DIGITAL MARKETING CAPABILITY, CUSTOMER VALUE, AND CUSTOMER ENGAGEMENT: ENHANCING MSME PERFORMANCE IN EMERGING ECONOMIES
DOI:
https://doi.org/10.70248/jmie.v4i1.4656Abstract
Digital transformation has encouraged widespread adoption of digital marketing channels among micro, small, and medium enterprises (MSMEs), yet this growing digital presence has not consistently translated into stronger marketing performance, particularly where digital activity remains operational rather than strategic. This study examines the effect of digital marketing capability on MSME marketing performance, positioning customer value as a mediator and customer engagement as a moderating boundary condition. Primary data were collected from 212 MSME owners/managers through purposive sampling and analyzed with Partial Least Squares Structural Equation Modeling (PLS-SEM). The measurement and structural models met established validity, reliability, and fit standards. Digital marketing capability was found to have a positive and significant effect on both customer value and marketing performance, and customer value likewise had a positive and significant effect on marketing performance. Customer value partially mediated the effect of digital marketing capability on marketing performance, accounting for about half of the total effect (VAF = 50.4%), while customer engagement was confirmed as a pure moderator, strengthening rather than independently driving marketing performance. An Importance-Performance Map Analysis further identifies digital marketing capability as the primary intervention priority. This study contributes to Dynamic Capability Theory and Customer Engagement Theory by showing how a joint mediation-moderation mechanism explains the translation of digital capability into marketing outcomes among resource-constrained enterprises, and offers practical guidance for MSME owners and policymakers in emerging economies designing integrated, value- and engagement-oriented digital marketing strategies.
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