Impact of digital and entrepreneurial capacities on innovation and resilience in entrepreneurship

Purpose This study examines the dynamic interconnections between digital capacity, entrepreneurial competency and innovation, focusing on their collective influence on entrepreneurial resilience in the Middle East. It underscores the pivotal role of digital transformation capacity, absorptive capacity and digital literacy in driving innovation and reshaping entrepreneurial practices. Design/methodology/approach The research draws on data from 803 entrepreneurs across the Middle East, employing covariance based structural equation modeling (CB-SEM) to investigate how digital capacity, absorptive capacity and digital transformation contribute to innovation and entrepreneurial agility, ultimately enhancing resilience. Findings The findings reveal that digital capacity, mediated by absorptive capacity and digital transformation, is a critical driver of innovation. This, in turn, bolsters entrepreneurial agility, which emerges as a key enabler of resilience. The study highlights that integrating digital competencies fosters innovative practices and equips entrepreneurs with the adaptability to navigate complex, evolving business environments. Research limitations/implications The study is limited to entrepreneurs in the Middle Eastern context, which may limit the generalizability of the findings to other regions with different economic, cultural or technological conditions. Practical implications The research underscores the necessity for policymakers and business leaders to prioritize enhancing digital competencies and cultivating innovative ecosystems. By doing so, they can promote entrepreneurial practices that are both adaptive and resilient in the face of a rapidly digitizing global economy. Originality/value This study contributes novel insights into the relationship between digital transformation and entrepreneurial resilience within the Middle Eastern context. It provides empirical evidence that digital capacities and competencies drive innovation, redefine entrepreneurial practices, and sustain success in a digitally connected economy.