Effects of digital transformation on firm performance: The role of IT capabilities and digital orientation.

ABSTRACT

Organisations undertake profound changes to fit in a rapidly evolving digital setting. However, although the IT capabilities of the organisational members play a critical role in this, the mechanism driving IT capabilities towards enhanced firm performance is not fully understood. A theoretical model to analyse the role of digital orientation and digital transformation in this relationship is introduced and tested on a set of 246 firms through the Partial Least Squares-Structural Equation Modeling method (PLS-SEM). This research contributes to the literature by introducing the social aspect to the study of technology management, delving also into the antecedents of digital transformation. Results confirm a positive effect of IT capabilities on firm performance through the development of a digital orientation and the digital transformation of the organisation.