The Role of Digital Transformation in Redefining Business Models for Growth

Abstract

Digital transformation has never been more important in the modern business environment, allowing firms to improve and transform their business models for better performance. There have been many breakthroughs and developments in terms of technology usage, for instance, artificial intelligence, IoT, cloud computing, and big data analysis; however, there are limited studies conducted that explore the implications of technology advancements in relation to business model innovation and growth. This paper analyzes the impact that digital transformation will have on innovation and growth in a business model through business model innovation. This study utilized multiple research approaches, and this entailed gathering data from 150 firms in the Finance, IT services, Manufacturing, Retailing, and Healthcare sectors. Data collection involved the use of survey questionnaires and conducting in-depth interviews, in addition to the use of secondary sources of data. Some of the techniques that have been used in analyzing data include regression analysis, Structural Equation Modeling (SEM), and case analysis. Results show strong correlation between the Digital Adoption Score and growth (r= 0.68, p<0.01). The highest positive outcomes were achieved by fully digitized business models, achieving 18% revenue growth, 22% market share, 85% efficiency rating, and 80% engagement of customers. It was found that business model innovation is a mediator between digitalization and growth according to SEM analysis. Digitalization has a high effect on business success due to its integration into the business model. The development and acquisition of technology-related factors and changes should be made by managers for the benefit of future growth. Future studies may look into other aspects such as time-based effects, industry-based effects, and national-level effects on growth through digital media.