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In light of technological uncertainty and grounded in the dynamic capabilities view, this study investigates the impact of digital capabilities on the competitive advantage of Vietnamese small and medium-sized enterprises (SMEs) in an emerging market. Surveying 250 SMEs in Vietnam, the research employed partial least squares-structural equation modelling (PLS-SEM) to test hypotheses, followed by artificial neural network (ANN) and PROCESS macro for robustness test. The results show no direct effect of digital capabilities on competitive advantage; however, interestingly, technological uncertainty positively moderates this relationship between digital capabilities and competitive advantage of these firms. The research findings also indicate that digital capabilities are proven to influence adaptive capabilities whereas technological uncertainty fails to moderate this correlation. Moreover, this study points out the positive effects of adaptive capabilities on explorative and exploitative innovation among these emerging market SMEs. Notably, explorative and exploitative innovation have a direct impact on firms’ competitive capabilities while the impact of digital leadership and digital absorptive capacity on digital capabilities is positively significant. The study explored the roles of digital capabilities and technological uncertainty, offering novel contributions to understanding a firm’s competitive advantage. It provides practical implications for managers aiming to enhance firms’ competitive advantage by lessening technological uncertainty for digital capabilities.

Digital transformation is confronting traditional industrial companies with the challenge of not only optimising their internal processes, but also establishing entirely new, digital business models (DBM). In some cases, this requires different competences than in traditional business. In the AgilHybrid research project, a model of 20 key competences that are critical to the success of DBM development was developed. These competences can be bundled into the five areas of entrepreneurial capabilities, adaptability, agile capabilities, collaborative capabilities and digital capabilities. In a CATI survey of 200 German industrial companies, the relevance of the selected competences for DBM development was validated. A multivariate regression model reveals that in particular the equipment of the companies with digital competences as well as the use of agile development methods influence the probability that a company offers digital business models successfully on the market. These competences seem to contribute as important enablers to the dynamic capabilities of seizing and transforming in the context of developing new DBM.

This study, rooted in the dynamic capabilities view, examines the influence of digital capabilities on the performance and innovation capabilities of manufacturing small and medium-sized enterprises (SMEs) in an emerging market. Surveying 297 manufacturing SMEs in Vietnam, the research employed partial least squares-structural equation modelling (PLS-SEM) and artificial neural network (ANN) to test hypotheses. The results show a positive effect of digital capabilities on process and product innovation capabilities. Despite an insignificant direct impact of digital capabilities on firm performance, technological uncertainty moderates this relationship positively. Notably, process innovation capability has no direct impact on firm performance, while product innovation capability’s impact on it is negatively significant. The study explored the roles of digital culture and digital leadership, offering novel contributions to understanding a firm’s digital and innovation capabilities. It provides practical implications for managers aiming to enhance firm performance by leveraging digital capabilities for innovation.