Digital transformation: the role of digital maturity and its determinants on business performance

Purpose The need for genuine digital transformation extends beyond technological implementations, which involve strategy, organizational structure and leadership. Motivated by the Malaysian government’s goal of digitizing 800,000 small- and medium-sized enterprises (SMEs) by 2025, this study aims to examine the antecedents of digital maturity by applying the technology-organization-environment model. Specifically, this empirical work assessed the impact of digital maturity on business performance and the potential mediating effect of digital maturity. Design/methodology/approach The data collected from 174 SMEs in the Malaysian service sector were analyzed via partial least squares structural equation modeling using the SmartPLS 4.0 software. Findings Perceived relative advantages, digital leadership, absorptive capacity, environmental dynamism and mimetic pressure significantly increased digital maturity, which subsequently influenced the business performance of SMEs. Furthermore, digital maturity had a significant mediating impact. Originality/value Stakeholders and policymakers, including MDeC and SME Corp, could gain valuable insights to refine initiatives targeted at advancing Malaysian SME digitization.