Assessing the Relationship Between Digitalization, Organizational Agility, and Sustainable Competitive Advantage Among Urban SMEs

• Abiodun Okunola

  Ladoke Akintola University Technology

  Author

Urban small and medium enterprises (SMEs) face mounting pressure to digitalize while simultaneously building the agility necessary for sustained competitiveness. Yet the empirical relationship between digitalization, organizational agility, and sustainable competitive advantage (SCA) remains insufficiently integrated, particularly in urban contexts where resource constraints and market volatility intersect. This study addresses this gap by examining how digitalization influences SCA through the mediating mechanism of organizational agility among urban SMEs. A quantitative cross-sectional survey design was employed, collecting data from 312 SME owners and managers operating in urban commercial districts. Partial least squares structural equation modeling (PLS-SEM) was used to test the hypothesized relationships. The results demonstrate that digitalization significantly predicts organizational agility (β = 0.472, p < 0.001), and organizational agility significantly predicts SCA (β = 0.518, p < 0.001). Importantly, organizational agility fully mediates the relationship between digitalization and SCA, with the indirect effect accounting for 89.4% of the total effect. The model explained 54.2% of variance in SCA and 38.7% in organizational agility. These findings suggest that digitalization alone is insufficient for achieving sustainable competitive advantage; rather, its strategic value is unlocked through the development of organizational agility. The study contributes a validated mediation framework and offers actionable guidance for urban SME managers and policymakers seeking to optimize digital investments for long-term competitiveness.

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Copyright (c) 2026 Abiodun Okunola (Author)

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