IMPACT OF DIGITAL TRANSFORMATION ON ORGANIZATIONAL PERFORMANCE: THE MEDIATING ROLE OF INNOVATION CAPABILITY AND THE MODERATING EFFECT OF ICT COMPETENCE IN NIGERIAN SMES:
##plugins.themes.academic_pro.article.main##
Abstract
Digital transformation is a key driver of competitiveness and sustainability for SMEs in developing economies. Yet
despite growing investment in digital infrastructure, Nigerian SMEs often report inconsistent performance
outcomes, raising questions about what enables or hinders effectiveness. This study examines the impact of digital
transformation on organizational performance among Nigerian SMEs, testing innovation capability as a mediator
and ICT competence as a moderator. Grounded in the Resource-Based View and Dynamic Capability Theory, the
study uses a quantitative cross-sectional survey of 250 SME owners and managers. Data were analyzed using
Structural Equation Modeling and regression analysis. Findings show that digital transformation significantly
improves organizational performance. Innovation capability partially mediates this relationship, while ICT
competence strengthens the link between digital transformation and innovation capability. The results suggest that
SMEs achieve superior performance when they integrate digital tools strategically, build ICT competence, and foster
innovation capability. The study recommends targeted digital skills programs, capacity-building in innovation,
improved access to affordable digital infrastructure, and stronger academia-industry-government collaboration to
support SME participation in the digital economy.