Knowledge Spillovers and Organizational Resilience: The Digital Capabilities Moderating Effect on <scp>MSMEs</scp> Innovation Orientation in Service Sector

ABSTRACT Although the importance of integrating digital technologies in micro, small, and medium enterprises (MSMEs) is growing rapidly, empirical research related to knowledge spillovers (KS), organizational resilience, innovation orientation, and digital capabilities still remains scarce. This research proposes a framework in which we verify the moderating effect of digital capabilities on the relationship between KS, organizational resilience, and innovation orientation. Another aim of this research is to study the effect of KS and organizational resilience on innovation orientation by conducting a quantitative study utilizing data from the World Bank's Enterprise Survey, collected at three separate times. Drawing from a sample of 2291 MSMEs in the service sector across 15 EU countries, the partial least squares structural equation modeling was the method used to evaluate our proposed conceptual model and examine the hypothesized relationships. The findings reveal that KSs have a positive effect on innovation orientation by leveraging digital capabilities. In addition, the empirical evidence demonstrates that both KS and organizational resilience have a positive impact on innovation orientation. This research also makes several theoretical and practical contributions.