Digital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of Vietnam

Digital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of VietnamDigital marketing and its relationship with digital orientation and technological innovation for SME performance in an emerging market: The case of Vietnam

MINISTRY OF EDUCATION AND TRAININGUNIVERSITY OF ECONOMICS HO CHI MINH CITY

NGO GIANG THY

Digital marketing and its relationship with digitalorientation and technological innovation for SMEperformance in an emerging market: The case of

DOCTORAL DISSERTATION

MINISTRY OF EDUCATION AND TRAININGUNIVERSITY OF ECONOMICS HO CHI MINH CITY

NGO GIANG THY

Digital marketing and its relationship with digitalorientation and technological innovation for SMEperformance in an emerging market: The case of

DOCTORAL DISSERTATION

Specialization: Commercial Business – Code: 9340121ACADEMIC ADVISOR:

Assoc Prof Dr Ho Viet Tien

Ho Chi Minh City, 2024

I hereby declare that my Ph.D thesis with the title “Digital marketing and its

relational perspective with digital orientation and technological innovation for SMEperformance in the emerging market” has been composed solely by myself and that it

has not been submitted.

I have read the UEH’s current research ethics guidelines, and accept responsibilityfor the conduct of the procedures in accordance with the guidelines I have attempted toidentify all the risks related to this research that may arise in conducting this research,obtained the relevant ethical and/or safety approval (where applicable), andacknowledged my obligations and the rights of the participants.

Ho Chi Minh City, 2024

Ngo Giang Thy

I express my gratitude to my promotor, Assoc Prof Dr Ho Viet Tien, for hisinvaluable support and astute guidance I am grateful for his time, contributions, andbenevolence in providing me with such adept guidance.

I would like to convey my profound gratitude to UEH for providing me with awealth of knowledge and academic opportunities I think that my knowledge has grownup after some years following the doctoral program.

My parents consistently motivate me to complete my studies The implementationof my study plan and successful completion of my PhD degree have enabled me topartially meet the expectations of my parents Furthermore, it is of utmost significancethat I would like to devote to my parents and family My Ph.D thesis is also asignificant present for my two daughters and one son.

The Ph.D thesis takes an approach on literature reviews to develop the researchmodel with nine hypotheses Testing hypotheses is based on two merged databasesources The final sample after merging and cleaning is 7,708 enterprises Statisticalmodels are employed to test hypotheses through the pool data Continuously, thestatistical models are employed to test hypotheses through firm levels, in which micro-enterprises (accounting for 40.4% in the total sample), small enterprises (39.1%), andmedium enterprises (8.5%) are concerned The findings of thesis have academiccontributions and provide practical information of SMEs in the emerging market.Firstly, approaching digital technology resources, e.g social media, e-commerce,Chabot AI, and CRM, business opportunities of SMEs are generated, and these make apositive contribution of digital marketing on firm performance Secondly, once digitalorientation is based on digital technology resources, both micro and small enterpriseshave a successful revolution in the way doing business However, digital orientationneeds a good combination with technological innovation, because the interaction amongthem strengthens achievements of SMEs Thirdly, the findings affirm a curial role ofdigital technology resources to support digital orientation and marketing, whichpresents a compelling argument within the Resource-Based View (RBV) theory Byembracing digital technology resources, SMEs can streamline their operations, improvecustomer experiences, and expand their market reach This transformation towards amore digitally oriented approach empowers SMEs to adapt to changing consumerbehaviors and market trends efficiently Fourthly, the results indicate that employeedigital abilities are a more prominent indicator in larger enterprises, such as small andmedium enterprises, but not micro-enterprises The results have provided a clearerunderstanding of how digital skills are defined in small and medium-sized firms inemerging countries like Vietnam This contributes academically to the RBV theory byemphasizing the importance of digital resources and skills.

1.8 Overview of research methodology 17

1.9 Structure of the dissertation 17

CHAPTER II: LITERATURE REVIEW 18

2.1 Theoretical background 18

2.1.1 The theory of the firm 18

2.1.2 The Behavioral Theory of the Firm 20

2.1.3 Theory of Resources-Based Views (RBV) 22

2.1.4 Theories and studies relevant to the digital era 25

2.3.2 The moderating role of employees’ digital skills 58

CHAPTER III: RESEARCH METHODOLOGY 64

3.5 Employed variables and their measure 91

3.6 Enterprises and its size 100

CHAPTER IV: DATA ANALYSIS 106

4.1 Overview about SMEs 106

4.2 Introduction 109

4.3 Result of descriptive statistics 111

4.4 Result of testing hypotheses 113

4.7 Discussion of overall model and models by firm sizes 144

CHAPTER V: CONCLUSION AND RECOMMENDATION 149

Appendix 1: The questionnaire for enterprises 175

Appendix 2: The questionnaire to investigate digital technology adoption 182

Appendix 3: Output of regression estimated 186

FP_PRO Firm performance measured by labor productivityFP_REV Firm performance measured by sales revenue

CHAPTER I: INTRODUCTION

1.1.Rational of the study

Changes in digital technology development make changes in firm’s reaction

The rapidly evolving digital technology environment has a profound impact onbusinesses and necessitates continuous adaptation and transformation These changesin the digital landscape can significantly influence firms in various ways Accordingly,companies are progressively embracing digital technologies to optimize their businessprocesses, improve customer satisfaction, and maintain a competitive edge Digitaltransformation entails the conceptualization and reconstruction of corporate processesand models to harness the potential of digital tools and data In addition, digitaltransformation facilitates the emergence of novel business models, includingsubscription-based services, platform-driven ecosystems, and sharing economyplatforms (Garzella et al., 2021) To maintain relevance, it is imperative for firms toengage in the exploration and adoption of these models.

According to Khin & Ho (2019), companies that embrace and adapt to digitaltechnology can achieve a competitive advantage by providing innovative products andservices, responding rapidly to market changes, and staying ahead of industry trends Inaddition, digital channels and platforms can be set up and offer opportunities to expandmarkets beyond geographical boundaries Firms can reach global audiences, creatingboth opportunities and challenges in terms of localization and competition Overall,digital technology empowers firms to adapt to the changing business landscape, seizeopportunities, and overcome challenges When strategically implemented, it can lead toimproved firm performance across various dimensions, ultimately contributing to long-term success and growth.

With a fast digital technology system development, channels of e-commerce,networking, and online marketing are considered and interacted with by firm to push

strategies through social media, internet, and e-commerce can help a firm to save cost.As a result, small and medium sized enterprises (SMEs) often think of how to acquiremore customers through various communications, in which integrated digital marketingplays a vital importance Integrated marketing communication is a fundamental andintegral part of a company's marketing efforts, which combination of marketingchannels, such as e-advertising, social media, public relations, and sales promotions aredefined as integrated marketing communication (Ivanov, 2012) By embracing digitaltechnology, SMEs can streamline their processes, improve efficiency, and reduce costs(Ardito et al., 2021) From adopting cloud-based solutions for storage and collaborationto utilizing e-commerce platforms for online sales, these enterprises leverage thepotential of technology to facilitate their expansions (Bendig et al., 2023) Asarguments above, the role of digital marketing is quite important for SMEs, they need toembrace new technologies and incorporate them into their business strategies to staycompetitive It is essential for SMEs in emerging markets to understand the impact ofdigital technology development on their industry and be proactive in leveraging theseadvancements to drive growth and innovation within their organizations As argued byMalesios et al (2021), not only large companies, but also SMEs need a plan of longterm investment effectively To do that, SMEs often set up a new vision of digitalmarketing innovation to maintain their market place (Thaha et al (2021).

The development of digital technology has forced enterprises to rethink theirstrategies, which digital marketing is considered Recently, companies have nothesitated to implement rapid digital transformation and digital orientation to keep upwith the competitive market and approach digital marketing to improve operational andmarket efficiency According to Thaha et al (2021), digital marketing is a combinationof marketing efforts using technology through e-commerce, internet media, socialmedia to introduce products or services Likely, Taiminen & Karjaluoto (2015) alsoargued that digital marketing and social media create the potential for small business toeffectively engage with both new and existing customer From the inception ofdigitalization and clear digital orientation, the provision of broadband connectivity hasdemonstrated its capacity to provide substantial prospects to SMEs (Nasiri et al., 2022).Additionally, Taiminen & Karjaluoto (2015) posit that digital marketing can be

categorized into two distinct communication channels: one-way and two-way One-waycommunication can be characterized as the utilization of websites and email fortransmitting information, whereas two-way communication channels encompass socialmedia platforms and automatic communication platform (Chatbot) that facilitate theestablishment of relationships between marketers and customers There is no doubt thatthe marketing effectiveness of SMEs is positively influenced by digital marketing,digital orientation and information technology capabilities (Sultoni et al., 2022).Accordingly, Sultoni et al (2022) also highlights the importance of leveraging digitalmarketing channels effectively to drive business growth and achieve strategicobjectives It suggests that businesses should invest in various online platforms, such associal media, search engine optimization, and content marketing, to maximize theirreach and impact In a study conducted by Telukdarie et al (2023), they delve into theimpact of digital technology on marketing tactics and how it has shaped the industry.Furthermore, Telukdarie et al (2023) discuss the importance of integrating digitaltechnology into overall marketing strategies They emphasize that businesses mustembrace these advancements and adapt their approaches accordingly to staycompetitive in today's fast-paced digital landscape.

In recent times, there has been a growing interest among researchers in doingempirical research on digital marketing techniques in order to enhance theunderstanding of company behavior (Nuseir & Aljumah, 2020) Digital marketing isdeemed effective when a company has a robust resource foundation, including digitaltransformation resources, customer relationship management (CRM), and Chatbot(Abdelkader, 2023) Large companies in developed nations have an advantage overSMEs toward a fortified stronghold in emerging markets, because SMEs in emergingmarkets often encounter internal and external business barriers (Pingali et al, 2023).According to Hoskisson et al (2000), emerging markets are economies with fasteconomic growth and economic policies which foster the adoption of a free marketsystem Emerging markets, unlike developed markets, are marked by substantial marketheterogeneity, primitive infrastructure, limited resources, and unofficial competition,which may impede the innovation and economic development of companies, especially

The current extent to which SMEs employ digital marketing through channels ofsocial media, e-commerce (Su et al., 2023), CRM (Galvão et al., 2018) and Chatbot AI(Artificial Intelligence) (Selamat & Windasari, 2021) and others relevant AlthoughBruce et al (2023) has an approach on studying digital marketing adoption of GhanaSMEs, this study mainly focuses on firm with intention to use digital marketing andconfirm that digital marketing supports firms to improve the sustainable growth ofSMEs While Nguyen et al (2022) have a general argument of social media onperformance of 180 Vietnamese SMEs, which social media is played as mediatorbetween market orientation and firm performance.

Actually, still some authors state that the strategic orientation is a domain, it can bean effective lever to improve effective development of the company (Chavez et al.,2020), but some SMEs do not seemly specialize in digitalization (Sultoni et al., 2022).In fact, strategic orientation can be seeing more clearly once the company does marketorientation and digital orientation However, in the context when the digital industryhas developed quickly, business will be more difficulties when the company lacks a

digital technology system This can be seen during the Covid-19 pandemic, somecompanies confuse to transfer the traditional sales to the online trade If the companydoes not update its online business system, e.g digital technology in business, it will bedifficult for the company to promote sales activities Accordingly, Kindermann et al.(2021) discovered the contribution of digital orientation, it significantly supports highperformance of firm This finding contributes to expanding the concept of digitalorientation, in which digital orientation is one of the key strategies and plays animportant role of firms’ business strategy From this standpoint, it gives a rise that thisthesis needs to be interested in analyzing the investigation of how firm performance isimpacted by the integration of digital marketing and digital orientation From thisperspective, we can examine the inquiry regarding the manner in which a company'soperational effectiveness is influenced by the amalgamation of digital marketing anddigital orientation This attention surely is expounded upon within the context of thisscholarly thesis.

Alraja et al (2022) conducted research within the Covid-19 pandemic, whichexamined the role of technological innovation in enabling organizations to effectivelyutilize resources, gain competitive advantages, and manage operations remotely Theintricate nature of the correlation between technological innovation and SMEperformance arises from its susceptibility to multifarious influencing factors One of thekey considerations pertains to the integration of technical advancements with pre-existing resources, including digital technology systems and strategies of digitalorientation Most of firms think that once innovation is well done the survival of firmis stayed in longer (Ancona & Caldwell, 1987), because activities of innovation canhelp the enterprises to solve the competitive problems, improve the efficiency of firm,and create new ideas However, depending on sectors of service or manufacturing, thecompany generates appropriate strategies of technological innovation Suchmanufacturing firms concerns innovation on enhancing competency and skills ofemployees, while service firms concern innovation on building up competitiveadvantage through typical services (Mithani, 2017).

With the explosion of information technology, digital technology, and consumerdemand changing faster and faster, the firms are confronted with adapting to thebusiness environment toward digital orientation According to Lohe & Calabrò (2017),innovation is expensive, risky, and complicated process but it is necessary for thesurvival, the growth, and the renewal of any organizations It’s not only presented thecapabilities of the firm to understand, capture and forecast the customer’s demand butalso a firm’s propensity to engage in creativity Innovation requests the mobilization ofexternal and internal resources (Subramaniam & Venkatraman, 2001; Terziovski,2010a) The initial ideas for innovation are often started from the combination ofcurrent and new concepts toward a right business strategy based resources available(Lohe & Calabrò, 2017).

In the era of fast learning with fierce competition, the firm needs to developinnovative strategies to be survival The concept of innovation capability is applied toexamine and utilize the company’s competitive advantages, in which the essentialprerequisite is creations toward efficient ideas of innovation management Thus,creating a favorable environment to exploit innovative ideas of members in thecompany is essential The nature of innovation itself is the perception of a company thatprioritizes the advancement of new ideas that create value across all operations Thisaspect emphasizes that innovation is not an inherent trait but rather a characteristicperceived within a company As we know, technological innovation affects thesustainable development of businesses, it has drawn increased attention in recent yearsfrom academics, corporations, and governments (Alraja et al., 2022) It is impossible toignore the connection between technological innovation and sustainable development(Omri, 2020).

In short, the perception of a firm toward innovativeness depends on its commitmentto promoting and implementing new ideas that result in tangible value across differentareas of its business Companies that successfully embrace and prioritize innovation aremore likely to adapt to changing market conditions, stay competitive, and drivesustainable growth A successful innovation must have an appropriate plan, in which itsactivities can combine with digital orientation and digital marketing to increase firm

efficiency It is not easy for a firm with limited natural resources of digital technologyto move towards digitalization At the conceptual level, a company applying a newtechnology is seen as a display of innovation and has an active role (Koellinger, 2008).In fact, innovation performance in a company is determined by the market response ofcustomers and competitors.

To address a competitive competency, innovative considerations of SMEs must beconcerned in their business plan, such Falahat et al (2020) found significantcontributions of product innovation and communication capacities with respect todigital marketing are important for SMEs Once the innovation and digital marketingare concerned well and address a target point of investment, the SMEs can save costsand lead to competitive advantages In addition, Falahat et al (2020) has differentarguments about impacts of marketing capacity on the competitive advantage of SMEsin the developed countries such as the U.S and the developing countries such asMalaysia, which they found a non-significant effect of marketing communicationcapacity on the advantage of competition for SMEs in Malaysia Of which theexplaining is SMEs pay attention to product innovation rather than marketingcommunication program investment.

In addition, some scholars offer an academic contribution, such as relationshipbetween digital orientation and firm performance (Kindermann et al., 2021), betweenmarketing and firm performance (Bruce et al., 2023; Daud et al., 2022; Hawaldar, et al.,2022), between innovation and firm performance (Aksoy, 2017; Binh et al., 2022;Ganotakis et al., 2023) However, these studies don’t have arguments on digitalmarketing and its interaction with technological innovation and digital orientation,particularly for SMEs in the emerging market.

Practical issues of SMEs during digial era

SMEs in developing nations have more obstacles when it comes to integratingdigital technology into their business processes (Astuti et al., 2020) While a fewresearchers have conducted studies on digital technologies (Astuti et al., 2020; Khin &Ho, 2019; Radicic & Petković, 2023), they do not place significant emphasis on thedigital marketing methods employed by SMEs in emerging economies This

dissertation aims to fill a practical gap A significant challenge faced by SMEs is thedifficulty in selecting appropriate digital tools and solutions that align with theirspecific business requirements and financial limitations (Khin & Ho, 2019).Additionally, there is a shortage in the digital skills possessed by employees, as well asa lack of resources to assist SMEs in cultivating the essential digital capabilities(Telukdarie et al., 2023) Furthermore, SMEs often have limitations in terms of bothresources and skills, which hinders their ability to effectively utilize digital marketing,e-commerce platforms, social media, customer relationship management (CRM), andother digital technologies that have the potential to speed up their growth The lack ofdigital orientation restricts their capacity to compete in a more digital marketplace.

1.2.Research background

The notion of digital marketing has evolved over time and is widely recognized asa strategic approach to stimulate the growth of products and services, facilitating theconnection between items and customers within various marketplaces The efficacy ofdigital marketing can be ascribed to the endorsement of digitalization, which hasemerged as the foundation for assuming the function of marketing strategy (Kannan &Li, 2017) Digital marketing is commonly recognized as a multifaceted endeavorencompassing various activities, structures, and processes that are facilitated by theutilization of contemporary digital technology resources within organizations (Bala &Verma, 2018) It cannot be denied that the beginning of digital marketing has adominant influence on the social media system and online communication of AIprogram, so online marketing is considered a goal in the early stages of digitaltechnology, in which e-commerce is included (Su et al., 2023).

Due to fierce competition and alterations in consumer behavior during the era ofdigital transformation, enterprise motivations must be stable in order to achieve growth.As argued by Rodrigo et al., (2022), intrinsic motivations (e.g voice, responsibility, jobcharacteristics) and extrinsic motivations (e.g management, job conditions, personalrelationship) cause companies geared towards digital social innovation However, Thesuccess and effectiveness of digital social innovation initiatives can indeed beinfluenced by the resources available of the firm According to Astuti et al (2020), the

adoption of SMEs’ digital technology is depended on the resources available, in whichdigital orientation play an important role The dominants of digital technology isdepended on digital transformation, once digital orientation is well planned, it helps toreduce difficulties and create business value for firm (Nasiri et al., 2022)

If looking back at previous studies, the corporate behavior and its businessstrategy responses are largely explained by the theory of RBV Therefore, İpek (2018)recruited the theory of Resource-Based View (RBV) to find out the connection betweenresources and capabilities of exporting firms in the emerging markets, e.g India,Malaysia Accordingly, İpek argued that firm resources are various, such as:organizational resources; production and R&D resources; managerial resources;experiential resources; financial resources; rational resources, human resources;knowledge-based resources; marketing-related resources; others resources In addition,İpek (2018) argued that prior scholars did not have a clear explanation of the capacityand market oriented resources of enterprises when applying the RBV The study hasmade an academic contribution the export behavior of firms is affected by existingresources and capacities Similarly, Barca (2003) also emphasized the internal resourcesof the firm, however the study did no consider resources of information technology.

Meanwhile, Barney (1991) argues that strategic resources are important to createcompetitive advantage However, to do this, firms need to know how to exploit existingtechnology, equipment and resources to serve business activities effectively Likely,Oduro et al (2023) also employ the RBV to explain how digital technology pays off andargue that a firm has resources that can be categorized into two categories: tangible andintangible values Tangible values encompass physical assets like machinery andequipment, while intangible values encompass non-physical assets such as reputationand company brand Enhancing the utilization of resources can lead to enhancedplanning, resulting in increased productivity and operational efficiency Besides, theeffective resource utilization is happened, when digital technology resouces and digialskill of employees must be harmoniously combined to improve the efficiency of digitalresources According to Marhraoui (2023), digital skills are willing to adopt newtechnologies, e.g artificial intelligence and platform- based solutions, in which skills of

data analysis and information management, e.g CRM are specific As a result, resoucesof digital technology and employees’ digital skill are conceptualize in the RBVframework to enhance digital technology systems of the firm, but there is a limitationto study the aspect of coordination between digital technology and other resources, suchas resources for digital skills of employees and technological innovation (Oduro et al.,2023) This is seen as a gap of study that is considered in this thesis.

As argued by Barney (1991), researchers turned to the RBV as a framework toelucidate the internal and external resources of enterprises Understanding internalresources is not a complex task, as they originate from pre-existing internal sourcessuch as employee’s skill, technology, financial assets, and organizational structure Theability to establish and maintain relationships with external partners can bedemonstrated through one's network relational capacity (Huggins & Thompson, 2013).Based on previous studies, findings have a limitation in measuring the digitalcapabilities of enterprises specifically involved in creating digital marketing activation.Therefore, it is imperative to include a supplementary proposition concerning digitalresources inside the framework of the RBV theory This is a research gap, because ananalysis of the utilization of digital resources by SMEs in emerging markets is notseemly concerned well although the concept of digital marketing has been concernedmore recently With positive changes in digital technology, enterprises pay moreattention to look for opportunities to communicate with customers and build socialmedia platform to communicate partners and stakeholders (Telukdarie et al., 2023).According to Thaha et al (2021), once a firm enters the business, it needs to clearlydefine the application of digital marketing to target appropriate customers Althoughdigital marketing plays an important role to open the way entering the market, thetechnological innovation and digital orientation are indispensable for enterprises.Effects of technological innovation derived by digital technology cannot be ignored andpreparation of digital skills of employees are also necessary It has a key role to causethe growth of firm (Sarsah et al., 2020).

It must be said that digital marketing becomes more effective and economical forenterprises Digital marketing belongs to the extra field of marketing and is concerned

in the firm, also its development is pointed out by the market orientation of firm (Martin& Javalgi, 2016) Digital marketing is a specialized branch of marketing that utilizesdigital technologies (Nasiri et al 2022), such as social media platforms, mobile devices,e-commerce, artificial intelligence Chatbot and other digital channels Digitalmarketing incorporates various strategies and tactics to reach and engage with targetaudiences, in which content marketing, social media marketing, email marketing, socialmedia (Kanaan et al., 2023), e-commerce (Su et al., 2023), CRM (Masrianto et al.,2022), and artificial intelligence Chatbot (Abdelkader, 2023) are taken into account.Because of digital technology development, digital marketing is seen as impossible tobe missed in firms Due to a new point of marketing strategy during the digital era,academic contributions of digital marketing in the ground theory of firms are seemlylack of (Kannan & Li, 2017) It is important to note that digital marketing is a dynamicand evolving field, particularly it is a new theory that SMEs must recognize to exploiteffectively Bad things can happen if SMEs do not know how to exploit digitalmarketing based on available digital technology resources and employee’s data skills.

Although SMEs have tried to comprehend marketing strategies through digitaltechnology, the digital capacity to adopt digital marketing of SMEs seems to beconfused, digital skills of employees are remained questions not to be answered Only9% of the 60 million SMEs in the world are thought to use the internet for marketing(Umar et al., 2020) This indicates that 91% of them are still not making full use of theinternet for marketing purposes It can be said that SMEs can benefit and improve theirefficiency if they have a good knowledge of how to use digital technology in terms offinancial constraints and digital channel capacity Particularly digital marketing isutilized to promote enterprises’ business and reduce acquisition costs Wang (2020) hada research approach on 167 international firms and concluded that the digitalcapabilities of enterprises grow with firm size That means the larger firms with thehigh digital skill, they make the higher performance Accordingly, the results found byWang (2020) that give us the idea to think about the approach of digital marketing ofSMEs and their digital capacity in emerging markets, such Vietnam and this isdominated and focused in this thesis.

The notions of digital marketing and innovation are intricately linked, asbreakthroughs in technology have significantly altered the marketing environment inthe era of digitalization (Noyola-Medina et al., 2018) Digital marketing utilizes a rangeof digital platforms and tools to establish connections with specific target groups,facilitate the promotion of products or services, and ultimately attain marketingobjectives Technological innovation assumes a crucial role in influencing the strategiesand techniques employed within the realm of digital marketing Although Noyola-Medina et al (2018) conclude that product innovation, process innovation, marketinginnovation, and organizational innovation positively cause the digital marketingadoption of SMEs, the finding does not present an interaction between technologicalinnovation and digital marketing Additionally, Azar & Ciabuschi (2017) conducted theresearch on 218 Swedish export firm ventures and confirm that the relationship betweentechnological innovation and firm performance is significantly existed The researchresults have given an explanation on the role of organizational innovation andtechnological innovation to support exporting companies to expand the internationalmarket Unlikely, Rosenbusch et al (2011) studied the impact of SME innovation onfirm performance, where innovation is determined by the process of internal innovationinput (e.g expenditure and experience of R&D) and process of external innovationinput (e.g sourcing of external technology and R&D collaboration) Several studieshave also shown that the effectiveness of innovation depends on the mindset anddynamism of the business Indeed, Miller & Friesen (1982) conducted innovationresearch by conservative and entrepreneurial firms, the innovation here is onlyinterested in innovation with respect to product lines, product design and serviceimplementation.

Dynamic firms often have a leading approach with plans of technologicalinnovation A combination between digital technology and market orientation createsinnovation in product or service (Quinton et al., 2018) Digital orientation refers to thestrategic mindset, while behaviors of an organization or individual emphasize on howto use digital tools to improve firm performance The drivers of innovation by digitalorientation are crucial for fostering a culture of innovation and driving the development

of new ideas, products, and processes (Sarsah et al., 2020) Wiklund & Shepherd (2003)applied the theory of RBV to review the capacity of a company and market orientation.

Currently, scholars pay more attention to explore the usage of digital technologycapability of enterprises, which they can get more academic contributions with respectto digital capabilities of firm in RBV Evidently, Elia et al (2021) found a study relatedto the company's use of digital exports in its B2C strategy The results showed thatdigital competence is the core thing that helps the company to orient and access theexport market rather than the previous traditional management Accordingly, the resultfound brings a contribution to theory of RBV, in terms of export companies, but thisstudy does not specify digital capabilities by size of enterprises As argued by Wang(2020), large companies are no stranger to digital marketing and this issues is interestedand published in previous studies SMEs in the emerging markets like Vietnam, digitalmarketing research is a gap of practice and academic Although there have been a fewstudies that have paid attention to digital technology and digital marketing (Bruce et al.,2023; Hawaldar e al., 2022; Kannan & Li, 2017), the deep analysis of the impact ofdigital marketing on SMEs and its interaction with other components, e.g technologicalinnovation and digital orientation has not been popularized.

1.3.The research gap of study

The contribution of SMEs is various for the country’s economy, particularly thosein developing nations, has been highlighted by the World Bank (Thaha et al., 2021).SMEs constitute a significant proportion of firms on a global scale and play asubstantial role in facilitating job opportunities SMEs account for around 90% ofenterprises worldwide and contribute to over 50% of the total employmentopportunities available (Thaha et al., 2021) In developing nations, formal SMEs play asignificant role by contributing around 40% of the national income, as measured by theGross Domestic Product (GDP) (Thaha et al., 2021).

The rapid evolution of digital technology is directly impacting how SMEs inemerging markets react and adapt to market changes These firms must embracetechnological advancements to stay competitive and relevant in today's fast-pacedbusiness environment By understanding how digital technology development

influences their industries, SMEs can proactively adjust their business strategies, inwhich digital marketing is indispensable to capitalize on emerging opportunities andovercome potential obstacles According to the findings of Falahat et al (2020),although acknowledging the significance of digital marketing, the authors contend thatSMEs prioritize product innovation over investments in digital marketing That meansSMEs are willing to pay more cost for innovation rather than digital marketinginvestment As a result, the efficiency of those two considerations has not been verified,this is a gap of study and chance for this thesis intents to find out In addition, this thesisalso aims to elucidate the potential impacts of the simultaneous interaction of digitalmarketing and technological innovation, and interaction of digital marketing and digitalorientation on SME performance.

The current body of scholarly work on digital marketing mostly focuses on theconcept of digital transformation and the use of digital platforms by large multinationalcompanies in developed countries (Pingali et al., 2023) Similarly, Wang (2020) alsostates that digital marketing has been established on the fundamental principles ofdigital technology According to Sony & Mekoth (2022), to adapt industry 4.0, the firmmust be proficient for nine technologies (e.g cloud computing, big data, the internet ofthings, auto robots, additive manufacturing, integration of system, cybersecurity,simulation, and augmented reality) employees should be equipped in the best way.Comparing to larger companies, the resources and capacity of employees equipped withdigital technology skills are more advantages small companies (Heredia et al., 2022).In fact, many questions about the digital skills of employees working in SMEs need tobe found out These questions have not been investigated by previous scholars; it isseen as a research gap in this thesis.

In recent years, there has been a notable increase of studies to investigate how SMEsuse digital marketing to promote their business (Taiminen & Karjaluoto, 2015; Thahaet al., 2021), but theoretical advancements regarding the digital marketing employed bySMEs in emerging nations have not garnered substantial attention Accordingly, thisthesis contributes to the literature review on digital marketing by providing context andhighlighting trends Besides that, the thesis brings a significant contribution to clarify

the doubts and arguments of previous studies about the contribution of digital marketingdepending on the resources and size of the business to improve SME performance.Additionally, this study also wants to compare the finding with the arguments of Haliket al (2021) with respect to the imbalance in business size when using digitalmarketing As a result, the finding of this thesis will fill the research gap in the theoryof RBV, which shows how much digital marketing can be applied if SMEs havestrongly available resources.

In fact, there is a lack of comprehensive evaluations and investigations about thelimitations in the feasibility of SMEs in emerging markets like Vietnam when usingdigital marketing strategies While SMEs have made progress in recognizing theimportance of digital technology and have started to adopt digital transformation, theyhave not yet focused on developing the digital skills of their personnel This is also seena practical gap Once the precise gap is identified, the advantages of assisting small andmedium enterprises in their growth will be amplified.

Behavioral theory of firm was develop by Cyert & March (1963), which firmbehavior toward using digital technology resources for production and business is notwidespread Although it is not strange in terms of digital marketing applications ofmultinational companies, the behavior of using digital marketing by SMEs is stillhidden and has not been exposed This study expects to investigate how digitalorientation can influence SME performance through the moderating of employees’digital skills In addition, once analyzing the application of digital marketing by SMEsfor business in emerging markets, it will be an exploration to partly measure how muchSMEs adopt available information technology resources for digital marketing toimprove its performance This result is a meaningful contribution to enriching thetheory of RBV and behavioral theory of firm for SMEs in the strategy of applyingdigital marketing.

1.4.Objectives of study

(1) To determine the function of digital marketing and its interaction withtechnological innovation and digital orientation influencing the performanceof SMEs.

1.5.Research questions

(1) How does the function of digital marketing and its interaction withtechnological innovation and digital orientation impact on SME performance?(2) How does the role of technological innovation and its interaction with digital

orientation impact on SME performance?

(3) What is the impact of the moderating variable of employees’ digital skills onthe association of digital marketing, technological innovation and digitalorientation on SME performance?

1.6.Scope and limitation of study

This dissertation does not employ qualitative methodology The dissertation ismainly focused on the quantitative methodology, utilizing a large sample of Small andMedium Enterprises (SMEs) in Vietnam To overcome the limitation of the absence ofa qualitative technique in the study, the dissertation proposes to utilize references fromrecently published papers with an emphasis on SMEs in both developed and developingnations The building of the research model is based on relevant earlier studies that arerelated to the survey conducted by the General Statistics Office (GSO) of Vietnam TheGSO questionnaire comprises a multitude of inquiries However, for the sake of thisthesis's study model, only the questions pertaining to digital marketing, technologicalinnovation, digital orientation, and employees' digital skills are chosen and employed.

1.7.Contribution of dissertation

The thesis will provide two major contributions First, the thesis findings will bepresented as an academic contribution, with theoretical contributions discussed indetail Second, the research findings will provide a general picture of SMEs inemerging markets, such as Vietnam The research findings are also useful for businessowners to reflect on how they have previously applied digital technology to digital

marketing,

allowing them to identify areas for improvement Furthermore, the study's findingsserve as a useful reference for relevant scientists and university students who can usethem in their research.

1.8.Overview of research methodology

To answer research questions, the thesis employs statistical models to testhypotheses proposed, in which the method of Ordinary Least Square (OLS) is takeninto account The database used to run regression models is a source of the GeneralStatistics Office (GSO) of Vietnam, it is defined as a big secondary data.

1.9.Structure of the dissertation

Chapter I introduces the dissertation and provides background information onprior relevant investigations This serves to demonstrate the research gap and objectivesof the study.

Chapter II provides a literature review, together with theoretical background andimportant issues Furthermore, hypothesis statements are also considered.

Chapter III outlines the research technique, focusing on the database used in thestudy and the research model as the primary components of the chapter.Chapter IV provides an overview of the data analysis and shows the findings that wereinvestigated.

Chapter V provides the final analysis of the study, where the dissertation's findings areexamined to demonstrate their academic significance and the originality of the research.

CHAPTER II: LITERATURE REVIEW

2.1.Theoretical background2.1.1 The theory of the firm

The theory of the firm is basic for a perspective to think of organizationalobjectives and framework toward analyzing research problems Neoclassicaleconomics' theory of the firm, which is a subset of the broader theory of value, wasdeveloped to examine how prices and the distribution of resources among various usesare determined (Barca, 2003) A production function that captures the underlyingtechnology utilized to deploy labor and capital forces for the purposes of producingproducts and services serves as the firm's representation The common assumption isthat this underlying technology will first experience increasing returns to scale, whichimplies a dropping average cost curve, and subsequently diminishing returns to scale,which will result in an increase in average cost.

The theory of the firm describes how firms are able to sustain competitiveadvantages in their industries (Hawkins, 1973) The main idea is that firms are bundlesof assets brought together with a specific goal in mind The assets can be tangible orintangible, but they combine and form business strategies to better compete with otherorganizations The theory of firm suggests that firms will invest only if they can get abeneficial return on the investment (Hawkins, 1973) It is possible for organizations tocreate an internal environment of innovation, so that individuals have the skills andresources necessary to pursue innovative ideas, or firms can adopt an open innovationstrategy by acquiring knowledge from external sources like customers, suppliers, andconsultants At a time when information technology is developing like today, the theoryof firm needs to be extended to the case of companies that have made innovations inapproaching digital technology for business The research of this thesis is also acontribution to the expansion of theory of firm how to react the business environmenttoward organizational agility through adoption of digital model business (Kuusisto,2017).

The theory of the firm has been a major part in understanding how resources areallocated and decisions made in the marketplace It is based on four key concepts: (i)Organizational framework; (ii) managerial hierarchy; (iii) division of labor; (iv)economy of scale Scholars applied the theory of the firm to explain how managers inan organization can help increase profitability by optimizing process and reducingwaste The core idea is that, in a market economy, an organization might be able toincrease its performance by performing some tasks more effectively than itscompetitors The basic premise of the theory is that a person or group of people willestablish an organization when it’s more efficient to do so than not The theory has beenextensively studied and applied to many fields, especially business firms, but alsoreligious groups, labor unions, volunteer organizations, non-profits and governments.

Using the theory of the firm is seen as a lens to see business strategies based onexisting resources There have been beginnings of some research on recognizing therole of technology as an affirmation of the boundaries of the enterprise, the creation ofoperations, and the management of support Typically, Coase (1937) argued that thecore technology of the early phones helped shape the firm boundaries of business.Chandler (1962) also noted that the consolidation of technology-based industries wouldbenefit the industries However, the above statements are still unclear as to how digitalengineering dominates the company's strategy as well as its economic, social andbehavioral background.

It has been determined by observers that the effects of digitization extend beyondcommunications and are present everywhere, facilitating routine interactions andreducing the occurrence of stress collisions that enable customization across Internetnetworks (Ivanov, 2012) The proliferation of social networks, which were facilitatedby the emergence of digital technology, gave rise to the online business sector.Furthermore, this phenomenon incites the ongoing expansion of mobile devices,prompting numerous conjectures regarding the potential for profound transformationsin corporate boundaries and hierarchies (Foss, 2005) Business market positioning isinfluenced by the emergence of multi-stakeholder ecosystems in value networks, theallure of multilateral business models, and the growing significance of data and

analytics As stated by Menz et al (2021), in the era of digitalization, an organizationmust prioritize three matters: (i) Advantage of corporate; (ii) the extent, boundaries, andscope of the organization; and (iii) the configuration and internal organization of thecompany.

2.1.2 The Behavioral Theory of the Firm

With arguments on administrative behavior of Simon (1947) and organizations(March & Simon, 1958), Cyert & March (1963) developed the behavioral theory of thefirm This development is built on previous publications but explores neworganizational frontiers According to Cyert & March (1963), the core researchcommitment of the behavioral theory of the business is to anticipate the pricing, output,and resource allocation decisions of the firm with "an explicit emphasis on the actualprocess of organizational decision-making."

Simon (1957) criticized the conventional microeconomics theory that anorganization's objective is essentially the same as an entrepreneur's desire to maximizeprofits Instead, he suggested that organizations should be seen as groups of people whohave various aims and work within a set of hierarchical power structures Thesimultaneous limitation of management behavior's capacity happens, it can causeunsuccessfully Similar to Cyert & March (1963), who used organizational goals,expectations, choice, and control to frame the characteristics of the empirical business,they established a positive theory to explain internal organizational behavior as well asthe behavior of oligopolistic markets The decision-making process is adaptivelyrational, with numerous objectives and ongoing organizational learning, when it comesto deciding on prices, outputs, and resource allocation.

The behavioral theory of the firm has proven to be highly influential in shapingthe understanding of organizations and their decision-making processes By examiningthe fundamental concepts that underlie this theory One key concept of the behavioraltheory is bounded rationality, which recognizes that individuals within organizationshave limited cognitive abilities and information processing capabilities Thisunderstanding helps organizations appreciate why they often make decisions that maynot seem optimal from a purely rational standpoint (Argote & Greve, 2007).

Accordingly, Argote & Greve (2007) emphasized the significant impact of earlyCarnegie school notions on organizational behavior research The behavioral theory ofthe firm comprises several hypotheses and theoretical mechanisms through whichadditional hypotheses are generated This thesis is supported by the opportunity toimplement the firm's behavioral theory to state the hypothesis regarding the behavior ofSMEs, in which digital marketing, technological innovation, and digital orientation areconsidered While subsequent research has not given them commensurate emphasis,there are certain research traditions that build directly upon the behavioral theory of thefirm.

Within the framework of the behavior theory of the firm, the concept oforganizational learning is frequently regarded as a cohesive notion that stimulatescontemplation regarding the adaptive outcomes of processes formulated in theory andsubstantiated by practical investigation According to Cyert & March (1963),organizations can be described as "complex systems." They contend that their formalmodel aligns with this characterization due to its composition of interdependentdecision-making rules that are responsive to both external feedback and internalreinforcements, such as the establishment of sales expectations The behavioral theoryof the firm posits that an adaptive element of organizational function is theinterconnectedness of its components, which contributes to the overall stability of theenterprise The behavioral theory of the firm provides a valuable framework forunderstanding organizational behavior and decision-making processes Its fundamentalconcepts shed light on why firms may deviate from traditional economic assumptionsand offer alternative perspectives on how organizations operate in practice.

By emphasizing the importance of human behavior, this theory recognizes thatfirms are not static entities, but rather dynamic systems driven by the decisions andactions of their members It highlights that factors such as individual motivations,cognitive biases, social dynamics, and organizational culture play a crucial role inshaping firm behavior This perspective has led to valuable insights into various aspectsof firms, including decision-making processes, organizational structure, performancemanagement systems, innovation strategies, and more By considering human behavior

as a key driver of change within firms, the behavioral theory provides a comprehensiveframework for understanding and predicting how organizations evolve over time Cyert& March (1963) have a remarkable explanation that simulated models of price andquantity decision making are constructed and adjusted based on actual decisions on thescene This proves the effectiveness of the theory as a good basis for synthesis andprediction The later simulations used a slightly different strategy, as they focused on anarrower set of theoretical mechanisms and explored their impact on organizationalbehavior and adaptive consequences This led to a series of organizational decisions(Cohen, et al., 1972) and searches (Levinthal & March, 1981) These arguments aboutthe meaning of theoretical mechanisms set models for further work using simulationsin organizational theory with a strong tradition in enterprise behavior theory.

The behavioral theory of the business has been slow in adopting regression modelsdue to its emphasis on organizational decision-making and changes in events that donot align with the traditional strategy of employing continuously dependent variablesand datasets to explain performance The regression approaches have made significantcontributions to the examination of the influence of learning curves on costs (Argote &Greve, 2007) The utilization of regression analysis has witnessed significant growth invarious fields as the availability of historical-event approaches for discrete andcontinuous time analysis has expanded Performance feedback studies have beenconducted to examine the impact of changing events on a particular sort ofeffectiveness function (Greve, 2011).

The behavioral theory of the business has demonstrated remarkable effectivenessin terms of its impact on the advancement of organizational theory and strategicmanagement Despite its ability to establish a robust basis for the conventionalneoclassical framework in economics, the notion is widely contested among economists(Cyert & March, 1963) The field of cognitive science encompasses a wide range ofresearch issues, including cognition, habits, talents, attention, strength, and adaptability.These topics are generally studied within the context of a broader framework, whichmay involve integration with other relevant techniques.

2.1.3 Theory of Resources-Based Views (RBV)

Resource-Based View is a business theory, it confirms firm’s achievement notmissing resources The firm needs to acquire and protect resources This theory becameknown and developed by Barney (1991) and Wernerfelt (1984) The evaluation ofresources within the firm cannot be done in isolation, even if the RBV uses the firm asa unit of analysis This situation exists because, in the end, market forces determinehow much these resources are worth in the final product (Barney, 1991) Anorganization can improve its efficacy and productivity by realizing its full potential andmaking use of all assets, capabilities, organizational processes, firm attributes,information, and knowledge Managers can be better positioned to be more strategic inmeeting the demands of specified market segments by recognizing these resources andcompetencies.

Barney (1991) provides valuable insights into the resources that contribute to afirm's competitive advantage According to Barney, resources can be categorized intotwo main types: tangible and intangible Tangible resources are physical assets that acompany possesses, such as buildings, machinery, and inventory These resources canbe easily quantified and measured They provide a foundation for a company'soperations and are often crucial in delivering products or services to customers On theother hand, intangible resources are non-physical assets that cannot be easily measuredor quantified These include intellectual property, brand reputation, knowledge base,patents, and organizational culture Intangible resources play a significant role inshaping a company's competitive advantage as they are often difficult for competitorsto replicate By adopting Barney's resource-based view, organizations can identify andleverage their key resources and capabilities to create sustainable competitiveadvantages This approach encourages firms to focus on developing unique strengthsrather than solely relying on market conditions or industry dynamics Overall, Barney'sresource-based view provides valuable insights into how firms can strategically managetheir resources for long-term success It serves as a foundation for understanding howorganizations can differentiate themselves from competitors and achieve sustainedprofitability.

Managers might not immediately recognize how certain resources by themselvesor in combination with other resources might offer a sustained competitive advantage.It could be challenging to identify the exact resource mix that offers a long-termcompetitive edge In order to attain a competitive advantage through causal ambiguity,it is imperative for every firm operating within a competitive environment to maintaina consistent level of vagueness regarding the origins of their competitive advantage, asa means to mitigate the risk of imitation (Conner & Prahalad, 1996) Replicating afirm's resource that arises from a complex social phenomenon may pose a significantchallenge for a competitor According to Barney (1991), social complications mayresult from a corporation's culture, reputation among suppliers and consumers, and themanager-to-manager relationships within a firm Although the link between socialcomplexity and competitive advantage may be evident, it may be more difficult toreplicate the social arrangement.

Other scholars have suggested slightly alternative definitions and categorizationsof valuable resources and conceptualize the resources based on perspective ideas Collis& Montgomery (1995), for instance, assert that a resource is valued when: (i) It helps afirm to produce goods that consumers want at a cost they are willing to pay; (ii) it is noteasy for others imitate; (iii) it deteriorates gradually; (iv) its value is managed by thecompany, not the workers, vendors, or clients It is not easily replaceable; (v) itoutperforms comparable resources offered by rivals.

As argued by Conner & Prahalad (1996), the resource-based theory looks at howto serve innovation by adding new or improving existing resources to the firm’sportfolio to create differentiation for their products in the marketplace The mission ofthe company's strategy is to create a combination of the capabilities of the enterprisetowards the external environment Chu et al (2019) employed the theory of RBV tomeasure how capabilities of information technology (IT) affect process innovationperformance and digital transformation of SMEs By examining the intersection of ITcapabilities and the resource-based view through 138 Chinese manufacturingenterprises, Chu et al (2019) highlight the importance of technology investments withrespect to firm's strategic goals as well as unique resources These authors also

emphasize that IT capabilities should not be seen as standalone assets, but rather asenablers that enhance an organization's existing resources and capabilities The findingexplores how firms can build sustainable competitive advantages by effectivelymanaging their IT resources By leveraging IT capabilities in a way that is aligned withtheir unique resources, organizations can achieve greater operational efficiency,innovation, and customer value However, the study does not concern the resource ofIT capabilities toward modern business strategies, such as digital marketing.

According to Kindermann et al (2021), digital orientation is part of the strategicorientation literature It is interesting for scholars to research; this can be caused byrevolution of information technology is developing very fast However, the study ofdigital orientation of SMEs in the emerging economies are seemly limited, so theacademic contribution of digital orientation concepts in the RBV is limited This isrecognized as necessary research of this thesis to carry out and contribute toconceptualizing digital orientation of SME performance in the emerging market.

2.1.4 Theories and studies relevant to the digital era

During the digital era, digital technology is very much concerned in enterprises.To explain behaviors of firm toward business strategies based on available resource ofdigital technology, some authors must employ some theories to find out that Evidently,Dahiya & Gayatri (2018) use the global digital theory to find out how the Indianenterprises recruit digital marketing communication to attract customers Accordingly,the findings show that digital channels, e.g Websites, YouTube, Digital TV, E-mails,Smartphone, are indispensable to reach markets and customers.

In fact, utilization of firm’s digital technology is depended on firm sizes(Taiminen & Karjaluoto, 2015) Challenges of large companies to employ digitaltechnology is less than that of SMEs, due to well adopted digital tools and knowledge(Barnes et al., 2012) With an approach on resource-based theory, Taiminen &Karjaluoto (2015) took a mixed method of semi-structured on 16 managers and thequantitative method on 421 SMEs to investigate how different firm sizes react digitalmarketing channels As a result, Taiminen & Karjaluoto (2015) has a statisticalconclusion that the utilization of digital channels in marketing by SMEs necessitates agreater level of expertise, as these

entities have restricted capabilities Meanwhile, Nauhaus, et al (2021) have a differentview of the use of digital marketing in a business based on the decisioncomprehensiveness theory The discovery affirms that the influence of expert sentimenton firms' capital allocation decisions is evident The findings suggest that a higher levelof expert sentiment towards the digital technology domain is linked to an increase inallocated capital and a greater focus on utilizing digital tools in business operations.Furthermore, Nauhaus et al (2021) substantiate the significance of informationprocessing by senior managers When senior managers possess extensive knowledge ininformation processing, they can make thoroughly rational decisions.

Some people do not hesitate to use available information technology resourcesto exploit marketing metrics because of available information technology resources.Based on the behavioral reasoning theory, Rakshit et al (2022) investigated the role ofsocial network marketing in B2B methods utilized by SMEs In conjunction withmarketing accountability theory, Rakshit et al (2022) verify that it has also beendemonstrated that the perception of so networking in the use of digital technologywould influence integrated social network marketing metrics indirectly.

Table 2.1: Relevant studies and its concerned theories

TheoryEstimation methodMain findingAuthor(s)

Global digital The quantitative method Digital marketing Dahiya &theory of Exploratory Factor communication has a Gayatri

Analysis employed to significant impact on the (2018)test hypotheses on 784 consumer mind toward

respondents who are buying decision Digitalpotential car buyers in channels (social media)

TheoryEstimation methodMain findingAuthor(s)

behavioral theory of the firm

decisions from 2016.

2005-technology are combined with a unit's

predetermined capital.Basic information authentication positively affects the relationship between product technology and definedresources.

Resource-based review theory

The study based on the combination between qualitative method of 16managers and

quantitative method of 421 SMEs in Central Finland Descriptive statistics are applied

SMEs are poor adoptions of digital tools to utilize marketing purposes.Limited in advanced digital channels toward online advertising and blogs, but website and search engine

optimization (SEO) arestrongly utilized.

Taiminen & Karjaluoto (2015)

Behavioral reasoning theory; Marketing

accountability theory

The quantitative methodconducted 6 SME experts and 254 SMEs, which the quantitative model of structural equation modeling(SEM) is dominated

Social media triggers an increase in SMEs’ concerning innovation, pro-activeness and risk taking SME growth is apositive contribution ofsocial media

Rakshit et al (2022)

2.2.Main concepts

2.2.1 Digital technology

Through social networking networks, the advancement of digital technology allowsindividuals, individuals, and businesses to meet and exchange information moreregularly Typically, the early growth of Web.20 altered human behavior towardinformation technology in terms of obtaining information, communicating, andexperiencing products and services (Chong & Pervan, 2007) Furthermore, the Internetof Things has transformed how people engage with their physical surroundings.

According to Quinton et al (2018), SMEs will be more interested in digitaltechnology because it will help them collect information, increase competitiveadvantages, and save costs for marketing tactics However, SMEs may experiencechallenges adapting to change due to technical limits and a lack of individuals who areknowledgeable about digital marketing One of factors influencing technologyadaptation is senior management In the context of small and medium-sized businesses,senior management is often understood by the firm owners, the team, and the behaviorthat will set off other organized people.

2.2.2 Concept of digital marketing

Digital marketing is a novel and captivating notion that has garnered considerableattention among organizations in contemporary times This phenomenon revolutionizesthe manner in which customers and businesses engage in communication, exchangeinformation, and engage in commercial transactions (Yaseen et al., 2019) The field ofdigital marketing has received significant interest from marketers This is mostly due toits ability to promote interactions between firms and customers, as well as fosterrelationships among customers themselves As a result, digital marketing plays a crucialrole in establishing and maintaining emotional and psychological connections betweencustomers and organizations (Thaha et al., 2021).

According to Masrianto et al (2022) Digital marketing is a marketing strategy thatemploys digital media to effectively engage consumers in a timely, personalized, andcontextually relevant manner Digital marketing is commonly known by alternativeterms such as "online marketing," "internet marketing," or "web marketing." The phrase

It is more leveraged by companies once its digital resources are available Forsmaller enterprises, digital marketing is a cost –cutting solution Search engines, socialmedia, email, web link are the basic channels for firms to find chances to reach currentand potential customers This is also considered online marketing, web marketing,internet marketing.

Because SMEs have an important role to contribute to economic transformationand progress in a country, the digital marketing consideration of SMEs willundoubtedly have a favorable impact on economic growth in a country (Daud et al.,2022) According to Khin & Ho (2019), a company's dedication to supporting productand service innovation through the use of digital technology is known as "digitalorientation."

Accordingly, the idea of digital orientation is focused on the company's technologicalcapabilities and digital adoption to utilize certainty of service and product creation.

In the growing global trend, enterprises do not hesitate to invest in digitaltransformation to have an internal information technology system Its innovation seemsto be more purposeful toward digital technology According to Quinton et al (2018),digital orientation has three main domains, e.g market orientation, entrepreneurialorientation and learning orientation These three components have mutualcharacteristics to support the company’s business improvement and jointly createadvantages of positioning Accordingly, digital marketing is a purposeful strategicpositioning for SMEs to capitalize on the opportunities derived by digital technology.This positioning includes the attitude and behavior of supporting the creation and theusage of market insights to address active innovation SMEs can excel in digitizedorganizational environments and intelligence-gathering technologies, reducing the costof expanding their audience.

Firms agree that digital media have had a significant impact on how a marketercurrently approaches a consumer (Smith, 2011) Digital media is the term used todescribe electronic forms of media that transmit information in digital formats Thisencompasses all forms of media that can be accessed through computers, mobiledevices such as smartphones, and other digital devices such as digital billboards Digitalmarketing is frequently done on the internet Digital advertising is a type of marketingthat uses the internet specifically to spread marketing messages Due to the high levelof connection, digital marketing makes it possible to communicate with a large numberof people at once It is typically used to market goods and services in a timely,pertinent, more individualized, and economical way (Taiminen & Karjaluoto, 2015).Digital media is heavily used in marketing activities, from promotions or product offersthrough product sales.

The internet is the advertising medium with the quickest rate of growth Hundredsof millions of dollars are spent by advertisers each year to post their advertising onpopular websites (Taiminen & Karjaluoto, 2015) People are more likely to make anonline purchase after reading an online advertisement, according to studies Internet

advertising banners can create an even playing field for big and small businesses(Smith, 2011) The internet allows users to select the material they want to view Theconsumer is drawing from a wealth of freely available information Before making anypurchases, consumers may now quickly access product information and even engage indiscussion Customers now have access to a broad audience through platforms likesocial networks and blogs with whom they may express their opinions and productreviews (Kaynak et al (2005) Customers can have a significant impact on thepositioning and sale of products through these channels There is a growing tendencyamong consumers to place greater trust in consumer opinions as opposed to datagenerated by businesses Digitization refers to the process of converting value-creatingbusinesses into a digital format (Nasiri et al (2022) Digital technology has an impacton society Some studies show that, once firm implements digitalization, it createsspillovers to organizational innovation, marketing innovation and market-basedinnovation (Kuusisto, 2017) Digital orientation indicates a firm’s commitment toimplementing digital technology realize product innovation, service innovation andsolution (Khin & Ho, 2019) According to Gatignon & Xuereb (1997), the concept ofdigital orientation is based on the idea of technological orientation of enterprises.Indeed, a digitally oriented company is capable and will be aware of new digitaltechnologies take advantage of this in product development, innovation, and marketingstrategy (Khin and Ho, 2019) Once digital technology is applied to a business, it willcontribute to exploiting digital marketing, helping to analyze market information moreeffectively According to previous studies, different areas of digitalization will shapedigital marketing capabilities, such as developing online advertising programs, sellingonline (Mathews et al., 2016) and adapting e-sales (Kaynak et al., 2005).

Digital marketing is considered as a tool, describing the use of technology inmarketing efforts, and practices of business by marketing products, services,information, ideas via the internet, mobile phone, display advertising and otherelectronic media (Pradhan et al., 2013) Digital marketing also facilitates access andcommunication with many people, based on which take advantage of opportunities topromote products or services in a time way, in which appropriate and cost-effectivemanner are enclosed It can be said that the market for digital marketing is borderless,