Digital transformation and organizational performance: Evidence from the banking sector in a developing economy

Digital transformation is widely viewed as a driver of organizational performance, yet limited evidence explains how its specific dimensions translate into performance outcomes in developing-country contexts. This study examines the effects of digital applications, process automation, digital infrastructure, human resources, and the institutional environment on organizational performance, with a particular focus on the mediating role of administrative creativity. Data were collected from supervisory and managerial employees in seven commercial banks in Sana'a, Yemen, and analyzed using Partial Least Squares Structural Equation Modeling. The findings reveal that digital applications and human resources have significant direct effects on organizational performance, whereas process automation, digital infrastructure, and the institutional environment do not. However, digital applications, digital infrastructure, human resources, and the institutional environment significantly enhance administrative creativity, which in turn exerts a strong positive effect on organizational performance. Mediation analysis shows that administrative creativity selectively mediates the effects of digital infrastructure, human resources, and the institutional environment on performance. These results demonstrate that digital transformation in banking organizations yields performance benefits primarily when digital initiatives are converted into outcomes through creative administrative behavior. By identifying administrative creativity as a key human-centered conversion mechanism, this study advances digital transformation theory and provides evidence from a developing-economy banking context on how digital investments generate sustainable organizational performance.