Effect of Digital Transformation on Firm Performance in the Uncertain Environment: Transformational Leadership and Employee Self-Efficacy as Antecedents of Digital Transformation

Abstract

As the functioning of firms has been changing, the digital transformation process is becoming inevitable for all firms. Therefore, scholars and managers pay great attention to this topic. However, there are still significant gaps about its human-related antecedents, and existing studies on its effects on firm outcomes have presented contradictory findings. By addressing these gaps in the literature, this study examines the effect of transformational leadership and employee self-efficacy as human-related antecedents of digital transformation and also its impact on firm performance. Data were collected from 305 participants who are managers in the manufacturing sector. The findings indicate that both transformational leadership and employee self-efficacy are positively related to digital transformation. Results also reveal that digital transformation is associated with operational and financial performance, and that environmental uncertainty strengthens its relationship with financial performance. This research, therefore, contributes to digital transformation literature, deepens the current knowledge, and offers novel and comprehensive insight, by addressing the gaps in the literature.