Despite growing interest, research on the impact of digital transformation capability on firm performance remains fragmented and inconsistent, limiting our understanding of when digital transformation capability drives superior outcomes. To address this gap, we develop a holistic conceptual model – grounded in resource-based theory and the TOE framework – that incorporates both internal and contingency factors. We then conduct a meta-analysis to empirically synthesize existing findings and pinpoint the conditions under which digital transformation capability most effectively enhances firm performance.
Drawing on 506 effect sizes from 243 independent samples, we employ a hierarchical linear meta-analysis to determine the specific contexts in which firms' digital transformation efforts pay off in terms of digital transformation focus as well as technology-, organization-, and environment-related factors.
Our meta-analysis reveals that digital transformation capability significantly improves firm performance, with having the strongest effects on innovation and efficiency outcomes. These benefits are amplified when digital transformation is guided by value creation objectives and strategic vision, rather than by digital technology adoption or integration. Additionally, digital transformation efforts yield greater returns in contexts characterized by high digital readiness and relevance and high market competitiveness, in cultures with high power distance and collectivism, and among large and manufacturing firms.
This conceptual and empirical integration advances our knowledge of the conditions that maximize the benefits of digital transformation capability and offers a solid and comprehensive foundation that future researchers can build upon.
