The impact of digital transformation on organizational performance with the mediating role of strategic agility in Iranian manufacturing industries (Method: Structural Equation Modeling)

Document Type : Research Paper

Authors
1 Shahid Beheshti University, Tehran, Iran
2 Faculty of Management and Accounting, University of Science and Culture, Tehran, Iran
10.22075/ijnaa.2025.39970.5592
Abstract
The purpose of this study is to examine the impact of digital transformation on organizational performance with the mediating role of strategic agility in Iran’s manufacturing industries. Considering technological challenges, resource constraints, and competitive pressures, the research develops an integrated model based on the Resource-Based View (RBV), Dynamic Capabilities Theory (DCT), and Technology–Organization–Environment (TOE) framework to clarify the mechanisms linking digital initiatives to performance outcomes. The research employed a quantitative approach using Structural Equation Modeling (SEM). Data were collected through a standardized questionnaire distributed among 400 managers and experts in Iranian manufacturing firms. Reliability and validity of the measurement instruments were tested using Cronbach’s alpha, KMO, and Bartlett’s test in SPSS, and the conceptual model was estimated using AMOS to assess the structural relationships among variables. The findings revealed that digital orientation and digital capacity positively influence digital transformation; digital transformation enhances organizational agility; and strategic agility significantly improves both financial and non-financial performance. The model demonstrated good fit indices and confirmed the proposed hypotheses. Based on the results, it is recommended that managers in Iranian manufacturing industries invest strategically in digital infrastructure, develop human digital skills, and foster a culture of innovation to facilitate digital transformation. Moreover, strategic agility should be institutionalized as a core organizational capability to enable firms to thrive in turbulent and highly competitive environments, thereby improving both financial and non-financial outcomes.
Keywords

[1] M. Aboelmaged, The drivers of sustainable manufacturing practices in Egyptian SMEs and their impact on competitive capabilities: A PLS-SEM model, J. Clean. Prod. 175 (2018), 207–221.
[2] E.O. Alakas, Digital transformational leadership and organizational agility in digital transformation: Structural equation modelling of the moderating effects of digital culture and digital strategy, J. High Technol. Manag. Res. 35 (2024), no. 2, Article 100517.
[3] B.K. AlNuaimi, S.K. Kumar Singh, S. Ren, P. Budhwar, and D. Vorobyev, Mastering digital transformation: The nexus between leadership, agility, and digital strategy, J. Bus. Res. 145 (2022), 636–648.
[4] J. Barney, Firm resources and sustained competitive advantage, J. Manage. 17 (1991), no. 1, 99–120.
[5] A. Bharadwaj, O.A. El Sawy, P.A. Pavlou, and N.V. Venkatraman, Digital business strategy: Toward a next generation of insights, MIS Q. 37 (2013), no. 2, 471–482.
[6] D.S. Bindeeha, E.K. Tukamushaba, and R. Bakashaba, Digital transformation and its multidimensional impact on sustainable business performance: Evidence from a meta-analytic review, Future Bus. J. 11 (2025), no. 1.
[7] G. Cao, Y. Duan, and J.S. Edwards, Organizational culture, digital transformation, and product innovation, Inf. Manag. 62 (2025), no. 4, Article 104135.
[8] S. Chatterjee, N.P. Rana, and Y.K. Dwivedi, How does business analytics contribute to organisational performance and business value? A resource-based view, Inf. Technol. People 37 (2024), no. 2, 874–894.
[9] C. Chen, Y. Zhang, and S. Wang, Digital transformation and firm performance: A case study on China's listed companies in 2009–2020, Digit. Econ. Sustain. Dev. 1 (2023), no. 1, Article 18.
[10] V.K. Chong, L. Mia, J. Sands, and Z.A. Wang, The effect of nonfinancial performance measures, absorptive capacity, and organizational learning on innovation performance, J. Manag. Control 34 (2023), no. 2, 201–233.
[11] A. Dossi and L. Patelli, You learn from what you measure: Financial and non-financial performance measures in multinational companies, Long Range Plann. 43 (2010), no. 4, 498–526.
[12] Y.L. Doz and M. Kosonen, Embedding strategic agility: A leadership agenda for accelerating business model renewal, Long Range Plann 43 (2010), no. 2–3, 370–382.
[13] K.M. Eisenhardt and J.A. Martin, Dynamic capabilities: What are they?, Strateg. Manage. J. 21 (2000), no. 10–11, 1105–1121.
[14] K. Escoz Barragan and F.S.R. Becker, Keeping pace with the digital transformation—exploring the digital orientation of SMEs, Small Bus. Econ. 64 (2025), no. 3, 1361–1385.
[15] C.E. Helfat and M.A. Peteraf, Managerial cognitive capabilities and the microfoundations of dynamic capabilities, Strateg. Manage. J. 36 (2015), no. 6, 831–850.
[16] P. Jain, K. Abhishek, and P. Chatterjee, Decision-Making Models and Applications in Manufacturing Environments, CRC Press, Boca Raton, FL, 2024.
[17] G.C. Kane, D. Palmer, A.N. Phillips, D. Kiron, and N. Buckley, Strategy, not technology, drives digital transformation, MIT Sloan Manag. Rev., 2015, An online report.
[18] H. Karadag, F. Sahin, N. Karamollaoglu, and M. Saunila, Disentangling the dynamic digital capability, digital transformation, and organizational performance relationships in SMEs: A configurational analysis based on fsQCA, Inf. Technol. Manag. 26 (2024), no. 2, 1–17.
[19] S. Khin and T.C.F. Ho, Digital technology, digital capability and organizational performance: A mediating role of digital innovation, Int. J. Innov. Sci. 11 (2019), no. 2, 177–195.
[20] J.T. Mahoney and J.R. Pandian, The resource-based view within the conversation of strategic management, Strateg. Manag. J. 13 (1992), no. 5, 363–380.
[21] G. Mangalaraj, S. Nerur, and R. Dwivedi, Digital transformation for agility and resilience: An exploratory study, J. Comput. Inf. Syst. 63 (2023), no. 1, 11–23.
[22] C. Matt, T. Hess, and A. Benlian, Digital transformation strategies, Bus. Inf. Syst. Eng. 57 (2015), no. 5, 339–343.
[23] J. Merin-Rodriguez, A. Dasi, and J. Alegre, Digital transformation and firm performance in innovative SMEs: The mediating role of business model innovation, Technovation 134 (2024), Article 103027.
[24] H.M. Naguib, H.M. Kassem, and A.E.H.M.A. Naem, The impact of IT governance and data governance on financial and non-financial performance, Future Bus. J. 10 (2024), no. 1, Article 15.
[25] T. Nguyen and L.T.T. Dang, Evaluating digital transformation preparedness among Vietnamese enterprises, Ho Chi Minh City Open Univ. J. Sci. Econ. Bus. Adm. 15 (2025), no. 3.
[26] K.C. Nguyen, N. Ngoc-Long, T.D. Ho, and T. Van Hai, Digital transformation, organizational agility, and firm performance in emerging markets: Evidence from Vietnam's machinery sector, Problems Perspect. Manage. 23 (2025), no. 3, 342.
[27] T. Oliveira and M.F. Martins, Literature review of information technology adoption models at firm level, Electron. J. Inf. Syst. Eval. 14 (2011), no. 1, 110–121.
[28] S. Oludapo, N. Carroll, and M. Helfert, Why do so many digital transformations fail? A bibliometric analysis and future research agenda, J. Bus. Res. 174 (2024), Article 114528.
[29] G. Piccoli, V. Grover, and J. Rodriguez, Digital transformation requires digital resource primacy: Clarification and future research directions, J. Strateg. Inf. Syst. 33 (2024), no. 2, Article 101835.
[30] R. Rupeika-Apoga, K. Petrovska, and L. Bule, The effect of digital orientation and digital capability on digital transformation of SMEs during the COVID-19 pandemic, J. Theor. Appl. Electron. Commer. Res. 17 (2022), no. 2, 669–685.
[31] D. Russ-Eft, H. Preskill, and J.B. Jordan, Evaluation in Organizations: A Systematic Approach to Enhancing Learning, Performance, and Change, Basic Books, New York, NY, 2024.
[32] T. Saebi, L. Lien, and N.J. Foss, What drives business model adaptation? The impact of opportunities, threats and strategic orientation, Long Range Plann. 50 (2017), no. 5, 567–581.
[33] M. Saeedikiya, S. Salunke, and M. Kowalkiewicz, Toward a dynamic capability perspective of digital transformation in SMEs: A study of the mobility sector, J. Clean. Prod. 439 (2024), Article 140718.
[34] M.S. Sumbal, A. Tariq, Q. Amber, K. Janovska, and A. Ferraris, Tech revolution unleashed: Navigating the winds of digital transformation in the fast lane, J. Innov. Knowl. 9 (2024), no. 4, Article 100551.
[35] D.J. Teece, Exploiting dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance, Strateg. Manag. J. 28 (2007), no. 13, 1319–1350.
[36] D. Teece, M. Peteraf, and S. Leih, Dynamic capabilities and organizational agility: Risk, uncertainty, and strategy in the innovation economy, Calif. Manag. Rev. 58 (2016), no. 4, 13–35.
[37] D.J. Teece, G. Pisano, and A. Shuen, Dynamic capabilities and strategic management, in: G. Dosi, R.R. Nelson and S. Winter (Eds.), The Nature and Dynamics of Organizational Capabilities, Oxford Univ. Press, Oxford (1997), pp. 509–533.
[38] L.G. Tornatzky, M. Fleischer, and A.K. Chakrabarti, The Processes of Technological Innovation, Lexington Books, Lexington, MA, 1990.
[39] N.X. Truong and D. Van My, Digital transformation in small and medium businesses in Vietnam, in: P. Ordonez de Pablos, X. Zhang and M. Almunawar (Eds.), Handbook of Research on Artificial Intelligence and Knowledge Management in Asia's Digital Economy, IGI Global, 2023, pp. 2–465.
[40] B.Q. Tuyen, T.H. Hung, and M.T. Lan, Leadership characteristics and digital transformation in an emerging market: The moderating effect of compliance pressure, Int. Rev. Econ. Finance 98 (2025), Article 103944.
[41] D. Van Hoang, N.T. Hien, H.V. Thang, P.N.T. Phuong, and T.T.T. Duong, Digital capabilities and sustainable competitive advantages: The case of emerging market manufacturing SMEs, Sage Open 15 (2025), no. 2.
[42] G. Vial, Understanding digital transformation: A review and a research agenda, in: Managing Digital Transformation, Elsevier, 2021, pp. 13–66.
[43] G. Vial, Understanding digital transformation: A review and a research agenda, J. Strateg. Inf. Syst. 28 (2019), no. 2, 118–144.
[44] D. Wang and X. Shao, Research on the impact of digital transformation on the production efficiency of manufacturing enterprises: Institution-based analysis of the threshold effect, Int. Rev. Econ. Finance 91 (2024), 883–897.
[45] K.S. Warner and M. Wager, Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal, Long Range Plann. 52 (2019), no. 3, 326–349.
[46] Y. Weber and S.Y. Tarba, Strategic agility: A state of the art introduction to the special section on strategic agility, Calif. Manage. Rev. 56 (2014), no. 3, 5–12.
[47] B. Wernerfelt, A resource-based view of the firm, Strateg. Manag. J. 5 (1984), no. 2, 171–180.
[48] M. Wynn, A. Bakeer, and Y. Forti, E-government and digital transformation in Libyan local authorities, Int. J. Teach. Case Stud. 12 (2021), no. 2, 119–139.

Articles in Press, Corrected Proof
Available Online from 16 October 2026

  • Receive Date 06 October 2025
  • Revise Date 19 December 2025
  • Accept Date 21 December 2025