The strategic interplay of market orientation and digital transformation: Empirical insights from textual analysis

Digital technology is revolutionizing the business landscape, compelling firms to embrace digital transformation (DT). As customer preferences evolve and competition intensifies in this digital age, the significance of market orientation (MO) becomes increasingly apparent. Within the framework of dynamic capabilities, our study operationalizes MO as the embodiment of a firm's sensing and seizing capabilities, while DT corresponds to transformation capabilities. We explore the relationship between MO and DT through textual analysis approach. Utilizing panel data from Chinese listed companies for the years 2011-2022 and employing a fixed-effects model, our analysis demonstrates that MO positively influences DT. This positive association remains accepted across a series of robust tests. Furthermore, our findings suggest that research and development (R&D) investment positively strengthens this relationship. Non-state-owned enterprises and high-tech companies, in particular, exhibit a stronger effect. This study contributes to the broader understanding of how the interplay between MO and DT is instrumental in navigating the current dynamic business environment. • Linking market orientation and digital transformation in dynamic capability framework. • Constructing a measurement of market orientation using textual analysis. • Market orientation is positively related to digital transformation. • R&D investment positively moderates the relationship.