Proceedings of The 4th International Conference On Business, Management and Finance
The Mediating Role of Contextual Ambidexterity in the Relationship between Digital Platform Capability and Smes Performance
Mohamad Rohieszan Ramdan, Nor Liza Abdullah
Digitalisation has transformed the business landscape and offered many opportunities for Small and Medium Enterprises (SMEs) to venture into new markets with new business models. Although digitalisation has created more business opportunities, apparently many SMEs are left behind due to lacking digital platform capabilities in leveraging the information technology revolution. This study examines the role of digital platform capabilities in enhancing SMEs performance through contextual ambidexterity. Contextual ambidexterity is the firm’s ability to implement competency exploration and exploitation simultaneously to generate values vital for great performance. By having contextual ambidexterity, organisation will be able to adapt to changing environments by being more versatile and innovative. Covariance-based SEM was used to test hypotheses based on survey data collected from 277 SMEs that use digital platforms in their business activities. Based on the analysis, the results show that the digital platform capability has a positive indirect effect on SME performance via contextual ambidexterity. The results suggest that SME can enhance their performance using digital platform capability by applying dynamic capability in the form of contextual ambidexterity. These findings enriched the literature on dynamic capabilities in the context of entrepreneurial SMEs that are facing greater challenges in business due to globalisation and environmental complexity.
keywords: Small and Medium Enterprises; digital platform capability; contextual ambidexterity; SMEs performance; dynamic capability.