Digital Transformation and Firm Performance: Benefit from Letting Users Participate

Abstract

Digital transformation has become an important channel for firms to build a competitive advantage in the digital economy. However, user participation, an important source of external knowledge for firms, has received limited attention in research related to digital transformation. Drawing on the knowledge-based view, the study uses a sample of 247 Chinese firms to investigate the impact of digital transformation on firm performance. The study examines the mediating role of user participation between digital transformation and firm performance and the moderating role of both environmental dynamics and absorptive capacity on the relationship between user participation and firm performance. Findings herein encourage digital transformation firms to pay attention to user participation, strengthen their ability to establish good relationships with users, improve their ability to absorb their knowledge, and make a strong effort to cultivate digital users.