Digital Marketing Capability and Organizational Performance The Mediating Role of Innovation Capability in Selected Ethiopian State Owned Enterprises

Abstract

This study investigated the effect of Digital Marketing Capability (DMC) on Organizational Performance (OP) with the mediating Role of Innovation Capability (IC) on Ethiopian State-Owned Enterprises (SOEs). The study was grounded on the Resource-Based View (RBV) and Dynamic Capabilities Theory (DCT). The study confirmed that, DMC is a strategic organizational competence for market sensing, customer engagement and organizational success. On the other hand, IC is the organizational ability to transform knowledge into innovation and better performance results. A positivist research paradigm and an explanatory research design were employed. Quantitative data was collected from 376 employees and managers in selected Ethiopian SOEs using structured Likert scale questionnaires. The data were analyzed using Covariance-Based Structural Equation Modeling (CB-SEM) with AMOS Version 23, and the measurement model’s validity and reliability were tested using Confirmatory Factor Analysis (CFA). The results indicate that DMC has a significant positive effect on OP (β = 0.307, p=0.02) and on IC (β = 0.528, p=0.03). Also, IC has a significant positive effect on OP (β= 0.709, p= 0.01). The results further show that IC partially mediates DMC-OP relationship (β = 0.374, p = 0.003) and highlight the fact that DMC increases performance directly and indirectly through innovation processes. It contributes to the RBV and DCT by showing how IC can improve OP via DMC. The study also provides practical implications to managers and concerned body in SOEs by emphasizing the importance of enhancing digital capabilities and innovation-driven strategies to enhance organizational outcomes.