Digital Marketing Capability and Its Impact on MSME Market Performance

Abstract

This study aims to examine the effect of digital marketing capability on the market performance of micro, small, and medium enterprises operating in Solo City. The research focuses on understanding how the ability to plan, implement, and manage digital marketing activities contributes to improved market outcomes among MSMEs. A quantitative research design was employed using a survey method. Data were collected from 85 MSME owners and managers who actively utilize digital platforms for marketing purposes. The measurement instruments were adapted from established scales, and data analysis was conducted using Structural Equation Modeling to evaluate both the measurement and structural models. The results indicate that digital marketing capability has a positive and statistically significant effect on MSME market performance. MSMEs with stronger digital marketing capabilities demonstrate higher levels of sales growth, broader market reach, and improved customer acquisition compared to those with limited digital capabilities. This study contributes to the marketing and small business literature by empirically validating digital marketing capability as a strategic resource within the context of MSMEs in an emerging economy. The findings also provide practical insights for MSME owners and policymakers to prioritize capability development in digital marketing initiatives.