ABSTRACT
The digitalization of MSMEs is not the same as the digitalization of large companies because most of their assets, businesses, and capabilities are outside the company. Thus, it is still questionable whether the digitalization of MSMEs has a positive impact on organizational performance, especially business performance. This study explores the digital capabilities (comprising managerial capabilities and operational capabilities) of MSMEs that may improve their business performance. In addition, the study develops a model that incorporates digital literacy as a moderator to the relationship between digital capabilities and business performance. The study aims to provide a clear model for an effective MSME digitalization program.
