<![CDATA[The batik industry represents an important component of Indonesia’s cultural heritage and regional economy. However, increasing digital disruption requires batik small and medium-sized enterprises (SMEs) to strengthen their ability to reach customers, develop products, and respond to changing market conditions. This study examines the effect of digital marketing capabilities on business performance by investigating the mediating roles of ambidextrous innovation and market capitalization agility. Survey data were collected from 223 batik SMEs in Central Java and analyzed using structural equation modelling (SEM). The findings show that digital marketing capabilities significantly enhance exploitative innovation and market capitalization agility. These capabilities function as important mechanisms through which digital marketing contributes to improved business performance. In contrast, digital marketing capabilities do not have a significant direct effect on business performance, indicating that digital adoption alone is insufficient to generate superior outcomes. Performance improvements depend on firms’ ability to translate digital marketing capabilities into innovation activities and agile market responses. This study contributes to the strategic fit and dynamic capabilities perspectives by integrating digital marketing capabilities, ambidextrous innovation, and market agility within a unified framework. Practically, batik SMEs should align digital marketing initiatives with continuous product refinement, commercialization, and rapid adaptation to market changes. The findings provide insights for strengthening the competitiveness and sustainability of heritage-based SMEs in the digital era.]]>
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