Digital capability and creative capability to boost firm performance and formulate differentiated CSR-based strategy

Abstract

Digitalization has facilitated the improvement of small and medium-sized enterprises (SMEs). Firms develop their internal skills to deal with external challenges stemming from the digitalization process and the COVID-19 crisis. Founded on the dynamic capability view, our paper empirically tests how firms utilize their digital and creative capabilities to improve their performance during the pandemic and promote their corporate social responsibility (CSR) activities. The study conducted a two-step analysis. First, the data from 151 enterprises in Vietnam was collected and analyzed qualitatively to understand their digital capabilities and export performance. Then, the Smart PLS version 3 was utilized to analyze extended quantitative data of 329 SMEs in various industries. This study contributes to the theories of dynamic capability with the implications of developing digital and creative capabilities to enhance performance and CSR differentiation strategy in dealing with external challenges, especially in global pandemics. Firm performance plays a mediating role in the relationship between capabilities and CSR differentiation strategy. Our study also enriches the CSR literature by viewing CSR as firms' achieved targets or voluntary activities instead of as an instrument to boost firm performance. This research provides the background for internationalization researchers, policymakers, and practitioners to face obstacles and overcome barriers, enhance digital and creative capabilities, engage in digital platforms, and benefit from international marketing, international retailing, and CSR activities.