This study aims to analyze the effect of digital marketing capability on the marketing performance of small and medium-sized enterprises (SMEs) in Malang City, with competitive advantage as a mediating variable. The study employs a quantitative explanatory approach and uses covariance-based structural equation modeling with maximum likelihood estimation. The findings indicate that the model demonstrates good measurement quality and acceptable model fit. Digital marketing capability has a positive and significant effect on competitive advantage and marketing performance. Competitive advantage also has a positive and significant effect on marketing performance. The mediation analysis indicates that competitive advantage plays a role in explaining the relationship between digital marketing capability and marketing performance. These findings emphasize that effectively managed digital marketing capability can help SMEs strengthen their competitive position while improving marketing performance. Therefore, SMEs should integrate digital technologies with marketing capabilities and market responsiveness to create greater customer value
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