Evaluating the Mediating Role of Dynamic Capabilities in Digital Transformation and SME Agility Post-COVID-19

• Adaan Ahsun

  Covenant University

  Author

The post-COVID-19 business landscape has compelled small and medium-sized enterprises (SMEs) to accelerate digital transformation, yet the mechanisms through which digital investments translate into organizational agility remain insufficiently understood. This study addresses the gap by examining whether dynamic capabilities—conceptualized as sensing, seizing, and transforming capacities—mediate the relationship between digital transformation and SME agility in the post-pandemic era. Drawing on a quantitative survey design with 312 SME managers across manufacturing and service sectors, and employing structural equation modeling with bootstrapped mediation analysis, the study tests a serial mediation model. Results indicate that digital transformation exerts a significant direct effect on agility (β = 0.41, p < .001), while dynamic capabilities partially mediate this relationship, accounting for 38.7% of the total effect (indirect β = 0.26, 95% CI [0.18, 0.34]). The full model demonstrates strong explanatory power (R² = 0.894, indicating 89.4% of variance in agility explained). The findings suggest that digital transformation alone is insufficient; SMEs must cultivate dynamic capabilities to convert technological adoption into actionable agility. Theoretical implications extend dynamic capabilities theory by specifying its mediating mechanism in post-crisis SME contexts. Practically, the study provides a validated framework for SME managers and policymakers to prioritize capability-building alongside digital investment.

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Copyright (c) 2026 Adaan Ahsun (Author)

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