Impact of E-Commerce and Digital Marketing Adoption on the Financial and Sustainability Performance of MSMEs during the COVID-19 Pandemic: An Empirical Study

Abstract

The COVID-19 pandemic has remarkably affected the business processes and performance of micro-, small-, and medium-sized enterprises (MSMEs) across the world. MSMEs have had to adopt and implement numerous strategies to sustain their businesses, and their financial and sustainability performance has been impacted by their choice of e-commerce (EC) platforms and digital marketing (DM) strategies. The objective of this research was to explore the effects of EC and DM platforms and strategies on facilitating MSMEs’ financial and sustainability performance amid the devastating COVID-19 pandemic. This study gathered data from 212 MSMEs from three districts of Bangladesh. A partial least squares structural equation modeling (PLS-SEM) approach was undertaken, to test the hypothesized model. The findings revealed that e-commerce had a significant association with MSMEs’ financial performance and sustainability amid the pandemic. It was also observed that digital marketing strategies had a substantial impact on MSMEs’ financial performance. However, the linkage between DM strategies and MSMEs’ sustainability was found to be insignificant. Furthermore, it was found that the financial performance of MSMEs mediated the relationship between e-commerce adoption and their sustainability performance. These findings contribute to the extant technology adoption literature, by exploring the role of e-commerce and digital marketing on firms’ financial outcomes amid a global pandemic. Managers and policymakers of small businesses can learn several things from this study, and understand how crucial digital commerce and digital marketing are to their success and long-term survival.