The Influence of Digital Business Strategy and Digital Capabilities on Financial Performance

Abstract

Purpose: Analyze the influence of digital business strategy and digital capabilities on financial performance.

Methodology: This study uses a quantitative approach; data collection is carried out through a survey using a questionnaire instrument. The research population includes SME entrepreneurs in the food and beverage sector in Jepara Regency. The research sample amounted to 163 respondents, taken using the non-probability sampling method. The data analysis technique uses Partial Least Squares (PLS).

Results/findings: The results of the study showed that all variations, including managerial capability, operational capability, human capability, and innovation capability, had a significant positive effect on financial performance.

Limitations: This study only focuses on the variables of managerial capability and operational capability for digital business strategy as well as human capability and innovation capability for digital-related capability, without considering other relevant variables.

Contribution: This study enriches the literature on digital business strategies and their influence on improving financial performance in the SME sector, especially the food and beverage sector.

Novelty: Previous research was limited in the context of large companies, while specifically on SMEs is still relatively limited. The results of previous studies also obtained inconsistent results.