Digital Capability and Distribution Readiness: Why Some E-Commerce MSMEs Excel While Others Fall Behind

Purpose: Digital transformation has become a critical driver of business performance in the contemporary era. This study examines the impact of social influence and facilitating conditions on business performance and explores the mediating role of digital capability among e-commerce-based MSMEs. Research Design, Data, and Methodology: A quantitative explanatory approach was employed. Primary data were collected through a structured survey of 228 e-commerce based MSMEs in South Sulawesi Province, Indonesia, and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS. Results: The findings indicate that facilitating conditions significantly influence business performance, whereas social influence affects digital capability but does not directly impact business performance. Notably, digital capability does not act as a strong mediator between external factors and business performance. These results suggest that achieving digital success depends not only on technology adoption or social pressure but also on strategic readiness, distribution preparedness, and logistics support for efficient e-commerce fulfillment. Conclusion: This study urges MSMEs to enhance internal digital capabilities and align them with strategies and distribution, moving beyond infrastructure investment. It challenges the assumed mediating role of digital capability and contributes to SME theory and policy formulation.