Digital Transformation on Firm Business Performance: Mediating Roles of Digital Innovation and Digital Competencies
Keywords:
Digital transformation, digital innovation, digital competencies, firm business performanceAbstract
Current research explores the impact of digital transformation on firm business performance in small and medium enterprises (SMEs). To investigate the digital transformation, have a significant relationship with a firm's business performance, digital innovation, and digital competencies. The study employed a descriptive research design, utilizing scales to measure digital transformation, digital innovation, digital competencies, and firm business performance. We collected the data using convenience sampling. The target organization conducted a survey with 536 employees from 25 different work units, utilizing PLS-SEM for data analysis and path analysis. Results indicated that digital transformation contributes to firm business performance. The study significantly contributes to Pakistan's economic growth, demonstrating how digital transformation influences SME performance and provides insights for policymakers and managers on fostering digital competencies to drive innovation and growth in the SME sector. This suggests that SMEs should strategically align their digital initiatives with digital innovation and digital competencies to maximize performance outcomes. Additionally, the findings indicate that SMEs management must actively engage in creating and capturing value through digital innovation practices, which can help mitigate the risks associated with employee resistance and inertia during the transformation process. Future research could explore competitive differences across various industries or countries to validate the results and examine whether non-innovative SMEs experience similar benefits from digital transformation.
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