Bridging the Gap: The Moderating Role of Entrepreneurial Learning in the Digitalization-Profitability Nexus among Start-ups

The increasing digitalization of start-ups presents a paradox in many developing economies, while digital technologies proliferate, profitability remains elusive for a majority of early-stage ventures. This study examines the effect of digitalization on profitability among start-ups in Lagos, Nigeria, and explores the moderating role of entrepreneurial learning. Anchored in the Resource-based view and Dynamic capabilities theory, digitalization is framed as a strategic resource, while entrepreneurial learning is considered a capability that enables firms to optimize digitalization. Data were collected from 268 key decision-makers across six tech-intensive sectors: Fintech, Healthtech, Edtech, Agritech, E-commerce, and Logistics, using an adapted questionnaire. Hierarchical multiple regression analysis reveals that data digitalization, digital collaboration, and digital literacy significantly enhance profitability, affirming the value of digitalization in start-up growth. Interestingly, the study finds that entrepreneurial learning does not universally strengthen this relationship and, under certain conditions, may even attenuate the profitability effect of digitalization. These findings underscore the need for a more nuanced understanding of how learning processes interact with digitalization. The study contributes to digital entrepreneurship literature by highlighting the profitability potential of targeted digitalization efforts and offering practical insights for emerging market start-ups navigating resource and capability constraints.