In order to identify the key factors contributing to KPOP’s value creation, this study delve into comprehending the capabilities of entertainment companies and artists in achieving top-ranking performance on music charts. Based on the smile curve framework of the digital music industry, we applied the perspectives of dynamic capabilities and creativity which both are required as critical capabilities in the creation/planning and distribution stages of the curve. For the research factors, management capabilities and partnership with music distribution were set as entertainment companies’ capabilities, and music-creation capabilities and nationality diversity were set as artists’ capabilities. Furthermore, with a consideration of the prevalent collaborations among KPOP and foreign artists, we analyzed the effect of the interaction between artists’ capabilities and cross-border collaboration with foreign artists on top-ranking performance. Six hypotheses were posited for the research model, including two moderating effects, and the hypothesis test was conducted on 543 samples which ranked in the top 100 on the Circle Digital Chart from 2010-2017. The empirical analysis showed that entertainment companies’ capabilities-management capabilities and partnership with music distribution-had a positive impact on top-ranking performance, and nationality diversity of artists also appeared to have a positive relationship with the performance. On the other hand, music-creation capabilities of artists were found to have a negative impact on the performance, implying the challenge of relying solely on the internal capabilities of artist amidst the rapidly changing and uncertain trend in the digital music industry. The interaction between artists’ nationality diversity and cross-border collaboration with foreign artists also had a negative impact on the performance, which could resulted from the communication and coordination costs due to an high-level of diversity within the collaboration project. The other interaction between music-creation capabilities and cross-border collaboration with foreign artists did not have a significant effect. The results indicate that entertainment companies and artists had better to identify factors enabling them to create value with dynamic capabilities and creativity in the changing and highly competitive environment such as digital music industry. Also the possibility that potential conflicts and coordination costs could arise from the cross-border collaboration with foreign artists was suggested. This study proposes theoretical insights by incorporating international characteristics of KPOP which have been overlooked in value creation studies within the Korean digital music industry.