Journal of Entrepreneurship Research

Journal of Entrepreneurship Research

Investigating the Impact of Digital, Network, and Innovation Capabilities on Agility and Performance in Small and Medium-Sized Enterprises with the Moderating Role of Entrepreneurial Financial Resources

Document Type : Research Article

Author
Armin Khaleghi Forghani
Department of Business Administration, Faculty of Management, Kharazmi University, Tehran, Iran.
10.22034/jer.2025.2044766.1209
Abstract
Introduction: The business environment in Iran is characterized by significant uncertainty and persistent turbulence, primarily driven by external factors such as economic sanctions, regulatory changes, and inflation. These conditions pose substantial challenges to the survival and growth of Small and Medium-sized Enterprises (SMEs), which constitute a vital component of the Iranian economy. To navigate such volatility, SMEs require specific capabilities that enhance their adaptability, resilience, and overall performance. This study examines the impact of digital capabilities, networking capabilities, and innovation capacity on the organizational agility and subsequent performance of SMEs. Furthermore, it investigates the moderating role of slack financial resources in the relationships between these antecedent factors and agility. The research proposes and tests a conceptual model of organizational agility and its determinants, with findings aimed at providing valuable insights for Iranian entrepreneurs and business managers.
Methodology: This applied research follows a quantitative, descriptive-survey approach. The statistical population comprises SMEs in Tehran with 10 to 249 employees. An online questionnaire was distributed to founders, senior managers, or board members of 350 companies, yielding 207 valid responses. Standardized scales were used to measure the key variables: digital capabilities, networking capabilities, innovation capacity, organizational agility, firm performance, and slack financial resources. Data analysis was performed using structural equation modeling (SEM) with SPSS and SmartPLS software.
Findings:  The results demonstrate that digital capabilities, networking capabilities, and innovation capacity have a positive and significant effect on the organizational agility of SMEs. Furthermore, organizational agility positively and significantly influences firm performance. The analysis also confirms the moderating role of slack financial resources, strengthening the effects of both digital capabilities and innovation capacity on organizational agility.
Conclusion / Implications: This study highlights the critical importance of developing digital capabilities, fostering external networks, and building innovation capacity within SMEs. It also emphasizes the vital role of slack financial resources for entrepreneurs, as they amplify the impact of digital and innovation capabilities on achieving agility. The findings suggest that entrepreneurs require access to readily available financial resources to effectively implement decisions and translate strategic capabilities into agile actions. The research provides practical guidance for entrepreneurs and SME managers to cultivate essential capabilities for enhanced agility and performance. Additionally, it offers policymakers insights into supporting SME agility and performance within Iran's complex and turbulent business landscape.
Keywords
Innovation Performance, IT Capabilities, Financial Slack Resources, Organizational Agility

Subjects

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  • Receive Date 01 November 2024
  • Revise Date 04 March 2025
  • Accept Date 04 March 2025