Digitalization and Export Performance: Mediating Role of Innovation and Export Market Orientation in Sri Lankan Apparel Exporters

In an era dominated by rapid technological advancements, digitalisation has become a significant driver of reshaping the apparel industry. Primarily, this research aims to examine the direct and indirect effects of digitalisation on export performance, with the latter effect mediated by innovation and export market orientation (EMO), in the context of large-scale Sri Lankan apparel exporters. Digitalisation is the adoption of digital technologies across multiple dimensions of a firm, including product offerings and value chain activities, both inbound and outbound. Innovation is examined through product and process dimensions, while EMO reflects a firm’s effort to incorporate marketing concepts into its export operations. Given that apparel export ventures have embraced digital capabilities, the evaluation used data collected from 83 large-scale apparel manufacturing exporters in Sri Lanka. Primary data was collected using a structured questionnaire instrument. Partial Least Squares - Structural Equation Modelling (PLS-SEM) was employed due to its suitability for analysing complex models with relatively small population sizes. This research contributes to bridging the knowledge gap in understanding the mediating impact of innovation and EMO when apparel export ventures seek to enhance their performance by embracing digital technologies. The findings reveal that digitalisation significantly enhances both innovation and EMO, and that EMO positively influences export performance, while EMO partially mediates the digitalisation–export performance link, the mediating role of innovation is negligible and statistically insignificant. By clarifying these indirect pathways, the study contributes to the dynamic capabilities perspective on how firms leverage digitalisation for performance improvement. Sectorally, it addresses an understudied export-oriented industry in an emerging economy, while theoretically, it advances understanding of the nuanced mechanisms through which digitalisation shapes export performance.