Prediction of Impacts of Digital Transformation on Business Performance using LSTM model

The impacts of digital transformation on the business performance of enterprises are examined using the LSTM models in the present work. Corporate giants like Alibaba, Huawei, and Tencent have, by embracing digital transformation and introducing technological solutions like cloud computing and artificial intelligence (AI), improved their decision-making and business efficiency. To predict the impacts of these digital technologies on business performance, the long short-term memory (LSTM) model provides a solution. In the present work, an LSTM model is employed to predict the business performance of some large enterprises in China and it is revealed that the models achieve a high accuracy in prediction, with an R2 of 0.99 and an accuracy of 97% for the prediction of Huawei at an embedding size of 40. With a focus on the hyperparameter tuning and dropout rates, we find that increasing the units of the LSTM model can improve the prediction accuracy, but the returns reduce when the units are beyond 150. Our LSTM model provides a practical solution for business performance prediction under the impact of digital transformation.