How digital capabilities and credit access influence green innovation performance in small and medium enterprises in resource constrained settings

Abstract

This study investigates how small and medium-sized enterprises (SMEs) transform digital capabilities into green innovation within volatile, uncertain, complex, and ambiguous (VUCA) markets, and how access to credit shapes that process. Guided by the Technology–Organization–Environment framework, the Resource-Based View, and Dynamic Capabilities Theory, the study surveyed 428 Ugandan SMEs and analyzed the data using covariance-based structural equation modeling (SEM) and multi-group analysis for credit access using SPSS AMOS Version 26. Green Technical Know-How, Process Compatibility with Green Technologies, Green Digital Readiness, ICT Infrastructure, Green Digital Orientation, and Firm Size all enhance digital value realization capability (DVRC), which emerged as the sole direct driver of green innovation performance (GIP). Competitive Pressure was the strongest antecedent of DVRC, while Observability and Government Green Policy Support showed no significant effects. Credit access operates as a critical boundary condition. Without credit, readiness factors (process compatibility and digital readiness) substitute for liquidity and are the only technological paths that raise DVRC. With credit, specialized know-how, and competitive pressure become decisive, the ICT → DVRC effect strengthens, and DVRC’s impact on GIP nearly doubles. Five indirect capability-to performance paths via DVRC are significant only, or much larger, for credit-enabled f irms. The findings position DVRC as the conversion engine that turns digital inputs into green outcomes, but show that its payoff is unlocked only once a minimum liquidity threshold is crossed. Policymakers should couple digital capability programs with inclusive green finance, while SME managers should emphasize readiness under constraint and invest in know-how when financing becomes available.