Digital Ecosystem Integration, Innovation Capability, and Global Market Performance of MSMEs: The Role of Institutional Support

This study examines how Digital Ecosystem Integration, Market Intelligence Capability, Innovation Capability, and Institutional Support shape the Global Market Performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Using Banyumas Regency as the empirical setting, the study proposes an integrated capability-based framework linking digital ecosystem engagement and market intelligence with global performance through Innovation Capability, while incorporating Institutional Support as a moderating condition. Data were collected through a cross-sectional survey of 100 digitally engaged MSMEs and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings show that Digital Ecosystem Integration positively affects Innovation Capability (β = 0.669; p < 0.001) and Global Market Performance (β = 0.326; p < 0.001). Market Intelligence Capability also positively influences Innovation Capability (β = 0.345; p < 0.001) and Global Market Performance (β = 0.517; p < 0.001). Innovation Capability mediates the effects of Digital Ecosystem Integration (β = 0.148; p = 0.002) and Market Intelligence Capability (β = 0.076; p = 0.014) on Global Market Performance. Institutional Support further strengthens the relationship between Innovation Capability and Global Market Performance (β = 0.184; p = 0.001). The model explains 84.3% of the variance in Global Market Performance and 68.3% in Innovation Capability, with Q² values of 0.741 and 0.584, respectively. The study extends the Dynamic Capability perspective by identifying digital ecosystem integration as a strategic capability, innovation capability as a transformation mechanism, and institutional support as a boundary condition. These findings offer practical guidance for strengthening MSME digital ecosystems and sustainable global competitiveness.