The effect of digital maturity and entrepreneurial agility on firm performance in digital transformation of traditional organisations

Abstract

Traditional organisations are under pressure to undergo digital transformations (DT) to manage the threat of disruption caused by the adoption of digital technologies. There is thus a need for businesses to understand how competitive advantage can be achieved through their DTs. However, their progress lags that of the technology industry as they have lower digital maturity scores, fewer benefits, and still largely traditional business models. This study drew on the resource based view (RBV) and dynamic capabilities framework (DCF) to understand the effect of entrepreneurial agility (EA) and digital maturity (DM) on competitive advantage, measured through firm performance in DTs. This was achieved through a quantitative research design with 60 online survey respondents, of whom the majority were in traditional organisations. This study extends the existing theory on entrepreneurial agility to DTs by showing a positive correlation with firm performance. Similarly, the moderating effects of digital maturity on the relationship between EA and firm performance were evaluated. The results showed much fewer moderating effects than were expected following a review of the digital maturity literature. These findings are discussed in the context of recent literature on organisational- and industry-related barriers for traditional organisations in DTs. A framework for traditional organisations is proposed based on how they can leverage EA and DM to achieve a competitive advantage through DTs.