<![CDATA[Purpose – This study examines how digital transformation, analytic capability, and learning system orientation drive operational performance among SMEs through data-driven decision-making (DDDM), and tests whether environmental dynamism moderates the DDDM-performance link, offering a possible explanation for a contradiction in prior digital capability research between studies reporting a direct performance effect and studies reporting none. Design/methodology/approach – The study surveys 275 Indonesian SME owners and managers through purposive and snowball sampling, analyzed with partial least squares structural equation modeling (PLS-SEM) in SmartPLS 4, supplemented by confirmatory tetrad analysis, a cross-validated predictive ability test, and necessary condition analysis (NCA). Finding/Results – Six of the seven hypothesized relationships are supported, including a staged effect of digital transformation on analytic capability (H5); the hypothesized moderating effect of environmental dynamism (H6) is not supported. A competing model with direct effects added, estimated directly in SmartPLS, shows data-driven decision-making fully mediates the effects of all three antecedents (digital transformation, analytic capability, and learning system orientation) on operational performance. DDDM strongly predicts operational performance, environmental dynamism has a significant direct but no significant moderating effect, and learning system orientation is confirmed as a necessary condition for performance. Discriminant validity and out-of-sample predictive power are confirmed. Originality/Value – The study extends digital capability research by reframing learning orientation's necessity and environmental dynamism's moderating effect into supported propositions, and by specifying data-driven decision-making as a plausible mechanism reconciling conflicting findings in prior studies, giving SME managers a mechanism-based roadmap for digital investment.]]>
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