Is cloud computing a game-changer for SME financial performance? Unveiling the mediating role of organizational agility through PLS-SEM

Purpose Cloud computing services are game-changing in empowering organizations to drive innovation and unlock new growth opportunities. Accordingly, this study aims to examine the determinants of cloud computing adoption in SMEs and assess their impact on firm financial performance, specifically focusing on the mediating role of organizational agility in driving cloud-enabled financial improvements. Design/methodology/approach Data were collected from 405 owners and managers of SMEs who used cloud computing. A “variance based-structural equation modelling” (PLS-SEM) was employed to test the hypothesis. Findings The PLS-SEM result shows that relative advantage, cost-effectiveness, compatibility and external environment support significantly influence cloud computing adoption in SMEs. However, complexity insignificantly impacts cloud computing adoption. The analysis also revealed that cloud computing adoption substantially influences organizational agility. Similarly, cloud computing adoption and organizational agility significantly influence firms’ financial performance. Practical implications The present research provides valuable suggestions to service providers, policymakers and managers on developing and expanding cloud computing in developed and developing nations. Additionally, cloud providers can recognize their role in creating a supportive and adaptable environment that ensures convenient access to cloud computing users. Originality/value This research is an initial attempt to blend the strength of diffusion of innovation (DOI) theory with two additional constructs (i.e. cost-effectiveness and external environment support) for making a comprehensive model of cloud computing adoption and its influence on firm financial performance. By doing this, the research adds to the empirical knowledge on cloud computing adoption and provides an institutional framework to interpret the impact of cloud-based information technology.