Nexus Between Digital Strategy, Digital Capability, and Digital Intensity in Small and Medium Enterprises

The rapid evolution of digital technologies has created a critical need for small- and medium-sized enterprises (SMEs) to adopt comprehensive digital strategies, leverage digital capabilities, and intensify digital integration. However, the interconnections between these dimensions remain unexplored within the context of SMEs, particularly concerning their potential to drive competitiveness and performance. This study examined the nexus between digital strategy, digital capability, and digital intensity in SMEs. It sought to understand how these elements interact and contribute to organizational performance and digital transformation. A quantitative research approach was employed, utilizing a structured survey questionnaire to collect data from SME representatives. A nonprobability, convenience sampling technique was adopted, and data was collected from 213 SME owners or managers in the North West Province of South Africa. Data analysis was conducted using SPSS for descriptive and inferential statistics and Smart-PLS for structural equation modeling (SEM). The findings present that all three hypotheses were found to be significant and supported. These results emphasize the significant role of digital strategy, digital capability, and digital intensity toward achieving competitive advantage and digital transformation in SMEs. Based on the findings, SMEs need to have a well-formulated digital strategy, accompanied by a robust digital capability. Both strategy and capability contribute to digital intensity, determining the extent to which sustainable growth can be attained in the digital economy. The research contributes to the existing literature by highlighting the collaborative effects of digital strategy, capability, and intensity in SMEs, offering practical implications aiming to pursue digital transformation in this sector.