TITLE:
Bridging Digital Transformation and Firm Performance: The Role of Digital Capability, Digital Innovation, and Digital Leadership in Moroccan SMEs
AUTHORS:
Soukaina Zaoui, Haiwei Zhou
KEYWORDS:
Digital Transformation, Firm Performance, Digital Capabilities, Digital Innovation, Digital Leadership, Dynamic Capabilities Theory, Moroccan SMEs
JOURNAL NAME:
Open Journal of Business and Management,
Vol.14 No.4,
July
14,
2026
ABSTRACT: Digital transformation (DT) has become a strategic priority for small and medium-sized enterprises (SMEs) seeking to compete in increasingly digital environments. However, the mechanisms through which it translates into firm performance (FP) in the context of SMEs in emerging economies remain insufficiently understood. Drawing on dynamic capabilities theory and the technology-organization-environment (TOE) framework, this study examines how DT influences FP in Moroccan SMEs, both directly and indirectly through digital capability (DC) and digital innovation (DI), and tests whether digital leadership (DL) moderates these pathways. The findings indicate that the effect of DT on FP is partially mediated by DC and DI, suggesting that DT improves performance both directly and, in particular, when digital initiatives are embedded in organizational capabilities and converted into innovation outcomes rather than through technology adoption alone. The results further reveal that DL significantly moderates the DT-DI relationship, strengthening the conversion of digital efforts into innovation, whereas its moderating effect on the DT–DC relationship is not statistically significant. The study provides a clearer understanding of DT as an organizational and leadership-driven process rather than a purely technological one, and integrates DT, capability building, innovation, and leadership into a single explanatory framework. Theoretical contributions extend dynamic capabilities theory and the TOE framework, while managerial and policy implications highlight the need for capability building, innovation incentives, and leadership development in SMEs’ digitalization programs aligned with the Morocco Digital 2030 strategy.