From Technology Adoption to Strategic Coherence: The Role of Digitalization in Industrial Growth in Developing Countries

Muhammad Aurang Zaib Ghauri, Minza Mudassar and Marc Audi

MPRA Paper from University Library of Munich, Germany

Abstract: Digitalization has emerged as a transformative force in modern industrial development, reshaping operational models, innovation practices, and competitive structures. This study investigates the impact of digitalization on the financial performance of industrial growth. Drawing on the resource-based view, dynamic capabilities theory, and transaction cost economics, the study develops a comprehensive framework linking digital strategy alignment, digital capabilities, technology adoption, innovation culture, and external support to industrial financial performance. Using panel data regression analysis on industrial firms, the results reveal that digital strategy alignment consistently exerts the strongest positive influence across measures of return on equity, return on assets, and asset turnover. Digital technology adoption and innovation culture show mixed effects, enhancing equity returns and operational efficiency while imposing short-term costs on asset-based performance. Digital capabilities display both transitional inefficiencies and long-term benefits, while external support emerges as statistically insignificant. These findings emphasize that the financial gains of digitalization are contingent on strategic coherence, organizational readiness, and cultural transformation rather than on technology adoption alone. The study contributes to both theory and practice by highlighting that firms must view digitalization as a holistic transformation process to overcome short-term paradoxes and achieve sustainable growth, while policymakers should focus on creating supportive ecosystems that strengthen firm-level capacities.

Keywords: Digitalization; Industrial Growth; Financial Performance; Innovation Culture (search for similar items in EconPapers)
JEL-codes: O1 O3 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cse, nep-pay and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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