Digital Transformation Under Resource Constraints: How Governmental Subsidies Foster SMEs’ Electronic Commerce Capabilities and Innovation Performance in Taiwan

This study explores how Taiwanese SMEs strategically transform resource scarcity into digital innovation advantages, particularly through digital commerce capabilities enhanced by governmental subsidies. Drawing on Resource-Based View, Open Innovation, and Dynamic Capabilities theories, a longitudinal quasi-experimental design was employed, assessing SME innovation performance pre- and post-intervention. Results from repeated measures ANOVA and regression analyses indicate significant improvement in digital technology application, e-commerce channel innovation, and market responsiveness, confirming digital commerce capabilities as critical mediators. This research uniquely contextualizes established innovation theories within Taiwan’s SME ecosystem, highlighting e-commerce as a vital pathway for resource-constrained SMEs. Practical recommendations emphasize targeted digital infrastructure investments and subsidy strategies, aligning closely with JTAER’s focus on electronic commerce theory and practice.