SME Performance Outcomes: The Role of Technological Absorptive Capacity and E-Business Innovation

This study examines the relationship between technological absorptive capacity and SME business performance, with e-business innovation as a mediating mechanism. Using data from 179 sunflower oil–processing SMEs in Tanzania and applying PLS-SEM, the findings show that technological absorptive capacity significantly enhances business performance, both directly and indirectly through e-business innovation. The mediation effect is partial, indicating that absorptive capacity influences performance partly by fostering e-business innovation. Multigroup analysis reveals no statistically significant differences between SMEs in the Dodoma and Singida regions, although effect sizes are generally stronger in Dodoma, where the mediating role of e-business innovation is also more pronounced. Overall, the study provides empirical evidence of the importance of technological absorptive capacity and e-business innovation in improving SME performance and offers relevant implications for managers, policymakers, and researchers.