Digital transformation is reshaping how small and medium sized enterprises (SMEs) expand across borders, yet evidence from emerging economies remains limited. This study investigates how digital entrepreneurship (DE) influences cross border trade performance (CBTP) through the mediating roles of innovation capability (IC) and institutional support (IS). Drawing on the resource-based view and institutional theory, data were collected from 154 export oriented Iranian SMEs and analyzed using SmartPLS 4. The results show that DE enhances CBTP only indirectly: both IC and IS fully mediate the DE–performance relationship, while the direct effect is nonsignificant. These findings indicate that digitalization contributes to export success only when firms develop innovation capabilities and operate within supportive institutional environments. The study advances theoretical integration of internal capabilities and external institutions and provides actionable implications for managers and policymakers seeking to strengthen digital internationalization in emerging economies.