How Critical Factors Drive Business Performance Through Digital Transformation in Manufacturing Industries

In the era of digitalization and artificial intelligence, companies in the manufacturing sector face new opportunities to improve their business performance (BP). However, they also face significant challenges in achieving successful digital transformation (DT). In this context, this research proposes a model to understand and evaluate how critical factors impact DT, and how, in turn, DT influences business performance, based on the RBT and DCT and the VRIO model. Through structural equation modeling (SEM), evidence is provided on the association between digital transformation and business performance. The findings from the survey applied to 175 formal manufacturing companies show that critical factors impact DT; conversely, their direct effect on BP is less consistent, while DT influences BP. The study's evidence demonstrates that the adoption and implementation of DT drives greater BP. Furthermore, this research contributes to the literature on DT and BP through critical factors and also reinforces the conceptualization and identification of DT success factors. Finally, the results contribute to the current debate and facilitate both business leaders and government authorities in formulating initiatives aimed at developing DT, as a roadmap to increase competitiveness and BP.