This paper examines the digital ecodynamics of small and medium-sized enterprises (SMEs) from a configurational approach to explain the competitive performance –innovation and internationalization performance – of these firms. Digital ecodynamics refer to the interplay between the triad of infor-mation technology (IT) ambidexterity, dynamic capabilities, and environmental uncertainty. A config-urational approach involves a systems perspective of IT ‘fit’ in which variables are viewed in combi-nation, forming configurations that generate the outcome of interest. The idea is to capture configura-tions of digital ecodynamics that account for the nonlinear complex interplay of its three constitutive elements as they jointly affect competitive performance. In doing so, we further distinguish between IT capabilities for exploitation that are oriented on the firm’s productivity, and IT capabilities for explo-ration that are oriented on innovation. This paper theoretically combines configurational theory with the resource-based view, fit, and ambidexterity. A survey of 140 SMEs serves to test the proposed hy-potheses. Three configurations characterize SMEs’ digital ecodynamics and have consequences for performance. Configurations I and III positively influence innovation performance whereas Configu-ration I positively influences internationalization performance, demonstrating the equifinal properties of configurational theory. Furthermore, configurations that give priority to exploration goals through their IT capabilities show better competitive performance.