The Impact Analysis of Digital Technology, Relational Capability, Innovation Capability, Organizational Learning on Organizational Agility and SME Performance

This research aims to analyze the relationship between digital technology capability, relational capability, innovation capability, organizational learning, on organizational agility and agility on financial performance, and innovation performance of small and medium enterprises (SMEs) in the processing industry sector in Java. This research is descriptive and uses a cross-sectional approach to obtain a deeper understanding of the influence between the contextual variables and business performance. This research collected the data from a survey with 206 respondents from SMEs. The data was processed by using the Partial-Least Square Structural Equation Modeling (PLS-SEM). The results of data analysis show that organizational agility mediates the digital technology capability, relational capability, innovation capability, and organizational learning variables on financial performance and innovation performance, specifically in product and process innovation. Organizational agility is critical for enhancing SMEs' performance by helping them to respond quickly to client requests, change production/service provision, make market judgments, and redesign the organization. It is critical to provide resources for digital technology, create complete digital technology competencies, and focus on relational, innovative, and learning capacities. Innovative product creation and process optimization can provide new value for SMEs.