Digital innovation, capabilities, and organizational agility as drivers of firm performance under government support

This study examines the interrelationships among digital innovation, digital capability, technological capability, organizational agility, and firm performance within the context of government support for innovation. Drawing on the resource-based view, knowledge-based view, and new institutional theory, the study develops and empirically tests an integrative framework using data from 300 manufacturing firms in Vietnam. Partial least squares structural equation modeling is employed to assess both direct and indirect pathways, and the results indicate that digital innovation promotes organizational agility, which in turn improves performance, thereby confirming a full mediating effect. Digital capability significantly influences technological capability and firm performance, with technological capability partially mediating this relationship and demonstrating a strong direct contribution to performance outcomes. In contrast, government support does not moderate digital innovation or technological capability, suggesting that institutional support confers legitimacy rather than exerting tangible leverage. These findings reveal the mechanisms through which innovation-related capabilities enhance superior performance, illustrating the limited efficacy of policy interventions in emerging economies. Consequently, the study provides actionable insights for managers seeking to align digital transformation efforts with internal capability development and for policymakers aiming to recalibrate innovation support toward genuine capability enhancement rather than procedural compliance.