Digital capabilities are increasingly important for Micro, Small, and Medium Enterprises (MSMEs) to sustain performance amid uncertainty. This study examines the relationship between digital capability and firm performance, focusing on the mediating roles of organizational ambidexterity and resilience and the moderating role of government support. Survey data from 302 senior managers of Indonesian MSMEs were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that digital capability enhances both ambidexterity and resilience, but only resilience mediates its positive effect on performance. Ambidexterity has no significant direct or indirect effect on performance. Government support strengthens the indirect effect through resilience but weakens the pathway through ambidexterity. These findings extend Dynamic Capabilities Theory by identifying organizational resilience as the primary mechanism linking digital capability to MSME performance. Practically, MSMEs should prioritize digital initiatives that strengthen resilience, while policymakers should design flexible support programs that enhance digital readiness and adaptive capacity.
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Fahrudi et al. (2026) studied this question.
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