Digital Marketing Capability and Competitive Advantage Among Nigerian SMEs: The Mediating Role of Innovation

This study investigates the relationship between digital marketing capability and competitive advantage among SMEs in Nigeria, examining the mediating role of innovation in this relationship, with data drawn from SMEs in Ogun State, South West Nigeria, and Plateau State, North Central Nigeria. As digitalisation reshapes competitive dynamics across industries, SMEs that develop superior digital marketing capabilities including social media management, search engine optimisation, digital analytics, and content creation are expected to achieve enhanced competitive positions. The mediating role of innovation has been theorised but not empirically tested in the Nigerian SME context. Grounded in the resource-based view and dynamic capabilities theory, the study operationalises digital marketing capability as a multidimensional construct and tests its direct and innovation-mediated pathways to competitive advantage. A cross-sectional survey of 320 SME owners and marketing managers is conducted using stratified random sampling. PLS-SEM is employed for path analysis and mediation testing. Preliminary findings reveal a significant positive relationship between digital marketing capability and competitive advantage, with product and process innovation serving as significant partial mediators. SMEs with higher digital literacy show stronger mediation effects, suggesting a complementarity between digital skills and innovative capacity. The study adds to the resource-based SME marketing literature by providing empirical evidence of the innovation mechanism linking digital capability to competitive outcomes in Nigerian regional markets. Keywords: digital marketing capability, competitive advantage, SME, innovation, Nigeria