<![CDATA[Digital transformation has intensified the pressure on small and medium enterprises (SMEs) to convert digital capability into measurable marketing outcomes. However, prior studies report inconsistent findings regarding the capability–performance relationship, suggesting that organizational capability alone may be insufficient to generate superior Performance. This study explains how Digital Marketing Capability and Strategic Agility translate into marketing performance through customer-based mechanisms. Using a quantitative explanatory design, data were collected from 168 digital-based SMEs and analyzed using Partial Least Squares Structural Equation Modeling. The findings demonstrate that Digital Marketing Capability and Strategic Agility significantly enhance marketing performance, both directly and through indirect pathways. Customer Engagement reveals a central role in transforming digital capability into relational value, while Brand Trust strengthens the conversion of engagement into performance outcomes. The study also confirms a significant serial mediation effect, indicating that marketing capability creates value when organizations successfully orchestrate customer interaction and trust simultaneously. These findings advance a capability–behavior–performance perspective by explaining the process through which internal capabilities are translated into market outcomes. The study further provides strategic insight for SMEs to align digital capability development with customer relationship management in increasingly dynamic digital markets.]]>
