Internal digital capabilities and market presence

An empirical assessment of Hungarian SMEs

Abstract

Organizational capabilities have become a critical factor in determining how small and medium-sized enterprises (SMEs) adapt to rapidly changing business environments and leverage digital technologies for competitive advantage. Drawing upon organizational capability and dynamic capability perspectives, this study examines the relationship between internal digital capabilities and market presence among Hungarian SMEs. Empirical data were collected through a questionnaire survey involving 75 SMEs operating in production-oriented and service-oriented sectors. Two composite indices were developed: the Internal Digital Capability Index (IDCI) and the Market Presence Index (MPI). The results indicate relatively favourable levels of internal digital capabilities, particularly regarding digital competencies and organizational adaptability. Market presence was strongest in dimensions related to customer interaction and reputation, while online visibility and digital customer acquisition showed lower levels of development. Correlation analysis revealed a moderately strong positive relationship between internal digital capabilities and market presence (r = 0.607). The findings suggest that organizational digital capabilities represent an important factor supporting market-related outcomes and emphasize the importance of capability development as a foundation for the successful digital transformation of SMEs.