Dynamic capabilities in action: digital capability, business model innovation and absorptive capacity

Purpose This study investigates how digital capability influences firm resilience in Turkish SMEs, specifically focusing on the mediating role of business model innovation (BMI) and the moderating role of absorptive capacity. Grounded exclusively in dynamic capability theory (DCT), it explains how digital capability (sensing), BMI (seizing) and absorptive capacity (transforming) collectively build resilience in resource-constrained contexts. Design/methodology/approach A quantitative research approach was adopted, collecting data from 312 high- and mid-level managers of SMEs in Istanbul, Turkey, through a random sampling method. Structural equation modeling (SEM) using SmartPLS 4.0 was employed to empirically test the relationships among digital capability, BMI, absorptive capacity and firm resilience. Findings The results indicate that digital capability significantly enhances SMEs’ resilience by enabling rapid adaptation to environmental changes. BMI was confirmed as a significant mediating mechanism, demonstrating that resilience arises when digital capabilities are strategically converted into innovative value creation and delivery models. Furthermore, the absorptive capacity significantly moderates these relationships, strengthening the conversion of digital investments into innovative practices and resilience outcomes; however, this effect is selective across different pathways. Practical implications SME managers should strategically invest in developing robust digital infrastructures, continuously innovate their business models and institutionalize absorptive capacity by fostering training, a knowledge-sharing culture and external partnerships. Policymakers should support digitalization initiatives through financial incentives and infrastructure to enhance SMEs’ adaptability in the face of market volatility. Originality/value By exclusively applying DCT, this study offers a focused theoretical study and empirical validation of how digital capability, BMI and absorptive capacity collectively enhance firm resilience. We further extend DCT to an emerging economy context, providing contextualized evidence from Turkish SMEs. The inclusion of high- and mid-level managerial perspectives ensures a comprehensive and informed understanding of strategic responses to market disruptions.