How does digital capability translate into export performance?: The critical mediating role of GVC upgrading

• A sequential pathway from 4th IR technology adoption to export performance is validated. • GVC upgrading fully mediates the capability-performance relationship. • GVC upgrading is the strongest direct predictor of SME export success. • The capability to leverage technology is more critical than mere tech adoption. The Fourth Industrial Revolution is reshaping global value chains (GVCs), creating new strategic imperatives for export-oriented small and medium-sized enterprises (SMEs). This study elucidates how technology adoption translates into enhanced export performance for Korean SMEs. Drawing on survey data from 131 Korean export SMEs, we test a comprehensive model using Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings reveal a sequential pathway: Fourth Industrial Revolution technology adoption significantly enhances firms' 'Digital Trade Capability,' which drives 'GVC Upgrading' across products, processes, and functions. Crucially, Digital Trade Capability has no direct effect on Export Performance, with its impact being fully mediated by GVC Upgrading—the single most powerful predictor of export success. This indicates that for SMEs, mere possession of digital capabilities is insufficient; these capabilities must be strategically leveraged to actively upgrade the firm's GVC position. Our findings provide critical insights for managers navigating digital transformation and policymakers shaping industrial strategy.