sustainability

Article
Influence of Digital Transformation Capability on
Operational Performance
Jiatong Yu 1 , Jiajue Wang 1 and Taesoo Moon 2, *

1 College of Economics and Management, China Jiliang University, Hangzhou 310018, China;
[email protected] (J.Y.); [email protected] (J.W.)
2 School of Management, Dongguk University, Gyeongju 38066, Korea
* Correspondence: [email protected]

Abstract: With the changes in market environments and the development of digital technology,
enterprises urgently need to develop the capability to adapt to profound changes in strategy and
business processes. Some previous research regarded a digital marketing capability as a digital
transformation capability, but other research explained the importance of digital competence to
enterprises, from the perspective of resource allocation. However, they could not explain the phe-
nomenon of enterprises on the usage of advanced digital technology to build the capability to refresh
or replace the business model and the value creation process. This study constructed the dimensions
of a digital transformation capability that contains three hub-factors (sensing, organizing, and re-
structuring) under the dynamic capability theory. This study collected 162 sets of enterprise data
through a survey, and investigated the relationships of an enterprise’s strategy orientation, digital
transformation capability, and operational performance by using SPSS and SmartPLS 3. The results
show that strategic orientation has a positive impact on a digital transformation capability, and that
digital transformation capability has a positive impact on operational performance. In addition, the
digital transformation capability plays a mediating role between strategic orientation and operational
performance. Doubtlessly, enterprises need to focus on building their own digital transformation
capabilities to create new enterprise value. A digital transformation capability will encourage en-
Citation: Yu, J.; Wang, J.; Moon, T.
Influence of Digital Transformation
terprises to integrate their business processes and routines through digital technology to achieve a
Capability on Operational competitive advantage.
Performance. Sustainability 2022, 14,
7909. https://doi.org/10.3390/ Keywords: customer orientation; technology orientation; digital transformation capability; sensing;
su14137909 organizing; restructuring; operational performance

Academic Editor: Ja-Shen Chen

Received: 19 May 2022

Accepted: 27 June 2022 1. Introduction
Published: 29 June 2022
With the changes in market environments, such as the development of digital tech-
Publisher’s Note: MDPI stays neutral nology and the personalization of consumer demand, most enterprises urgently need to
with regard to jurisdictional claims in develop the ability to adapt to profound changes in strategy and business processes. Digital
published maps and institutional affil- transformation has become an indispensable way for enterprises to deal with the directions
iations. of networking and intelligence, to improve quality and efficiency, and to reshape core com-
petitiveness [1]. Moreover, digital transformation has influenced all industries, especially
so for the more traditionally stable manufacturing industry, which is forced to urgently
optimize resource allocation, innovate production methods, and improve production ef-
Copyright: © 2022 by the authors.
ficiency [2]. The digital technology trend and the design principles used by enterprises
Licensee MDPI, Basel, Switzerland.
in digital transformation include the smart factory, 3D printing, advanced manufacturing
This article is an open access article
solutions, artificial intelligence, big data analytics, cloud computing, cyber security, the
distributed under the terms and
industrial Internet of Things, mixed reality (virtual and augmented reality), and simulation
conditions of the Creative Commons
of connected machines [3]. Under the new pattern of global high-quality development,
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
enterprises should not only pay attention to revenue and profit objectives, but also set out
4.0/).
the road of sustainable development. Digital transformation capabilities are the catalyst for

Sustainability 2022, 14, 7909. https://doi.org/10.3390/su14137909 https://www.mdpi.com/journal/sustainability

Sustainability 2022, 14, 7909 2 of 20

the sustainable development of enterprises. More and more enterprises are beginning to
use digital technology to promote transformation and upgrading, developing sustainable
digital transformation capabilities by reshaping the value chain, and achieving production
and developmental benefits. Therefore, in the era of the digital economy, it is necessary
to clarify how to establish an action mechanism for sustainable competitive advantage by
developing a digital transformation capability in enterprises.
The deep integration of digitalization and industrialization changed the traditional
production and operation management methods, and offers the potential for the improve-
ment of product development, production efficiency and customer service [4]. In view
of the company’s existing traditions, they will face greater challenges and barriers when
searching and implementing digital business model transformation. They are often forced
to deal with conflicts and trade-offs between existing and new ways of doing business [5].
Companies may start with smaller changes and gradually transform their traditional
business processes into digital business processes. For example, automotive companies
use sensors to detect blind spots to avoid accidents and enhance the safety features of
their products [6]. Therefore, in this study, digital transformation refers to the company
using advanced (information, communication and control), integrated platforms/digital
production technologies to effectively and extensibly connect various stakeholders (tech-
nology providers, manufacturing factories, supply chains and service providers) to achieve
short-cycle, multi-variety and personalized digital operation production.
In the existing research related to digital transformation capabilities, some of the
previous studies regarded an e-commerce capability or a digital marketing capability as
a digital transformation capability. They argued that a digital capability in e-commerce
includes agility and responsiveness, multi-channel communication, visualization, and
governance [7]. However, e-commerce is only one aspect of digital transformation for
enterprises. Measuring only one aspect of an e-commerce capability or a digital marketing
capability to investigate the digital transformation capability is not enough. Other research
explained the importance to enterprises of digital competence from the perspective of re-
source allocation [8], however enterprises not only need to deeply explore the management
changes brought by digitalization, but they also need to make adaptive adjustments to
the action mechanism of a dynamic capability. Most of the research based on a dynamic
capability in the context of digital transformation [9] included sensing, seizing, and trans-
forming [10–12]. But they could not explain the real phenomenon of enterprises on the
advanced use of digital technology to build a capability to refresh or replace the business
model and the value creation process. This study tries to provide an entry point to develop
new digital transformation capabilities from the process perspective.
To explain the real-world phenomenon of digital production technology, enterprises
use advanced integrated platforms to effectively and broadly connect their various stake-
holders to form and achieve diverse and personalized digital production processes in the
short term. This is digital transformation that enables the production of various personal-
ized products by innovatively changing the traditional production process. How should
manufacturing enterprises push for digital transformation in the era of the 4th Industrial
Revolution? This study empirically investigates how Chinese enterprises develop a digital
transformation capability to obtain sustainable competitiveness. This study proposes the
following three research questions: (1) What are the dimensions of a digital transformation
capability? (2) What are the influencing factors of an enterprise’s digital transformation
capability? (3) What is the relationship between the enterprise’s digital transformation
capability and its operational performance? This study tries to construct the dimensions of
a digital transformation capability. It contains three hub-factors (sensing, organizing and
restructuring) under the dynamic capability theory.
The contributions of this study are as follows. First, this study empirically provides
a relationship in which enterprises with high strategic orientation have higher digital
transformation capability according to the basis of the resource-based theory. Second,
this study empirically explains the necessity for efforts that, according to the dynamic
Sustainability 2022, 14, 7909 3 of 20

capability theory, enterprises must make to enhance their digital transformation capabilities
based on the changes in digital environments. Third, this study empirically provides
ways that an enterprise’s digital transformation capability can positively affect business
processes and improve operational performance. This study contributes academically by
presenting empirical research results that can construct digital transformations in the era
of the digital economy and improve an enterprise’s operational performance to obtain
sustainable competitive advantage. Limitations that could not be addressed in this study
will be presented separately after a discussion of the research results.

2. Literature Review
2.1. Dynamic Capability Theory
Dynamic capability theory originated from the characteristics of enterprises in order
to effectively deal with the changes in market environments of the 1990s. In market dynam-
ics such as economic globalization and diversification of consumer demand, a dynamic
capability refers to the organization’s flexible capability to properly allocate internal and
external resources, quickly make marketable products, effectively grasp changing busi-
ness opportunities, and continuously maintain a competitive advantage. Most enterprises
have implemented a digital strategy to improve competitive advantage [13]. This study
proposes a new approach to the business transformation capability, and empirically ex-
plores the impact of strategic orientation on operational performance through a digital
transformation capability.
Through literature reviews of previous research, this study found that the dynamic
capability theory evolved on the basis of information processing theory (1970s), the resource-
based view (1980s), and core competence theory (1990s). Information processing theory
was first proposed by Galbraith [14]. When the information processing capability fits with
the enterprise’s demand for information processing, the enterprise can obtain sustainable
competitive advantage and improve organizational performance [15]. Resource-based view
(RBV) was first proposed by Penrose [16]; when the environment changes, the value of
the enterprise’s existing resources also changes. If the adjustment is not made in time, the
enterprise’s previous competitive advantage will no longer exist [17]. As a supplement and
development of resource-based view, Prahalad et al. [18] first proposed the core competence
theory. Core competence is a unique enterprise resource that is specially organized to
improve the efficiency of other resources [19].
Since Teece et al. published the paper titled Dynamic capability and strategic manage-
ment (1997), scholars have carried out a lot of research on dynamic capability. Teece et al. [9]
argued that to cope with a rapidly changing environment, enterprises integrate, establish,
and reconfigure their internal and external competitiveness. Moreover, they proposed the
dimensions of a dynamic capability that includes integrate-build-reconfigure processes.
Teece [10] believed that a dynamic capability enables enterprises to create, deploy, and
protect the intangible assets that support superior long-run business performance. More-
over, skills, processes and procedures, organizational structure, and the decisions or rules
of an enterprise have an impact on its dynamic capabilities, such as sensing, seizing,
and reconfiguring.
Therefore, based on previous studies of dynamic capability, we conclude that although
the driving factors and mechanisms of dynamic capability in these previous studies are
slightly different, they all emphasized that dynamic capability refers to the ability of an
enterprise to purposefully change basic resources in response to environmental changes.
In particular, enterprises are now in the digital era and have to respond to environmental
changes through digital transformation, constructing a digital transformation capability to
keep consistent with new digital strategies.

2.2. Strategic Orientation

Previous studies on strategic orientation emphasized the importance of a digital
transformation strategy, the difference between a digital transformation strategy and an IT
Sustainability 2022, 14, 7909 4 of 20

strategy, and the impact of strategic orientation on capability [20–22]. The digital strategy
is to use digital resources to create value to affect the enterprise’s business strategy [11].
Organizations have to respond to the changes in the market environment, the development
of digital technology, the personalization of consumer demand, and the fierce competition
in the industry through a digital transformation strategy [20]. Digital transformation goes
beyond the traditional IT role in supporting existing business processes because it can
redefine a value proposition [21]. Strategic orientation is an important driver of dynamic
capability, including customer and technology orientation [22].
From the perspective of demand and supply in market development, the traditional
industrial chain layout and manufacturing method can no longer meet the enterprise’s
needs of small-scale customization and high-quality delivery. Enterprises urgently need to
use digital transformation to improve productivity [1]. The application of digital technology
has greatly stimulated the market potential. Enterprises use digital technology to analyze
customers, improve the matching efficiency of demand and supply using algorithms, and
significantly reduce transaction costs [2]. At the same time, enterprises can have a large
number of potential customers through accurate portraits of customers, and the product
schemes in the database can be recombined to provide feasible marketing schemes. On the
other hand, to resolve the inconsistency in demand and supply of personalized products,
companies must plan to supply small units of a product. We can see that enterprises not
only need to solve the problem of producing and selling products; they also need to meet
the needs of consumers faster and more comprehensively. Therefore, digital transformation
is good for enterprises to accurately match demand and supply in their respective market
segments and solve a series of problems such as low efficiency in resource allocation,
insufficient profitability, weak core competency, and so on.
This study explores the impact of strategic orientation on a digital transformation
capability from two aspects: customer orientation and technology orientation. Customer
orientation means the use of digital terminals as the best carrier to integrate a customer’s
key journeys, realize B2C end-to-end interactions, support customized and personalized
products, accurately collect and gain insights into customer needs, remove intermediary
links, and improve operational efficiency and the customer experience [22]. Consumer
demands are rapidly changing; they create new value with brand images through de-
signing and customizing products [13]. Technology orientation means that the system of
the enterprise, with the development of digital technology, is dynamically reconstructed
along with changes in enterprise needs, and technology innovation and new technology
development can be used to build on the changes in the internal and external environments
of the enterprise [22]. The MIS literature increasingly emphasizes the presence of gaps in
an organizational capability due to technological and environmental changes, and many
studies call for coping with these issues, especially in the digital context [21].

2.3. Digital Transformation Capability

Through the literature review of previous studies, we can summarize the importance
of aligning an IT strategy with a business strategy. Previous studies focused on the use
of purely digital technology, an IT-business aligning capability, or a dynamic ability as
a digital transformation capability. Levallet and Chan [22] suggested that organizations
can use and leverage a digital capability, such as an IT infrastructure and an information
management capability, to foster managerial improvisation depending on the type of
unexpected event. The digital capability studied by Levallet and Chan [22] was completely
biased toward an IT-enabled capability. Tumbas and Berente [23] studied the digital
capability of entrepreneurial growth in the field of entrepreneurship and tended toward a
technical aligning capability rather than a digital transformation capability. Yeow et al. [11]
and Warnera and Wägerb [12] used case analysis to build a digital transformation capability.
Although they considered sensing, seizing, and reconfiguring the three components of a
digital transformation capability, they could not explain the phenomenon of organizing
 [11] and Warnera and Wägerb [12] used case analysis to build a digital transformation
capability. Although they considered sensing, seizing, and reconfiguring the three com-
Sustainability 2022, 14, 7909 ponents of a digital transformation capability, they could not explain the phenomenon 5 of 20 of
organizing external digital resources into internal processes, as well as sustainable digital
development of enterprises when the enterprise conducts a digital transformation.
external digital transformation
The digital resources into internal processes,
capability as well
proposed inas sustainable
this digital
study refers to development
an enterprise’s
of enterprises
capability when the enterprise
corresponding conducts
to the digital a digital transformation.
environment. It is a necessary capability for the
The digital
enterprise’s transformation
survival capability proposed
and is consequently shown in in this study
Figure refersontoprevious
1. Based an enterprise’s
studies,
capability corresponding to the digital environment. It is a necessary
this study combined actual phenomena with the dimensions of a digital transformation capability for the
enterprise’s
capability forsurvival and is consequently
the enterprise. shown in Figure
Digital transformation 1. Based
capability on previous
refers studies,
to the enterprise’s
this study combined actual phenomena with the dimensions of a digital transformation ca-
ability to use advanced platforms such as information, communication, and control mech-
pability for the enterprise. Digital transformation capability refers to the enterprise’s ability
anisms. And it provides integrated platforms of digital production technologies to connect
to use advanced platforms such as information, communication, and control mechanisms.
various stakeholders effectively and extensively, such as technology providers, manufac-
And it provides integrated platforms of digital production technologies to connect various
turing factories,effectively
stakeholders supply chains, and servicesuch
and extensively, providers. Organizations
as technology providers,with a digital trans-
manufacturing
formation capability can achieve short-cycle, multiple-variety, and personalized
factories, supply chains, and service providers. Organizations with a digital transformation digital
operation
capabilityperformance. Accordingly,
can achieve short-cycle, three dimensions
multiple-variety, andof a digital transformation
personalized digital operationcapa-
bility (sensing Accordingly,
performance. customer needs threeand technology
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achieving sustainable competitiveness in the organization.

TheDig
Figure1.1.The
Figure Digital Transformation Capability.
ital Transformation Capability.
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sense changes in enter-
the
prise
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depends on is becoming larger and more complex. The ability to sense changes
the digital environment
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enterprise the marketplace, and in
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then formulates
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options based onsensing in this study refers
its surroundings, to
and then
the organizational
formulates a digital ability to monitorstrategy.
transformation changes,Therefore,
identify problems
sensing in and opportunities,
this study refers andto the
formulate a digital transformation strategy.
organizational ability to monitor changes, identify problems and opportunities, and for-
mulateToa solve
digitalthe problems of the
transformation enterprise’s survival and development effectively, the
strategy.
organizational capability to fully organize
To solve the problems of the enterprise’s the internal andand
survival external digital resources
development relatedthe
effectively,
to the business cannot be ignored. The enterprise aligns a digital transformation strategy
organizational capability to fully organize the internal and external digital resources re-
with the enterprise’s business goals and strategies. The enterprise sources digital resources
lated to the business cannot be ignored. The enterprise aligns a digital transformation
by the expected impact on business performance and combines internal and external
strategy
resourceswith
forthe
theenterprise’s business goals
digital transformation. and strategies.
Therefore, The enterprise
the term organizing in thissources digital
study refers
resources by the expected
to the organizational impact
capability on business
to align performance
digital resources and combines
with business internal
needs, source and
digital
external resources for the digital transformation. Therefore, the term
resources, and then fully combine the available internal and external resources for a digitalorganizing in this
study refers to the organizational
transformation of the organization. capability to align digital resources with business needs,
sourceDifferent
digital resources,
from the use and then fully combine
of technology the available
and the alliance internal digital
of departments, and external
transfor-re-
sources
mationforis aaprocess
digital that
transformation of the organization.
requires continuous and comprehensive changes in organizational
structures, business processes, and employee skills. So, the ability to restructure sustainable
digital development is indispensable. While innovating its digital resources, the enterprise
continuously coordinates the available resources and facilitates sustainable development of
Sustainability 2022, 14, 7909 6 of 20

its digital strategy to improve organizational performance. Consequently, restructuring in

this study refers to the organizational ability to innovate digital resources, coordinate with
organizational structures, and facilitate sustainable development of digital resources.

2.4. Operational Performance

Improving performance is the substantial goal of all enterprises, and therefore, fac-
tors related to improvement of performance have become core issues in management
research [24]. Enterprises are committed to growth to ensure survival [10]. Performance
is the evaluation of an enterprise’s operations, either from the results it has achieved or
through the potential for future achievements [25]. Good operational performance is the
foundation of the enterprise’s survival and development [26]. The performance from a dig-
ital transformation can be judged by various factors, such as operational performance [27].
Digital transformation can improve the operational performance of the organization.
Wamba and Mishra [28] argued that manufacturing enterprises invest in digitalization to
enable the reduction in data processing costs by automating data collection, warehousing,
and diagnostics. Helfat and Raubitschek [29] suggested that improved use of digital tools
improves customer engagement and development of product-service systems, including
improvements in remote diagnostics and process management. Hong et al. [30] pointed
out that enterprises achieve mass production through digitalization and reduce product
costs. Dubey et al. [31] proposed in their research on manufacturing organizations that big
data analysis and artificial intelligence can improve operational performance under the
influence of environmental dynamism.

3. Research Model and Hypotheses

3.1. Research Model
Most enterprises put a lot of effort into responding to rapidly changing environments.
In the era of the 4th Industrial Revolution, it is very important to find existing inefficient
business processes and to pursue innovative efforts by combining internal and external
digital resources to match the organizational structure according to the digital business
environment. Previous studies conducted with a resource-based view have shown that
most organizations with a lot of resources have high performance [15–17]. In addition,
existing studies based on core competency theory have shown that most organizations
with core competencies have high performance [18,19]. However, existing studies were
conducted in a stable environment, not a turbulent one. In the recent rapidly changing
environment of the 4th Industrial Revolution, the results of existing studies are limited in
explaining the real phenomenon.
To improve the explanatory power by eliminating the inefficiency of the existing
business model, a new approach is needed to promote innovative combinations of internal
and external digital resources suitable for the digital environment [9,10]. From a resource-
based view, core competence theory and dynamic capability theory, this study proposes a
conceptual research model to investigate the relationships among strategic orientation with
a customer orientation and a technology orientation, the digital transformation capability
with three dimensions (sensing, organizing, and restructuring), and operational perfor-
mance through the digital transformation capability of the organization. The proposed
research model is shown in Figure 2.
Sustainability 2022,
Sustainability 14,14,
2022, x FOR
7909PEER REVIEW 7 of7 22
of 20

Figure 2. Research Model.

Figure 2. Research Model.
This study proposes that strategic positioning drives enterprises to develop a digital
This study proposes
transformation capabilitythattostrategic
enhancepositioning
operationaldrives enterprises
performance. Thisto develop a digitalthe
study analyzes
transformation
impact of an enterprise’s strategic orientation on its digital transformation capability,the
capability to enhance operational performance. This study analyzes and
impact of an enterprise’s
also analyzes the impactstrategic orientation
of the digital on its digital
transformation transformation
capability on operational capability, and
performance.
also
Theanalyzes
objective the
of impact
this studyof the
is todigital transformation
empirically investigatecapability on operational
the relationship betweenperfor-
strategic
mance. The objective
orientation of this study
and operational is to empirically
performance throughinvestigate the relationship
a digital transformation between in
capability
strategic orientation
the digital and operational
environment. To respond performance
to changes through
in the adigital
digitalenvironment,
transformation capa-
customer
bility in the digital environment. To respond to changes in
orientation and technology orientation have positive impacts on the development the digital environment, cus-
of a
tomer orientation and technology orientation have positive impacts
digital transformation capability with sensing, organizing, and restructuring processes. The on the development
of digital
a digital transformation
transformation capability
capability also with
has asensing,
positive organizing, and restructuring
impact on operational performance pro- of
cesses. The digital transformation
the organization. capability also
The digital transformation has a positive
capability impactwith
of a company on operational per-
an organizational
formance
direction of of
thecustomer
organization. The digital
orientation and transformation capabilitywill
technology orientation of apositively
company with affectanthe
organizational direction of of
operational performance customer orientation
the organization andand technology
ultimately haveorientation will posi-
a positive effect on the
tively affect the operational performance
company’s sustainable competitive advantage. of the organization and ultimately have a posi-
tive effect on the company’s sustainable competitive advantage.
3.2. Research Hypotheses
3.2. Research Hypotheses
Strategic orientation is the activity direction for changing path dependence to match
with the external
Strategic orientation environment. It has
is the activity been used
direction in many path
for changing research situations,
dependence such as
to match
digitization and innovation [17,24,29,30]. According to Yu and
with the external environment. It has been used in many research situations, such as dig- Moon [8], digital strategic
orientation
itization refers to the[17,24,29,30].
and innovation overall strategic direction
According of an
to Yu and enterprise
Moon [8],indigital
the context of digital
strategic ori-
transformation,
entation including
refers to the overallthe strategic
strategic measures
direction to achieve
of an enterprise it. in
This
thestudy is aimed
context at the
of digital
transformation, including the strategic measures to achieve it. This study is aimed at thethe
current digital environment, based on digital strategic orientation studies, explaining
relationship
current digitalbetween strategic
environment, orientation
based on digital(customer
strategicorientation
orientation and technology
studies, orientation)
explaining the
and the digital transformation capability.
relationship between strategic orientation (customer orientation and technology orienta-
tion) and Racela and Thoumrungroje
the digital [32], grounded in resource-advantage theory, investi-
transformation capability.
gated
Racela and Thoumrungroje [32],a grounded
how customer orientation as higher-order in or interconnected operational
resource-advantage resource
theory, investi-
enhances enterprise performance through creativity and innovation
gated how customer orientation as a higher-order or interconnected operational resource capabilities among
enterprises
enhances of different
enterprise sizes and within
performance through different market
creativity and contexts.
innovation They conceptualized
capabilities among cus-
tomer orientation as an enterprise’s capacity to create and deliver superior customer value
enterprises of different sizes and within different market contexts. They conceptualized
through the processing of market intelligence, as demonstrated by the enterprise’s com-
customer orientation as an enterprise’s capacity to create and deliver superior customer
posite operational resources of market-sensing, customer-relating, and customer-response
value through the processing of market intelligence, as demonstrated by the enterprise’s
capabilities. Pan et al. [33] used the resource-based view and its extended dynamic ca-
composite operational resources of market-sensing, customer-relating, and customer-re-
pability as a theoretical foundation, explored the role of strategic orientation (technology
sponse capabilities. Pan et al. [33] used the resource-based view and its extended dynamic
orientation and customer orientation) in promoting enterprises’ digital capabilities, and
capability as a theoretical foundation, explored the role of strategic orientation (technol-
new product development in the context of digital transformation.
ogy orientation and customer orientation) in promoting enterprises’ digital capabilities,
Lin and Kunnathur [34] examined the impact mechanism of strategic orientation
and new product development in the context of digital transformation.
on big data capabilities from three aspects (customer orientation, technology orientation,
Lin and Kunnathur [34] examined the impact mechanism of strategic orientation on
and entrepreneurship orientation) and empirically verified that strategic orientation is
big data capabilities from three aspects (customer orientation, technology orientation, and
conducive to the development of a big data capability in enterprises. In this study, customer
entrepreneurship
orientation refers orientation)
to the extentandtoempirically
which the verified
enterprise thathasstrategic orientation
a sufficient is condu- of
understanding
cive to the development of a big data capability in enterprises. In
its target customers to continuously create superior value for them. Therefore, this study this study, customer
orientation
proposes refers to the extent
the following to which the enterprise has a sufficient understanding of
hypotheses.
Sustainability 2022, 14, 7909 8 of 20

Hypothesis 1 (H1). Customer orientation has a positive impact on a digital transformation capability.

Hypothesis 1a (H1a). Customer orientation has a positive impact on sensing in a digital

transformation capability.

Hypothesis 1b (H1b). Customer orientation has a positive impact on organizing in a digital

transformation capability.

Hypothesis 1c (H1c). Customer orientation has a positive impact on restructuring in a digital

transformation capability.

In their research on strategic orientation, digital capabilities, and new product de-
velopment in emerging market enterprises, Pan et al. [33] carried out structural equation
modeling by using sample data from Chinese manufacturing enterprises to empirically
test their arguments. They found that technology orientation and customer orientation
play a critical role in driving an enterprise’s digital capability. Moreover, they tested how
the two dimensions of strategic orientation tend to exert different effects on new product
development, with technology orientation playing a more significant role than customer
orientation in contributing to new product development.
Lin and Kunnathur [34] demonstrated a connection between a big data capability and
the three strategic orientation concepts. The relationship between a big data capability and
the three strategic orientations reinforced the strategic dimension in a big data capability.
More specifically, based on an extensive review of the literature on strategic orientation,
they concluded that customer, entrepreneurial, and technology orientations contribute
to the development of a big data capability. In this study, technology orientation refers
to the extent to which the enterprise is inclined to introduce or use new digital manu-
facturing technologies in the transformation process. Therefore, this study proposes the
following hypotheses.
Hypotheses 2 (H2). Technology orientation has a positive impact on a digital transformation capability.
Hypotheses 2a (H2a). Technology orientation has a positive impact on sensing in a digital
transformation capability.
Hypotheses 2b (H2b). Technology orientation has a positive impact on organizing in a digital
transformation capability.
Hypotheses 2c (H2c). Technology orientation has a positive impact on restructuring in a digital
transformation capability.
Pan et al. [33], based on previous RBV research, defined digital capability with a
flexible IT infrastructure and an information management capability. They emphasized
that a digital capability is the key capability of enterprises in a technological environment.
The development of a digital capability by enterprises is good for dealing with rapidly
developing technical problems and various uncertainties. Taking the industrial robot in
the production process of the manufacturing enterprise as an example, the automatic
production line not only improves accuracy in the operation but also improves efficiency
and reduces costs. Dubey et al. [31] drew on the dynamic capability view of enterprises and
on contingency theory to test the relationship between big data analytics powered by AI and
operational performance. Their findings showed that big data analytics powered by AI have
a significant and positive effect on operational performance. Big data analytics powered
by a dynamic AI capability enables organizations to improve operational performance by
creating new products or services, improving product or service quality, reducing costs, and
reducing market risks of product or service innovations. Tanriverdi and Lim [35] believed
that digital technologies could support an enterprise’s capability to sense the complexity of
its environment to design a response that is able to help maximize its chances of survival
through the adaptation or redefinition of its core activities. Helfat and Raubitschek [29]
Sustainability 2022, 14, 7909 9 of 20

provided a theoretical analysis of digital transformation capabilities, showing the influence

of organizational performance on digital platform-based ecosystems.
In this study, digital transformation capability refers to the extent to which the en-
terprise can use advanced platform technologies, such as information, communication,
and control, to effectively connect various stakeholders, such as technology providers,
manufacturing factories, supply chains, and service providers. To achieve short-cycle,
multi-variety, and personalized digital production capabilities, operational performance
refers to increasing operational efficiency and effectiveness through digital transformation.
Therefore, this study proposes the following hypotheses.
Hypotheses 3 (H3). A digital transformation capability has a positive impact on
operational performance.
Hypotheses 3a (H3a). Sensing in a digital transformation capability has a positive impact on
operational performance.
Hypotheses 3b (H3b). Organizing in a digital transformation capability has a positive impact on
operational performance.
Hypotheses 3c (H3c). Restructuring in a digital transformation capability has a positive impact
on operational performance.

4. Research Design
4.1. Measurement
The purpose of this paper is to conduct an empirical study on the relationship between
strategic orientation (which includes customer orientation and technology orientation) and
operational performance, through the digital transformation capability of an enterprise
in the digital environment, measuring the impact of strategic orientation on operational
performance. To test the hypotheses, a questionnaire was used to collect data from Chinese
manufacturing enterprises.
From the resource-based view, core competence theory and dynamic capability theory
of existing theoretical research, the variables cover strategic orientation including customer
orientation (CUO) developed by Lu et al. [1] and technology orientation (TO) developed
by Yu and Moon [8]. Based on the original dynamic capability [9,10,17], a digital transfor-
mation capability (sensing, organizing, and restructuring) in the new digital environment
was developed to explain the mechanism of digital transformation. Moreover, operational
performance (OPP) was developed by Hong et al. [30]. The operational definitions and
measurements are shown in Table 1.
Sustainability 2022, 14, 7909 10 of 20

Table 1. Operational Definitions and Measurements.

Factor Operational Definition Measurement

1. Competitive advantage is based on understanding customers’ needs.
2. Business objectives are driven primarily by customer satisfaction.
Customer The extent to which the enterprise has sufficient understanding of its target customers to
3. Measure customer satisfaction frequently and systematically.
Orientation continuously create superior value for them.
4. Pay close attention to after-sales service for customer satisfaction.
5. Continuously try to discover additional customer needs that they are unaware of.
1. Proactively develop new technologies.
2. Use sophisticated technologies in new product development.
Technology The extent to which the enterprise is inclined to introduce or use new digital manufacturing
3. New products are always at the state of the art in the level of the technology.
Orientation technologies in the transformation process.
4. Technological innovation is readily accepted in our program/project management.
5. Based on the results of technological innovation, it has been accepted by our organization.
1. Monitor changes and trends in the marketplace.
2. Scan for opportunities and threats in the environment.
3. Identify inefficiencies in existing business processes.
The organizational capability to monitor changes, identify opportunities and formulate a digital 4. Identify opportunities for organizational change based on market conditions.
Sensing
strategy. 5. Foresee a wide range of actionable options based on the surroundings.
6. Seek new opportunities for strategic uses of IT.
7. Determine the needs for a digital transformation strategy.
8. Formulate the digital transformation strategy.
1. Align the digital transformation strategy with business goals and strategies.
2. Try to allocate management resources for digital transformation.
3. Implement active interactions between other functions such as manufacturing, marketing and services.
The organizational capability to align digital resources with business needs, sources digital 4. Integrate internal resources and competency for digital transformation.
Organizing
resources, then fully combines available digital resources. 5. Integrate external resources such as expert skills and knowledge for digital transformation.
6. Combine internal and external resources for digital transformation.
7. Emphasize the strategic role of the sourcing function for digital transformation.
8. Prioritize digital transformation investments by the expected impact on business performance.
1. Seek new ways to do something.
2. Frequently try to innovate new products and services.
3. Continually develop and produce new products or services.
4. Try to maintain time to market with new products and services.
The organizational capability to innovate digital resources, coordinate organizational structures
Restructuring 5. Try to reconfigure the resources for new products and services.
and facilitate sustainable development of a digital transformation.
6. Try to apply knowledge resources to new products and services.
7. Try to fit business processes into integrated resources.
8. Cooperate with each other to solve conflicts.
9. Facilitate a sustainable effort to implement a digital transformation strategy.
1. Raise the quality of products and services.
2. Increase process improvements.
Operational The achievements and contributions made in product quality, the production process, costs, and
3. Reduce total costs.
Performance other aspects through the digital transformation.
4. Attract more customers.
5. Easily modify products to a specific customer need.
Sustainability 2022, 14, 7909 11 of 20

4.2. Data Collection

Based on a research method at the organizational level, the questionnaire was dis-
tributed through random sampling, and executives (CEOs, CMOs, CFOs, CIOs), senior
managers, and department managers were the participants. Because the questionnaire’s
analysis hierarchy was a relationship of organizational variables, it was distributed to
the enterprise’s overall operational managers responsible for digital transformation to
represent enterprise-level data. Due to the COVID-19 pandemic, the questionnaire was
distributed by e-mail and web page. In total, 162 valid responses were collected for this
study by December 2021. We used SPSS software to analyze the data results. Statistics on
the respondents are shown in Table 2 Demographic Statistics.

Table 2. Demographic Statistics.

Item Category (N = 162) Frequency Percentage

Department Manager 30 18.5
Position Senior Manager 80 49.4
Executive (CEO, CMO, CFO, CIO) 52 32.1
Less than 5 years 13 8.0
5–10 years 30 18.5
Years Since Established 10–15 years 76 46.9
More than 15 years 42 26.5
Automobile 30 18.5
Machine & Equipment 22 13.6
Electronics 36 22.2
Main Industry Type Textile & Clothing 28 17.3
Food & Beverage 20 12.3
Medical & Medicine 17 10.5
Other 9 5.6
Less than 100 15 9.3
100–300 23 14.2
Number of Employees 300–2000 50 30.9
2000–10,000 39 24.1
More than 10,000 35 21.6
Less than RMB 30 million (US$4.3 million) 12 7.4
RMB 30–100 million (US$4.3–14.3 million) 15 9.3
Annual Sales RMB 100–500 million (US$14.3–71.5 million) 49 30.2
RMB 500 million-1 billion (US$71.5–143 million) 54 33.3
More than RMB 1 billion (US$143 million) 32 19.8
To meet customer needs and customer satisfaction 108 67.7
To speed up decision making and delivery 98 60.5
To sustain competitive advantage 94 58.0
Digital Transformation
To diminish production and process costs 95 58.6
Objectives(multiple choice)
To enhance operational efficiency 100 61.7
To facilitate new product development 84 51.9
Other 25 15.4

The survey results showed that senior managers comprised the largest number of re-
spondents: 80 (49.4%). In the distribution of the enterprise’s established times of operation,
the range 10–15 years was the most predominant: 76 (46.9%). From the perspective of main
industry type, electronics was prominent: 36 (22.2%). Regarding the number of employees,
the range 300–2000 was the highest proportion: 50 (30.9%). For annual sales, the range
RMB 500 million to RMB 1 billion was the highest proportion: 54 (33.3%). Moreover, among
the answers to the digital transformation objectives, the item chosen the most was to meet
customer needs and customer satisfaction: 108 (67.7%).

5. Data Analysis
5.1. Tests of the Measurement Model
We used SPSS software to analyze reliability and validity. Among the results in
Table 3, Cronbach’s alpha, factor loadings, and composite reliability of all variables were
Sustainability 2022, 14, 7909 12 of 20

higher than 0.7, and AVE was higher than 0.5, which means both reliability and validity
were achieved [36,37]. In all measurement items, there were three items in which cross-
factor loading values are less than 0.7. One was sen6 (seeking new opportunities for
strategic use of IT), which indicates the enterprise’s main performance is sensing (after
monitoring market changes and identifying opportunities): they do not seek opportunities,
but directly formulate digital transformation strategies. The other two deleted items were
res1 (seeks new ways to do something) and res4 (trying to maintain time to market with new
products and services). This reflects the enterprise’s main performance during restructuring:
innovating new products and services, and cooperating with various departments to
maintain continuous development of the digital transformation, rather than focusing on
finding new ways and maintaining the time to market for products.

Table 3. Factor Loadings, AVE, CR, and Cronbach’s Alpha Values.

Factor Items Loadings AVE CR Cronbach’s Alpha

cuo1 0.840
cuo2 0.815
Customer Orientation cuo3 0.837 0.708 0.924 0.897
cuo4 0.865
cuo5 0.850
to1 0.853
to2 0.865
Technology Orientation to3 0.842 0.706 0.923 0.896
to4 0.854
to5 0.785
sen1 0.813
sen2 0.834
sen3 0.813
Sensing 0.652 0.918 0.893
sen4 0.797
sen7 0.841
sen8 0.745
org1 0.787
org2 0.864
org3 0.804
Organizing 0.648 0.917 0.891
org6 0.814
org7 0.761
org8 0.795
res2 0.820
res3 0.843
res6 0.819
Restructuring 0.665 0.923 0.899
res7 0.839
res8 0.770
res9 0.802
opp1 0.775
opp2 0.808
opp3 0.871
Operational Performance 0.643 0.915 0.888
opp4 0.788
opp5 0.811
opp6 0.751
AVE = Average Variance Extracted; CR = Composite Reliability.

At the same time, in order to perfect the model and improve the explanatory power of
the factors, an exploratory factor analysis was carried out through SPSS. A dimensionality
reduction factor analysis was conducted based on principal component extraction analysis
method with a feature value greater than 1. In the digital transformation capability, except
for sen5, sen6, org4, org5, res1, res4, and res5, all measurement items had values greater
than 0.6. Sen5 is “foresees a wide range of actionable options based on the surroundings,”
Sustainability 2022, 14, 7909 13 of 20

which showed the enterprise’s main performance during sensing: monitoring market
changes after identifying opportunities, no longer foreseeing viable options, but directly
formulating a digital transformation strategy. Org4 is “integrates internal resources and
competency for digital transformation,” and org5 is “integrates external resources such
as expert skills and knowledge for digital transformation.” This reflects the enterprise’s
main performance during organizing: aligning digital resources with business needs,
sourcing digital resources, and then fully combining the available digital resources instead
of separately integrating internal external resources. Res5 is “tries to reconfigure the
resources for new products and services,” which reflects the enterprise’s main performance
during restructuring and innovating new products and services, and cooperating with
various departments to promote the continuous development of the digital transformation
strategy, instead of focusing on reconfiguring resources. So, as a means of improving
validity, a decision was made to delete inf6, sen5, sen6, org4, org5, res1, res4, and res5 to
further improve the factor explanatory power.
In order to verify the necessity of the high-order model, we used SmartPLS 3 software
to compare the first-order factors with the second-order factors. According to the research
of Sarstedt et al. [38], second-order factor loading is higher than first-order factor loading,
and structural model analysis using the second-order factor is appropriate. In this study, a
digital transformation capability consists of sensing, organizing, and restructuring. Results
are shown in Table 4. Second-order factor loading was higher than first-order factor loading.
It is appropriate to use the second-order factor model for structural model analysis.

Table 4. Factor Loading Comparison of First-order Factors and Second-order Factors.

2nd Order 1st Order Factor

Construct Items Construct Items
Factor Loading Loading
sen1 0.813 sen1 0.650
sen2 0.834 sen2 0.771
sen3 0.813 sen3 0.733
Sensing
sen4 0.797 sen4 0.687
sen7 0.841 sen7 0.711
sen8 0.745 sen8 0.638
org1 0.787 org1 0.699
org2 0.864 Digital org2 0.770
org3 0.804 Transformation org3 0.728
Organizing
org6 0.814 Capability org6 0.770
org7 0.761 org7 0.700
org8 0.795 org8 0.733
res2 0.820 res2 0.751
res3 0.843 res3 0.738
res6 0.819 res6 0.749
Restructuring
res7 0.839 res7 0.734
res8 0.770 res8 0.622
res9 0.802 res9 0.720

Moreover, according to Hair et al. [36], by extracting the average variance of each
potential factor and comparing the square root of the average variance with the correlation
coefficient between the variables, if the square root of the average variance is higher than
the correlation coefficient, it has discriminant validity. We used SmartPLS 3 software to
analyze discriminant validity. Results of discriminant validity are shown in Table 5. The
square root of the average variance was higher than the correlation coefficient, so it is safe
to assume that discriminant validity is present.
 to analyze discriminant validity. Results of discriminant validity are shown in Table 5.
The square root of the average variance was higher than the correlation coefficient, so it is
safe to assume that discriminant validity is present.

Table 5. Discriminant Validity.

Sustainability 2022, 14, 7909 14 of 20
CUO TO SEN ORG RES OPP
CUO 0.842
TableTO 0.658Validity.0.840
5. Discriminant
SEN 0.667 0.659 0.808
CUO TO SEN ORG RES OPP
ORG 0.682 0.701 0.697 0.805
CUO
RES 0.842
0.604 0.606 0.622 0.729 0.816
TO 0.658 0.840
OPP
SEN
0.597
0.667
0.498
0.659
0.649
0.808
0.658 0.707 0.802
CUOORG
= Customer Orientation;
0.682 TO = Technology
0.701 Orientation;0.805
0.697 SEN = Sensing; ORG = Organizing;
RES =RES
Restructuring; OPP = Operational
0.604 0.606 Performance.
0.622 0.729 0.816
OPP 0.597 0.498 0.649 0.658 0.707 0.802
5.2.
CUOTest of the Structural
= Customer Orientation;Model
TO = Technology Orientation; SEN = Sensing; ORG = Organizing; RES = Restruc-
turing; OPP = Operational Performance.
To verify the research hypotheses of the structural model, path coefficients were an-
alyzed by using SmartPLS 3, and the path coefficients were estimated by using bootstrap
5.2. Test of the Structural Model
resampling method [36]. The results are shown in Table 6 and Figure 3. In addition, all
To verify
variance thefactors
inflation research hypotheses
(VIFs) were wellof below
the structural
5, which model,
showedpath
that coefficients were
multicollinearity
analyzed
is by using
not an issue SmartPLS
for this 3, and the path coefficients were estimated by using bootstrap
study [37].
resampling method [36]. The results are shown in Table 6 and Figure 3. In addition, all
variance
Table inflation factors
6. Hypothesis Testing(VIFs) were well below 5, which showed that multicollinearity is
Results.
not an issue for this study [37].
Hypothesis Path Coefficient p T Result
Table 6. Hypothesis Testing Results.
H1 (+) Customer Orientation→Digital Transformation Capability 0.437 0.000 *** 7.925 Supported
Hypothesis
H2 (+) Path Transformation CapabilityCoefficient
Technology Orientation→Digital 0.451 p 0.000 *** T 9.652 Result
Supported
H1 (+) Customer
Digital Orientation→Digital
Transformation Transformation Capability
Capability→Operational Perfor- 0.437 0.000 *** 7.925 Supported
H3
H2(+)
(+) Technology Orientation→Digital Transformation Capability 0.4510.757 0.000 0.000
*** ***9.652
15.692 Supported
Supported
mance
H3 (+) Digital Transformation Capability→Operational Performance 0.757 0.000 *** 15.692 Supported
*** p < 0.001.
*** p < 0.001.

Figure 3. The Results of Data Analysis in the Research Model. *** p < 0.001.
Figure 3. The Results of Data Analysis in the Research Model. *** p < 0.001.
To discern the relationship between customer orientation and the digital transfor-
mation capability, the results of path analysis showed that customer orientation (path
coefficient = 0.437, t value = 7.925) had a 99% statistical significance on the digital transfor-
mation capability. Therefore, customer orientation had a positive (+) relationship between
digital transformation capabilities; hence, H1 is supported.
To deduce the relationship between technology orientation and the digital transfor-
mation capability, the results of path analysis showed that technology orientation (path
coefficient = 0.451, t value = 9.652) had a 99% statistical significance on the digital transfor-
mation capability. Therefore, technology orientation had a positive (+) relationship with the
digital transformation capability, and H2 is supported. The explanatory power of customer
orientation and technology orientation on the digital transformation capability was 65.4%
(R2 = 0.654). This means the variable selection of customer orientation and technology
orientation and the relationship between strategic orientation and digital transformation
capability have very high explanatory power.
To understand the relationship between digital transformation capability and the
operational performance of the organization, the results of path analysis showed that the
digital transformation capability (path coefficient = 0.757, t value = 15.692) had a 99%
Sustainability 2022, 14, 7909 15 of 20

statistical significance on operational performance (R2 = 0.573). Therefore, the digital

transformation capability had a positive (+) relationship with operational performance,
and H3 is supported.

5.3. Test on Mediating Effects of the Digital Transformation Capability

In this study, there are two mediating effects (CUO→DTC→OPP, and TO→DTC→OPP).
Hair et al. [37] proved that the strength of the mediator can be examined by using total
effect and variance accounted for (VAF). Mediation analysis results are presented in Table 7.
The VAF of path 1 (CUO→DTC→OPP) is 43.02%, indicating that a digital transformation
capability has a partial mediation effect on the relationship between customer orientation
and operational performance. At the same time, the VAF of path 2 (TO→DTC→OPP) is
43.13%, indicating that the digital transformation capability has a partial mediation effect
on the relationship between technology orientation and operational performance.

Table 7. Mediation Effect of Digital Competence.

Mediation
Path Direct Effect Indirect Effect Total Effect VAF
Type Observed
Customer Orientation→Digital
Transformation 0.437 0.330 Partial
1 0.767 43.02%
Capability→Operational (7.925) (6.485) Mediation
Performance
Technology Orientation→Digital
Transformation 0.451 0.342 Partial
2 0.793 43.13%
Capability→Operational (9.652) (8.051) Mediation
Performance
VAF > 0.80 = full mediation, 0.20 ≤ VAF ≤ 0.80 = partial mediation, VAF < 0.20 = no mediation.

5.4. Additional Analysis

To find the specific relationship between digital transformation capability and oper-
ational performance, this study appended the analysis of the impact between first-order
factor variables in Figure 4. Digital transformation capability consists of three factors:
sensing, organizing, and restructuring. Therefore, the result of data analysis by converting
the variable digital transformation capability into three secondary factors is presented. In
the relationship between strategic orientation and digital transformation capability, the
relationship between customer orientation and sensing was the highest. The relationship
between restructuring and operational performance was highest between the three factors
of digital transformation capability and operational performance of the organization.
Summary of hypothesis testing results is presented in Table 8. The results of the path
analysis showed that among the influences of customer orientation and technology orienta-
tion on digital transformation capability (sensing, organizing, restructuring), technology ori-
entation had the second highest influence on sensing (path coefficient = 0.386, t value = 6.945),
after the influence by customer orientation on sensing (path coefficient = 0.415,
t value = 6.034). Therefore, the results show that both technology orientation and cus-
tomer orientation have a positive impact on the development of a digital transformation
capability. In particular, customer orientation and technology orientation had a greater
impact on sensing in a digital transformation capability compared to customer orienta-
tion. Second, the results showed that customer orientation and technology orientation
first promote sensing, and then organizing in the development of a digital transformation
capability, but the impact on restructuring is relatively insignificant.
Sustainability 2022, 14, x FOR PEER REVIEW 17 of 22
Sustainability 2022, 14, 7909 16 of 20

Figure 4. The Results of Second-order Data Analysis in the Research Model. *** p < 0.001, ** p < 0.01,
Figure
* p < 4. The
0.05, Results
n.s.-not of Second-order Data Analysis in the Research Model. *** p < 0.001, ** p < 0.01,
significant.
* p < 0.05, n.s.-not significant.
Table 8. Summary of Hypothesis Testing Results.
Summary of hypothesis testing results is presented in Table 8. The results of the path
Hypothesis Path Coefficient p T Result
analysis showed that among the influences of customer orientation and technology orien-
H1 (+) Customer Orientation→Digital Transformation Capability 0.437 *** 7.925 Supported
H1a (+)
tation on digital transformation capability (sensing,
Customer Orientation→Sensing 0.415
organizing,
***
restructuring),
6.034 Supported
technol-
H1b (+) ogy orientation
Customer Orientationhad the second highest influence
→Organizing 0.265 on sensing** (path coefficient
3.426 = 0.386, t
Supported
H1c (+) value =Orientation
Customer 6.945), after→Restructuring
the influence by customer orientation
0.152 * on sensing 2.004 (path coefficient =
Supported
H2 (+) Technology Orientation→Digital Transformation Capability
0.415, t value = 6.034). Therefore, the results0.451 show that *** 9.652
both technology Supported
orientation and
H2a (+) Technology Orientation→Sensing 0.386 *** 6.945 Supported
H2b (+) customer orientation
Technology Orientation→Organizing have a positive impact on
0.331 the development
*** of
5.039 a digital transfor-
Supported
H2c (+) mation Orientation
Technology capability. In particular, customer orientation
→Restructuring 0.130 and
n.s. technology1.769 orientation
Rejected had a
H3 (+) Digital Transformation
greater Capability
impact on →Operational
sensing inPerformance 0.757
a digital transformation ***
capability 15.692
compared Supported
to customer
H3a (+) Sensing→Operational Performance 0.278 *** 3.677 Supported
H3b (+)
orientation. Second, the results showed that 0.157
Organizing→Operational Performance
customer orientation
**
and technology
2.027 Supported
orien-
H3c (+) tation first promote sensing,
Restructuring→Operational Performance and then organizing0.420 in the development
*** of
4.888 a digital transfor-
Supported
mation capability,
*** p < 0.001, but
** p < 0.01, * p <the
0.05,impact
n.s. = noton restructuring is relatively insignificant.
significant.
At the same time, the path results of the digital transformation capability (sensing,
At therestructuring)
organizing, same time, theand pathoperational
results of the digital transformation
performance showed that capability
the effect(sensing,
of sensing
on organizing (path coefficient = 0.300, t value = 3.933) was greater than onsensing
organizing, restructuring) and operational performance showed that the effect of operational
on organizing (path coefficient = 0.300, t value = 3.933) was greater than on operational
performance (path coefficient = 0.278, t value = 3.677). In particular, the effect of organizing
performance (path coefficient = 0.278, t value = 3.677). In particular, the effect of organiz-
on restructuring (path coefficient = 0.536, t value = 7.601) was greater than it was on oper-
ing on restructuring (path coefficient = 0.536, t value = 7.601) was greater than it was on
ational performance
operational performance (path(path coefficient = 0.157,
coefficient t value
= 0.157, t value= =2.027).
2.027).That
Thatis,is, when building a
when build-
digital transformation capability, enterprises see a positive impact
ing a digital transformation capability, enterprises see a positive impact on operational on operational perfor-
mance from organizing
performance from organizing to restructuring
to restructuringbased on sensing.
based on sensing.Second,
Second, whenwhen comparing
compar- the
effects
ing theof effects
sensing, organizing,
of sensing, and restructuring
organizing, and restructuringon operational
on operational performance,
performance, thethe
results
results showed that restructuring (path coefficient = 0.420, t
showed that restructuring (path coefficient = 0.420, t value = 4.888) had a greater impactvalue = 4.888) had a greater
on impact on operational
operational performance; performance;
that is,that is, restructuring
restructuring is more
is more important
important among
among digitaltrans-
digital
transformation capabilities.
formation capabilities.
6. Discussion
6.1. Implications
This study has three main academic implications. First, it empirically proves that
a digital transformation capability to improve operational performance in a digital en-
vironment is an important variable affecting implementation, and customer orientation
Sustainability 2022, 14, 7909 17 of 20

and technology orientation impact development of the digital transformation capability.

Moreover, technology orientation (path = 0.451, t = 9.652) has a bit more of a positive
impact on a digital transformation capability than customer orientation (path = 0.437,
t = 7.925). Technology orientation is very important for enterprises wanting to develop a
digital transformation capability. This is similar to the results of Pan et al. [33] and Lin
and Kunnathur [34]. Pan et al. [33] examined the relationship between two important
types of strategic orientation, such as technology orientation and customer orientation, on
new product performance in the context of digital transformation. Moreover, as the new
generation of digital technologies today facilitate rapid development of the digital economy,
technology-oriented enterprises are more conducive to new product performance and are
important drivers of superior corporate performance. Lin and Kunnathur [34] examined
the relationship between a big data capability and strategic orientations (customer and
technology). The result of their research showed whether a big data capability (integration
of resources and strategy application) will emerge depending on insights into the business
value of a new technology (a demonstration of technology orientation). Zhou et al. [21] ex-
amined how strategic orientation can help build a dynamic capability in China’s emerging
economy. The survey showed that strategic orientations are important drivers of dynamic
capability. The effectiveness of strategic orientations depends on market dynamics. In
particular, when market demand becomes increasingly uncertain, the impact of customer
orientation is weak, whereas technology orientation has a stronger effect on an adaptive
capability. As competition intensifies, technology orientation can build capability more
effectively. Therefore, this study shows that strategic orientation plays an important role in
the development of a digital transformation capability.
Second, under the dynamic capability theory, this study constructs the digital trans-
formation capability framework considering the background of the digital economy era.
A sensing capability to find problems and opportunities in the digital environment, an
organizing capability to align an IT strategy with the business strategy and to integrate
internal and external resources, and a restructuring capability to innovate new products
and services and reconfigure organizational structures and resources, are important dimen-
sions of constructing a digital transformation capability. This is similar to the results of Lin
and Kunnathur [34]. They developed the big data capability concept to capture big data
understandings and practices in enterprises. They emphasized that the conceptualization of
big data as a dynamic capability helps to capture what is involved in big data practices and
helps to integrate all these elements in a theoretical manner. Moreover, this study tested the
mediation effect of a digital transformation capability on the relationship between strategic
orientation and operational performance. This is similar to the results of Pan et al. [33].
They confirmed the mediating role of a digital capability between strategic orientation
and new product performance. In addition, Day et al. [39] studied a supply management
capability with four aspects: supply management integration, coordinated sourcing, col-
laboration management, and performance assessment. The results of their study showed
that the supply management capability is formed of internally consistent routine bun-
dles, which are significantly related to operational performance. In this study, the digital
transformation capability had a 43.02% and a 43.13% partial mediation effect, respectively,
on the relationship between customer orientation and operational performance, and on
the relationship between technology orientation and operational performance. From the
perspective of dynamic capability theory, and due to the dramatic changes in the business
environment, this study indicates that the importance of a digital transformation capability
is increasing.
Third, this study tested how a digital transformation capability has a direct positive
impact on operational performance. The results of path analysis showed that a digital
transformation capability (path coefficient = 0.757, t value = 15.692) had a 99% statistical
significance on operational performance. This is also similar to the results of Pan et al. [33].
They assessed the impact of a digital capability on new product development performance
from an information systems perspective. Similarly, Li and Liu [40] showed that, in the
Sustainability 2022, 14, 7909 18 of 20

context of emerging economies similar to China, a dynamic capability is a firms’ potential to

systematically solve problems, formed by its propensity to sense opportunities and threats,
to make timely decisions, and to implement strategic decisions and changes efficiently to
ensure the right direction. In the digital environment, the enterprise’s original technology
resources alone are not enough to improve organizational performance. Therefore, this
study shows that developing a digital transformation capability is the key determinant in
adapting to the future requirements of the digital business environment.
At the same time, the practical implications of this study are as follows. First, digital
transformation managers of the enterprise need to upgrade the digital transformation
strategy suitable to the level of the business strategy. Pan et al. [33] claimed that digital-
oriented enterprises are better able to identify data and capabilities generated in the digital
environment and can organize them to make rational allocations. Similarly, research by
Zhou et al. [21] showed that under the fierce pressures of a rapidly changing environment
and owing to the characteristics of emerging economies, enterprises must develop a dy-
namic capability to survive the competition. The enterprise combines customer needs with
the enterprise’s goals and uses digital technology and digital management skills to gain
insight into consumer dynamics.
Second, digital transformation managers need to focus on building their own digital
transformation capability to create new value to attain sustainable competitiveness. The bet-
ter the enterprise’s digital transformation, the higher the operational performance [6,8,13].
Li and Liu [40] also found that a dynamic capability positively affects competitive ad-
vantage. Digitalization expands the range of internal or external resources available to
enterprises. A digital transformation capability will encourage enterprises to integrate
their business processes and routines through digital technology to achieve a sustainable
competitive advantage. In other words, from the perspective of the manager, the enterprise
can better adapt to the digital age and can create higher organizational performance by
sensing digital opportunities, organizing digital resources, and reconstructing the digital
capability. The enterprise continuously inserts digital resources into every link of the
industrial chain in various forms for new digital added value.

6.2. Limitations and Future Research

Although this study empirically verified the correlation between strategy orientation,
digital transformation capability, and operational performance, it has some limitations.
First, the sample was only 162 enterprises. Future research can try to expand the sample
or focus on a specific segment of an industry, such as electronics, automobiles, clothing,
household appliances or food industries. Second, this study examined the mediating
effect of a digital transformation capability. Future research can try to further explore the
moderation effect of the digital transformation capability, or try to add different moderator
variables, such as enterprise size and enterprise establishment age. Third, this study
conceptualized the digital transformation capability from the perspective of enterprise
processes, and then built the measurement items. Future research can try to measure the
digital transformation capability from other non-process perspectives, such as the industrial
digital chain and the digital platform.

7. Conclusions
This study provides empirical evidence for the positive impact of a digital trans-
formation capability on operational performance. The research model was built from a
resource-based view, core competency theory, dynamic capability theory and the digital
transformation literature. We believe that strategic orientation consists of customer ori-
entation and technology orientation, and that strategic orientation has a positive impact
on a digital transformation capability, improving competitiveness. Digital transformation
integrates sustainable development into the enterprise value chain and plays an irreplace-
able role in helping enterprises achieve safe, intelligent and sustainable operation. By
developing the digital transformation capabilities, enterprises can realize a quantifiable,
Sustainability 2022, 14, 7909 19 of 20

visible and implementable business model driven by data, build an internal coordination
mechanism, complete better market decisions, and promote the scientific and sustainable
development of enterprises.
Furthermore, we developed the construct of the digital transformation capability. A
digital transformation capability not only composes a multi-dimensional structure, but
also includes sensing, organizing, and restructuring constructs from the perspective of
process theory. The results show that a digital transformation capability has a positive
impact on operational performance. In addition, the digital transformation capability plays
a mediating role between strategic orientation and operational performance. From the
results of this study, most enterprises in the era of the 4th Industrial Revolution need to de-
velop and implement digital transformation capabilities. In order to eliminate uncertainty
and obtain sustainable competitiveness in a highly competitive environment, enterprises
try to sense environmental changes and establish digital strategies, organize internal and
external resources, and restructure them in connection with business processes within the
organization. In conclusion, the development and execution of a digital transformation ca-
pability can lead to higher organizational operational performance that secures sustainable
competitive advantage.

Author Contributions: Conceptualization, J.Y. and T.M.; methodology, J.Y.; software, J.Y.; validation,
J.Y. and T.M.; formal analysis, J.Y.; investigation, J.Y.; resources, J.Y. and J.W.; data curation, J.Y.;
writing—original draft preparation, J.Y.; writing—review and editing, J.Y., J.W. and T.M.; visualization,
J.Y.; supervision, J.Y.; project administration, T.M. and J.Y. All authors have read and agreed to the
published version of the manuscript.
Funding: This research was supported by the Fundamental Research Funds for the Provincial
Universities of Zhejiang (No. 2022YW66).
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Data sharing is not applicable to this article.
Conflicts of Interest: The authors declare they have no conflict of interest.

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