Digital Entrepreneurial Resilience as a Mechanism Linking Digital Capability and MSME Business Survival in the Digital Economy Era

Abstract

Persistent market turbulence, technological disruption, and post-pandemic economic volatility compel Micro, Small, and Medium Enterprises (MSMEs) to evolve beyond superficial digital tool adoption toward adaptive business resilience. This study investigates the impact of digital capability on MSME business survival, examining the mediating role of digital entrepreneurial resilience (DER). Utilizing an explanatory quantitative survey, empirical data were gathered from 240 MSME owners and managers operating in the culinary, handicraft, and retail sectors across North Sulawesi actively leveraging digital ecosystems. Data were analyzed via Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4.0. Findings reveal that: (1) digital capability positively and significantly impacts digital entrepreneurial resilience (β = 0.564; p < 0.001) and business survival (β = 0.218; p < 0.001); (2) digital entrepreneurial resilience substantially enhances business survival (β = 0.478; p < 0.001); and (3) digital entrepreneurial resilience partially mediates the relationship between digital capability and business survival (indirect effect β = 0.270; p < 0.001; 95% CI [0.212; 0.336]). The structural model accounts for 58.2% of the variance in digital entrepreneurial resilience and 65.4% in business survival (R² = 0.654). These results enrich Dynamic Capability Theory and the Resource-Based View by establishing that digital capability sustains enterprise survival primarily when institutionalized into adaptive entrepreneurial resilience.