Examining the impact of digital transformation on digital product innovation performance in banking industry through the integration of resource-based view and dynamic capabilities

This study presents a novel approach by integrating the Resource-Based View (RBV) and Dynamic Capabilities (DC) frameworks to investigate how Digital Transformation (DT) facilitates Digital Product Innovation (DPI) in the banking sector. Unlike prior research that primarily examines DT's impact on financial performance and operational efficiency, this study positions DT as a pivotal mediating mechanism that transforms firm-level resources and capabilities into digital innovation outcomes. This research also addresses the gap in understanding the importance of integrating the RBV and DC within DT, an area where previous studies remain limited. Using Partial Least Squares-Structural Equation Modeling (PLS-SEM), data from 355 banking professionals across 51 Indonesian banks were analyzed. The findings reveal that unique resources and capabilities, IT and digital capabilities, strategic orientation, collaboration and relational resources, complementary resources, and DC positively influence DT, which in turn significantly enhances DPI. Furthermore, DT partially mediates these relationships, demonstrating that firms must not only acquire digital resources but also cultivate dynamic capabilities to effectively adapt and integrate them into their innovation strategies. This study offers substantial theoretical contributions by integrating the RBV and DC frameworks to elucidate the role of DT in driving DPI. From a managerial perspective, it provides practical guidelines for banks on effectively managing resources and capabilities to successfully implement DT and foster DPI. • Boost DPI performance via digital transformation by integrating Resource-Based View and Dynamic Capabilities. • RBV and DC constructs boost digital transformation, which in turn enhances digital product innovation performance. • Digital transformation partially mediates the link between RBV, dynamic capabilities, and DPI performance.