THE IMPACT OF DIGITAL TRANSFORMATION CAPABILITY ON FIRM PERFORMANCE: THE MEDIATING ROLE OF DIGITALTRANSFORMATION IN ACCOUNTING
Main Article Content
Abstract
This study investigates the impact of firms’ digital transformation capability on their performance through the mediating role of digital transformation in accounting. A survey was conducted with 495 small and medium-sized enterprises (SMEs) in Thanh Hoa province, and the proposed relationships were tested using the Partial Least Squares Structural Equation Modeling (PLS-SEM) approach. The findings confirm that digital transformation capability exerts a positive and significant influence on digital transformation in accounting, while also indirectly affecting firm performance through this mediating variable. Furthermore, digital transformation in accounting has a direct and positive effect on firm performance. Based on the results, the study provides several recommendations for SMEs to strengthen their digital transformation capability and enhance accounting digitalization, thereby improving overall firm performance.
Keywords
Digital transformation capability, digital transformation in accounting, firm performance, SMEs.
Article Details
References
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[2] Baiyere, A., Salmela, H., Nieminen, H., & Kankainen, T. (2025). Assessing digital capabilities for digital transformation—The MIND framework. Information Systems Journal, 35(1), 6-38.
[3] Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance: an empirical investigation. MIS quarterly, 169-196.
[4] Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. V. (2013). Visions and voices on emerging challenges in digital business strategy. MIS quarterly, 37(2), 14-001.
[5] Braojos, J., Weritz, P., & Matute, J. (2024). Empowering organisational commitment through digital transformation capabilities: The role of digital leadership and a continuous learning environment. Information Systems Journal, 34(5), 1466-1492.
[6] Chanias, S., Myers, M. D., & Hess, T. (2019). Digital transformation strategy making in pre-digital organizations: The case of a financial services provider. The Journal of Strategic Information Systems, 28(1), 17-33.
[7] Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L., & Chow, W. S. (2014). IT capability and organizational performance: the roles of business process agility and environmental factors. European Journal of Information Systems, 23(3), 326-342.
[8] Forés, B., & Camisón, C. (2016). Does incremental and radical innovation performance depend on different types of knowledge accumulation capabilities and organizational size?. Journal of business research, 69(2), 831-848.
[9] Granlund, M. (2011). Extending AIS research to management accounting and control issues: A research note. International journal of accounting information systems, 12(1), 3-19.
[10] Hair, J., & Alamer, A. (2022). Partial Least Squares Structural Equation Modeling (PLS-SEM) in second language and education research: Guidelines using an applied example. Research Methods in Applied Linguistics, 1(3), 100027.
[11] Heredia, J., Castillo-Vergara, M., Geldes, C., Gamarra, F. M. C., Flores, A., & Heredia, W. (2022). How do digital capabilities affect firm performance? The mediating role of technological capabilities in the “new normal”. Journal of Innovation & Knowledge, 7(2), 100171.
[12] Hutama, D., Raharjo, K., & Nugroho, A. (2023). Impact of Digital Capability on SMEs Performance: Mediating Role of Digital Business Transformation. Wacana Journal of Social and Humanity Studies, 26(3).
[13] Kane, G. C., Palmer, D., Phillips, A. N., & Kiron, D. (2015). Is your business ready for a digital future?. MIT Sloan management review, 56(4), 37.
[14] Kaplan, R. S., & Norton, D. (1996). The Balanced Scorecard. Harvard Business SchoolPress, Boston, MA, USA, 68-78
[15] Li, L., Su, F., Zhang, W., & Mao, J. Y. (2018). Digital transformation by SME entrepreneurs: A capability perspective. Information Systems Journal, 28(6), 1129-1157.
[16] Liu, H., Ke, W., Wei, K. K., & Hua, Z. (2013). The impact of IT capabilities on firm performance: The mediating roles of absorptive capacity and supply chain agility. Decision support systems, 54(3), 1452-1462.
[17] Merín-Rodrigáñez, J., Dasí, À., & Alegre, J. (2024). Digital transformation and firm performance in innovative SMEs: The mediating role of business model innovation. Technovation, 134(C).
[18] Oesterreich, T. D., & Teuteberg, F. (2019). The role of business analytics in the controllers and management accountants’ competence profiles: An exploratory study on individual-level data. Journal of accounting & organizational change, 15(2), 330-356.
[19] Quattrone, P. (2016). Management accounting goes digital: Will the move make it wiser?. Management accounting research, 31, 118-122.
[20] Ratmono, D., Frendy, & Zuhrohtun, Z. (2023). Digitalization in management accounting systems for urban SMEs in a developing country: A mediation model analysis. Cogent Economics & Finance, 11(2), 2269773.
[21] Rizana, A. F., Wiratmadja, I. I., & Akbar, M. (2025). Exploring Capabilities for Digital Transformation in the Business Context: Insight from a Systematic Literature Review. Sustainability, 17(9), 4222.
[22] Slovin, E. (1960). Slovin’s formula for sampling technique. Retrieved from https://prudencexd.weebly.com/
[23] Tallon, P. P., Queiroz, M., Coltman, T., & Sharma, R. (2019). Information technology and the search for organizational agility: A systematic review with future research possibilities. The Journal of Strategic Information Systems, 28(2), 218-237.
[24] Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic management journal, 18(7), 509-533.
[25] Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319–1350.
[26] Venkatraman, N., & Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of management review, 11(4), 801-814.
[27] Vial, G. (2019). Reflections on quality requirements for digital trace data in IS research. Decision Support Systems, 126, 113133.
[28] Wade, M., & Hulland, J. (2004). The resource-based view and information systems research: Review, extension, and suggestions for future research. MIS quarterly, 107-142.
[29] Warner, K. S., & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long range planning, 52(3), 326-349.
[30] Zhang, M., & Tansuhaj, P. S. (2007). Organizational culture, information technology capability, and performance: the case of born global firms. Multinational Business Review, 15(3), 43-78.