This study empirically analyzed the causal relationships between the digital marketing capabilities of small business owners, digital innovation, competitive advantage, and digital marketing performance. The study targeted 200 respondents among domestic small business owners who have adopted digital marketing. The results of the verification of the impact between the variables conducted in this study are as follows. First, it was found that digital marketing capabilities have a significant impact on digital innovation. Second, digital marketing capabilities were found to have a significant impact on competitive advantage. Third, it was found that digital marketing capabilities do not significantly impact digital marketing performance. Fourth, digital innovation was found to have a significant impact on competitive advantage. Fifth, digital innovation was found not to significantly impact digital marketing performance. Sixth, competitive advantage was found to have a significant impact on digital marketing performance. This study provides theoretical and practical implications and discusses the limitations of the research while suggesting directions for future research.