Our study analyses the direct and indirect effects of digital strategic orientation on the performance of micro, small- and medium-sized enterprises (MSMEs) in emerging countries. Based on a statistically representative database of Peruvian MSMEs, we use a structural equation model to test the effects of digital strategies on MSMEs’ performance as well as the mediation effect of innovation and environmental practices. Our results show the total positive effect of digital strategies, both directly and mediated by innovation. However, environmental practices do not exert either a direct or a mediating effect. It is necessary for the concurrence of innovation so that environmental practices exert the expected mediation effect. The total effect of digitalization on MSMEs’ competitiveness is almost twice the size of the direct effect, resulting from both mediation effects. We shed light on the importance of analyzing emerging countries in the literature and test the influence of contextual factors.