The Effects of Digital Transformation on Firm Performance: The Role of Customer Experience and IT Innovation

Digital transformation (DT) has attracted the attention of management and organizational scholars in the past decade. In addition, firms are increasingly interested in using DT to obtain a competitive advantage. Nevertheless, studies on DT outcomes remain scarce. Therefore, this study empirically investigated the effect of digital transformation on firm performance by classifying the capabilities required to realize digital transformation, customer experience, and IT innovation. A structured questionnaire was used to collect data from 164 representatives of service sector firms in Saudi Arabia, namely chief information officers, chief transformation officers, and IT managers. Based on the findings of this study, it is evident that digital transformation, customer experience, and IT innovation positively impact a firm’s performance, with customer experience exhibiting the strongest effect.