How External Institutional Forces Shape Digital Transformation: Uncovering the Mediated Pathways toward Performance Improvement

Abstract

Against the backdrop of rapid digital economic development and profound institutional environment changes, enterprise digital transformation has emerged as a critical strategic issue for enhancing competitiveness. Based on institutional theory, this study systematically examines the impacts of coercive, normative, and mimetic pressures on digital transformation and tests the mediating role of digital transformation between institutional pressures and firm performance. Utilizing survey data from 286 Chinese enterprises and employing PLS-SEM for empirical analysis, the research reveals that institutional pressures significantly promote digital transformation, with mimetic pressure exerting the strongest influence, followed by normative and coercive pressures. Digital transformation significantly enhances firm performance and plays a pivotal mediating role in the relationship between institutional pressures and performance, indicating that external institutional environments indirectly improve performance levels by driving firms to restructure processes and adopt technologies. This study extends the explanatory power of institutional theory against the backdrop of digital transformation and elucidates the differential effects of institutional pressures. The findings provide crucial insights for enterprises in responding to institutional changes, formulating digital strategies, and building sustainable competitive advantages. The results provide practical guidance for achieving the SDG9 - process Innovation, Digital Access and Innovation Capability.