability and network capability on entrepreneurial SMEs' financial performance. The study also examines how exploitation and exploration orientations moderate this relationship. Based on analysis of 230 entrepreneurial SMEs, the results indicate that digital platform capability has a positive indirect effect on entrepreneurial SMEs' performance via network capability. The study also shows that exploitation and exploration orientations negatively and positively moderate this effect, respectively. The results suggest that entrepreneurial SMEs can enhance their performance through digital platform capability by aligning this capability with their orientation. These findings thereby enrich the literature on entrepreneurial SMEs and capabilities.