<![CDATA[This study examines the mediating role of digital adaptability in the relationship between digital literacy and employee performance among employees of trade-sector micro, small, and medium-sized enterprises (MSMEs) in Purbalingga Regency, Indonesia. A quantitative explanatory research design was employed, and data were collected from 200 respondents using a structured questionnaire. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS software. The results show that digital literacy has a positive and significant effect on employee performance. Digital literacy also positively affects digital adaptability, while digital adaptability significantly improves employee performance. Furthermore, digital adaptability partially mediates the relationship between digital literacy and employee performance. These findings indicate that digital literacy improves employee performance both directly and indirectly by strengthening employees’ ability to adapt to digital change. This study contributes to the literature by integrating the Resource-Based View and Adaptive Performance Theory in explaining employee performance in the MSME context. Practically, the findings suggest that MSME managers should develop both digital skills and adaptive capacity to improve employee performance.]]>
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