Enhancing organizational performance through digital transformation strategies: An empirical study of Saudi startups

Fawaz Mohammed A. Alshihre ()

International Journal of Innovative Research and Scientific Studies, 2025, vol. 8, issue 5, 1461-1477

Abstract: This study investigates how digital transformation strategies influence organizational performance in startups operating in Saudi Arabia, aiming to fill a notable research gap within emerging market contexts. The research adopts a mixed-methods design, combining quantitative data from surveys of 331 startup professionals across multiple sectors with qualitative insights from semi-structured interviews. Structural Equation Modeling (SEM) was employed to test hypothesized relationships derived from the DeLone and McLean IS Success Model, Resource-Based View, and Dynamic Capabilities Theory. The results indicate a strong positive relationship (R² = 0.67) between digital transformation strategies and organizational performance, particularly through improvements in customer experience (β = 0.49), operational efficiency (β = 0.42), and innovation capacity (β = 0.31). Effective digital leadership and higher digital readiness substantially enhanced these outcomes. Larger, technology-focused startups outperformed their smaller, service-oriented counterparts, which faced challenges including limited technical expertise, system integration issues, and financial constraints. The findings underscore that digital transformation is not merely a technological initiative but a holistic strategic endeavor that requires alignment across leadership, culture, and infrastructure to drive meaningful performance gains. The study offers a diagnostic framework and actionable recommendations for entrepreneurs and policymakers to craft context-sensitive digital strategies that bridge the execution gap, thereby advancing Saudi Arabia’s Vision 2030 objectives and fostering resilient, innovation-driven startup ecosystems.

Keywords: Digital readiness; Digital transformation; Innovation; Organizational performance; Resource-based view (RBV); Saudi Arabia; Startups. (search for similar items in EconPapers)
Date: 2025
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