Abstract

Digital technology developments are profoundly changing corporate operations in all sectors. Building strong digital skills has become more important for small and medium-sized businesses (SMEs) in developing countries, many of which run under limited resources and must remain competitive in the face of digital disruption. Though awareness of this requirement is increasing, especially in light of the different results of digital technology adoption initiatives, understanding the fundamental drivers that shape the effective growth of digital capabilities still lags behind. To conceptualise how digital skills develop inside SMEs, this paper uses a multi-method approach based on a quantitative survey. It presents and scientifically confirms ORGDIGCAP, a multidimensional measuring tool that reflects important facets of digital capabilities in organizational settings. Three main components form the basis of the scale: organizational learning connected to digital tools, the actual use of these technologies, and their strategic integration. Curiously, in this situation the adoption aspect lacked significant empirical backing as a fundamental element of digital capacity assessment.The study uses data from 137 Mexican SMEs to examine the relationship between digital capabilities and agility and the mediating role of digital strategy. The results demonstrate the importance of digital strategy formulation in boosting an organization's digital agility and digital capacity development for competitiveness. This article defines the digital transformation processes in developing country SMEs for theoretical and practical insights. It gives executives and lawmakers solid advice for preparing organizations for success in a volatile, technology-driven environment.