DIGITAL CAPABILITIES AND COMPETITIVE ADVANTAGE IN THE CONTEXT OF TECHNOLOGICAL UNCERTAINTY: EVIDENCE FROM EMERGING MARKET SMEs

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.