<![CDATA[Purpose – This study investigates the effects of digital marketing adoption and digital literacy on perceived business performance and examines whether digital literacy strengthens the performance contribution of digital marketing among small and medium-sized enterprises (SMEs) in Riau Province, Indonesia. Design/methodology/approach – The study used a quantitative, cross-sectional explanatory design. From 320 questionnaires distributed purposively to SME owners and managers in five areas of Riau, 250 valid responses were analyzed. The constructs were measured with multi-item five-point Likert scales. SmartPLS 4 was used to evaluate the measurement and structural models, including an interaction term, with statistical inference based on 5,000 bootstrap resamples and 95% confidence intervals. Findings – Digital marketing adoption positively influenced perceived business performance (β = 0.381, p < 0.001), as did digital literacy (β = 0.429, p < 0.001). Digital literacy also strengthened the relationship between adoption and performance (β = 0.215, p < 0.001), although the interaction effect was small (f² = 0.095). The model explained 61.2% of performance variance and demonstrated predictive relevance (Q² = 0.421). Originality/value – By treating digital marketing adoption as a strategic resource and digital literacy as both an enabling capability and a boundary condition, this study refines the Resource-Based View explanation of SME digitalization. The evidence from an underexamined Indonesian region indicates that access to digital platforms should be accompanied by practical skills in content development, customer interaction, information evaluation, and performance measurement.]]>
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