From ambidextrous innovation to digital servitization: The moderating role of digital empowerment in Vietnamese Small and Medium-sized manufacturing Enterprises (SMEs)

This study investigates how innovation ambidexterity and digital empowerment jointly enable digital servitization and performance outcomes in manufacturing SMEs in an emerging economy context. Drawing on dynamic capabilities theory and the servitization/digitalization literature, we conceptualize exploratory and exploitative innovation as microfoundations of digital servitization and examine digital empowerment as an internal enabling condition. We propose that digital servitization, in turn, enhances both operational effectiveness and customer participation in value co-creation. Using survey data from 205 owners and CEOs of Vietnamese manufacturing SMEs and 5-point Likert scales, we test the research model with Partial Least Squares Structural Equation Modelling (PLS-SEM). The results show that both exploration and exploitation innovation positively influence digital servitization, with a stronger effect for exploration innovation. Digital empowerment significantly strengthens the relationship between exploitative innovation and digital servitization, but does not significantly moderate the exploratory innovation-digital servitization link. Digital servitization exerts significant positive effects on operational effectiveness and on customer participation in value co-creation, underscoring its significant role in translating innovation capabilities into both efficiency and relational gains. The study advances understanding of the microfoundations of digital servitization in manufacturing SMEs, nuances the role of digital empowerment as a contingent rather than universal amplifier of innovation ambidexterity. It provides actionable implications for SME leaders seeking to leverage digital tools, skills, and autonomy to turn innovation efforts into digitally enabled service offerings and improved performance.