Digital literacy as a mediator in the link between digital marketing adoption and business performance: insights from micro and small enterprises (MSEs) in the Maldives

Purpose This study examines the influence of digital marketing adoption, digital infrastructure limitations and training resource deficiencies on the performance of micro and small enterprises (MSEs) in the Maldives, as well as the mediating role of digital literacy from the perspective of TAM and RBV. Design/methodology/approach A quantitative approach was adopted, with data collected from employees and owners using a Google Form survey. Structural equation modeling (SEM) with SMART PLS 4 was used to analyze the results. Findings Digital literacy significantly mediates the relationship between the adoption of digital marketing and MSEs' performance. The influence of training resource deficiencies on performance is visible, although there is no influence of inadequate digital infrastructure. Research limitations/implications Use of convenience sampling, the sole focus on the Maldivian context and the cross-sectional design limit the generalizability of the findings. Practical implications MSEs should enhance their digital literacy and marketing strategies, while policymakers and organizations should improve the availability of training, resources, and assistance. Originality/value To the authors' knowledge, this is one of the few empirical studies to test digital literacy as a mediator between digital marketing adoption and firm performance in MSEs. The findings not only provide contextual empirical evidence but also identify boundary conditions that challenge the application of the underlying theories to a small-island setting.