Digital Capability and Digital Innovation: The Impact of Small Business Sustainability During Pandemic Covid 19

Yudha Prakasa


This study aims to explain and analyze the effect of digital capabilities on digital capabilities and the sustainability of small businesses. This research is classified as explanatory research using a quantitative approach. This study involved 153 creative small businesses in Surabaya City with three leading sectors: fashion, culinary, and interior design. The sampling technique used proportional random sampling. The questionnaire was distributed using Google Forms. The study results show that Digital Capability has a significant effect on Digital Innovation; Digital Capability and Digital Innovation have also been directly proven to improve the Business Sustainability of small business owners during the Covid 19 pandemic. Digital Capability will increase the sustainability of small and large businesses if, at the same time, business owners also increase Digital Innovation in managing both the innovation process, organizational innovation management, and innovation in marketing. These three innovations can mediate and strengthen the influence of Digital Capability on SMEs' Business Sustainability.


Digital Capability; Digital Innovation; Business Sustainability; SMEs; Covid 19.

Full Text:



Baker, W. E. and Sinkula, J. M. 2005, Environmental marketing strategy and firm performance: Effects on new product performance and market share, Journal of the Academy of Marketing Science, 33(4), 461–475. doi: 10.1177/0092070305276119.

Baker, M. 2015. Digital transformation. Buckingham Business Monographs.

Bagozzi, R. P., Yi, Y., & Phillips, L. W. 1991. Assessing Construct Validity in Organizational Research. Administrative Science Quarterly, 36(3), 421–458.

Bourlakis, M. et al. 2014. Firm size and sustainable performance in food supply chains: Insights from Greek SMEs, International Journal of Production Economics, 152, 112–130. doi: 10.1016/j.ijpe.2013.12.029.

Brent, A. C. and Labuschagne, C. 2007. An appraisal of social aspects in project and technology life cycle management in the process industry, Management of Environmental Quality: An International Journal, 18(4), 413–426. doi: 10.1108/14777830710753811.

Carcary, M., Doherty, E. and Conway, G. 2016, A dynamic capability approach to digital

transformation: a focus on key foundational themes, Paper presented at the 20-28, available at:

Chang, W. S. and Hsieh, J. 2011. The dynamics of intellectual capital in organizational development, African Journal of Business Management, 5(6), 2345–2355. doi: 10.5897/AJBM10.1039.

Choi, J., Sang-Hyun, A. and Cha, M. S. 2013, The effects of network characteristics on performance of innovation clusters, Expert Systems with Applications, 40(11), 4511–4518. doi: 10.1016/j.eswa.2013.01.052.

Colbert, B. (Wilfrid L. U. and Kurucz, E. (University of G. 2007, Triple Bottom Line and the Role for HRM, Human ResouRce Planning, 1(May), 21–31. Available at:

Damanpour, F. and Evan, W.M. 1990, The adoption of innovation overtime: structural characteristics and performance of organizations, Paper Presented at the Annual Meeting of the Decision Science Institute

Davis, F. D. and Venkatesh, V. 1996, A critical assessment of potential measurement biases in the technology acceptance model: Three experiments, International Journal of Human Computer Studies, 45(1), 19–45. doi: 10.1006/ijhc.1996.0040.

Gonzalo, M.-G., Arturo, G.-R.J., Yesenia, P.-C.S. and Vikas, K. 2018, Innovation capabilities and performance: are they truly linked in SMEs?, International Journal of Innovation Science, available at:

Hair, J. F. et al. 2019, When to use and how to report the results of PLS-SEM. doi: 10.1108/EBR-11-2018-0203.

Hortinha, P., Lages, C. and Lages, L.F. 2011, The trade-off between customer and technology orientations: impact on innovation capabilities and export performance, Journal of International Marketing, 19(3), 36-58.

Hootsuite, 2020. Digital 2020: 3.8 billion people use social media - We Are Social. (n.d.). Retrieved November 6, 2020, from

IMD, 2020. Digital Competitiveness Ranking 2020. IMD World Competitiveness Center

Janssen, J. et al. 2013. Experts' views on digital competence: Commonalities and differences, Computers and Education, 68, pp. 473–481. doi: 10.1016/j.compedu.2013.06.008.

Kerti Yasa, N. N., Ekawati, W. N. and Dewi Rahmayanti, L. P. 2019, The role of digital innovation in mediating digital capability on business performance, European Journal of Management and Marketing Studies, 4(2), 111–128. doi: 10.5281/zenodo.3483780.

Khin, S., Ahmad, N.H. and Ramayah, T. 2012, The integrated effect of strategic orientations on product innovativeness: moderating role of flexibility, Procedia - Social and Behavioral Sciences, 65, 743-748.

Khin, S. and Ho, T. C. F. 2019, Digital technology, digital capability and organizational performance: A mediating role of digital innovation, International Journal of Innovation Science, 11(2), 177–195. doi: 10.1108/IJIS-08-2018-0083.

Laforet, S. 2011, A framework of organizational innovation and outcomes in SMEs, International Journal of Entrepreneurial Behavior and Research, 17(4), 380-408.

Levallet, N., & Chan, Y.E. 2018. Role of Digital Capabilities in Unleashing the Power of Managerial Improvisation. MIS Q. Executive, 17.

Liu, D. Y., Chen, S. W. and Chou, T. C. 2011, Resource fit in digital transformation: Lessons learned from the CBC Bank global e-banking project, Management Decision, 49(10), 1728–1742. doi: 10.1108/00251741111183852.

Liu, J. et al. 2018, Nexus approaches to global sustainable development, Nature Sustainability, 1(9), 466–476. doi: 10.1038/s41893-018-0135-8.

Lu, Y. and Ramamurthy, K. R. 2011, U Nderstanding the L Ink B Etween I Nformation T Echnology C Apability and O Rganizational a Gility : a N E Mpirical E Xamination 1, MIS Quarterly, 35(4), 931–954.

Maedche, A. 2016, Interview with Michael Nilles on "What Makes Leaders Successful in the Age of the Digital Transformation?', Business and Information Systems Engineering, 58(4), 287–289. doi: 10.1007/s12599-016-0437-1.

Munir Abbasi, Panayiota Vassilopoulou & Lampros Stergioulas. 2017, Technology roadmap for the Creative Industries, Creative Industries Journal, 10(1), 40-58, doi:10.1080/17510694.2016.1247627

Nambisan, S., Lyytinen, K., Majchrzak, A. and Song, M. 2017, Digital innovation management: reinventing innovation research in a digital world, MIS Quarterly, 41(1), 223-238.

Peteraf, M. A. 1993. The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3), 179–191. doi:10.1002/smj.4250140303

Prakasa, Y., Raharjo, K. and Wiratama, I. D. 2020, 'Transformational Leadership and Digital Maturity: The Mediating Role of Organizational Culture, Atlantis Press, 154(AICoBPA 2019), 224–229.

Rogers, E. M. 1995, Diffusion of Innovations - Chapter 4, Diffusion of Innovations, 160–203. Available at:

Teece, D. and Pisano, G. 1994, The dynamic capabilities of firms: An introduction, Industrial and Corporate Change, 3(3), 537–556. doi: 10.1093/icc/3.3.537-a.

Ullah, H. et al. 2021, Nexus between IT capability and green intellectual capital on sustainable businesses: evidence from emerging economies', Environmental Science and Pollution Research, 28(22), 27825–27843. doi: 10.1007/s11356-020-12245-2.

Ussahawanitchakit, P. 2012, Administrative innovation, technical innovation, competitive advantage, competitive environment, and firm performance of electronics businesses in Thailand, Review of Business Research, 12(1), 1-10.

Valmohammadi, C. 2017, Customer relationship management: Innovation and performance, International Journal of Innovation Science, 9(4), 374–395. doi: 10.1108/IJIS-02-2017-0011.

Ventures, East. 2021. Digital Competitives Index 2021: Momentum Akselerasi Transformasi Ekonomi Digital. Jakarta

Westerman, G. et al. 2012, The Digital Advantage: How Digital Leaders Outperform their Peers in Every Industry, MIT Sloan Management Review, 1–24. Available at:

Zawislak, P. A. et al. 2013, Influences of the Internal Capabilities of Firms on their Innovation Performance: A Case Study Investigation in Brazil., International Journal of Management, 30(1), 329–349.

Zhou, K. Z. and Wu, F. 2010, Technology capability, strategic flexibility and product innovation, Strategic Management Journal, 31(5-6), 547-561



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

J-MAS (Jurnal Manajemen dan Sains) Published by Master of Management Program, Faculty of Economics, Batanghari University
Adress: Fakultas Ekonomi, Jl.Slamet Ryadi, Broni-Jambi, Kec.Telanaipura, Kodepos: 36122, email:

Creative Commons License This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.