Relationships between digital maturity, organizational agility, and firm performance: An empirical investigation on SMEs

Digitalization has significant power to boost the performance of small and medium-sized enterprises (SMEs). Most scholars approached the phenomenon from different standpoints by examining the effects of information technology skills, digital skills, information systems capabilities, information and communication technologies (ICT) adoption, and digitalization on firm performance. However, although the terms are interrelated, the impact of digital maturity on SMEs' performance has been rarely investigated. Digital maturity examines the extent of digitalization and digital capabilities of organizations, which is essential in evaluating state-of-the-art organizations' digitalization efforts and providing a roadmap for further improvement. Although digitalization offers various benefits to organizations, its direct effect on the performance outcome is still arguable. Prior studies had revealed mixed findings when they assessed the impact of digital maturity on firm performance. Hence, some studies called for research for the examination of possible intervening variables. Consequently, this study examines the effects of digital maturity and organizational agility on firm performance. Furthermore, the moderating role of organizational agility in the digital maturity-firm performance link is also investigated. Data for testing the proposed model was collected from SMEs in the Marmara Region of Turkey using a convenience sampling technique. The structural equation modeling with partial least squares estimation (PLS-SEM) approach was used to analyze 119 responses collected from SMEs via face-to-face and online questionnaires. Eighty-two of the respondents identified themselves as entrepreneurs/partners. 13 respondents are senior executives, 14 are mid-level managers, 8 are white-collar employees, and two stated that they work in different positions than these. The findings show that organizational agility and digital maturity have a positive impact on firm performance. However, when the role of organizational agility is examined as a moderator, it is discovered that the factor reduces the effect of digital maturity on firm performance.