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This study examines the mediating role of financial decisions and the moderating role of digital transformation in the relationship between managerial characteristics and financial performance among small and medium-sized enterprises (SMEs) in Vietnam. Grounded in Upper Echelons Theory, Behavioral Theory of the Firm, Resource-Based View, and corporate finance theories, the study conceptualizes financial decisions as a formative higher-order construct comprising capital structure, investment, and working capital management decisions. The empirical analysis is based on survey data collected from 510 SMEs in Khanh Hoa Province, Vietnam. The data were analyzed using partial least squares structural equation modeling (PLS-SEM), including mediation and moderation tests. The results show that managerial characteristics have a significant positive effect on financial decisions, which in turn positively affect financial performance. Financial decisions are found to partially mediate the relationship between managerial characteristics and firm performance. In addition, digital transformation positively moderates the relationship between financial decisions and financial performance, indicating that firms with higher levels of digital capability derive greater performance benefits from their financial decisions. Overall, the findings highlight the importance of managerial attributes and digital transformation in shaping financial outcomes through effective financial decision-making in SMEs.
Ngoc et al. (Tue,) studied this question.