Digital Capabilities on Business Performance: Does It Matter?

Abstract

Objective: the study aims to address the central research question: How do digital capabilities impact the performance of digital businesses? We explore digital capabilities in the context of digital transformation, enhancing the understanding of this phenomenon for businesses through dynamic capability theory and defining digital capabilities based on previous studies. Methods: these capabilities are presented in the research model. A survey was conducted with 308 digital businesses, and the hypotheses were tested using partial least squares structural equation modeling. Results: this paper demonstrates the significant impact of digital capabilities on business performance, providing evidence that ecosystem orchestration capability is a precursor to other capabilities. Conclusions: we conclude that a critical factor for a digital business’s success is its responsiveness. Digital capabilities are essential for a company’s success in the new digital business landscape. Additionally, digital technologies enable entrepreneurs to create innovations that cross traditional industry boundaries, integrating digital and non-digital assets and scaling new ventures with new products, services, and business models. This study is valuable for managers to direct investments in digital technologies, integrate stakeholders, and respond quickly to customer demands to enhance performance.