Strategic CSR and digital transformation: pathways to SME performance in a turbulent emerging market

What the paper says

Purpose This study addresses how small and medium-sized enterprises (SMEs) in turbulent emerging markets translate Corporate Social Responsibility (CSR) into performance gains. We develop and test the Legitimacy-Enabled Capability Activation (LECA) model, which positions Digital Transformation (DT) as the central mechanism linking CSR to performance, and examine the contingent role of market turbulence (MT). Design/methodology/approach Integrating Resource-Based View, Dynamic Capabilities, Stakeholder, and Contingency theories, we test a moderated-mediation model using PLS-SEM on survey data from 536 owner-managers of Jordan's food-processing SMEs. Findings CSR strongly fosters DT, which in part mediates the CSR–performance relationship. Furthermore, market turbulence intensifies the DT–performance link, strengthening the indirect effect of CSR on performance through DT. Practical implications Managers should treat CSR as a strategic legitimacy-building resource, not a peripheral activity, as it lowers barriers to digital transformation. Policymakers can amplify this effect by linking CSR incentives with direct support for digital infrastructure and skills. In emerging markets where disruptions are common and institutions are often weak this coordinated approach helps SMEs sustain employment and maintain vital stability within their communities. Originality/value We introduce the LECA framework, providing the first empirical evidence of a moderated mediation process where CSR boosts performance through DT, with this effect amplified under high market turbulence. This advances dynamic capabilities theory by framing turbulence as a capability activator and offers actionable insights for SMEs in volatile environments.