Guest editorial: Navigating the digital transformation maze: an editorial on strategy, execution and impact for firms
Year: 2025
Type: editorial
Abstract: Organizations worldwide are heavily investing in advanced digital technologies to reinvent their operations and value propositions. Global spending on digital transformation initiatives reached approximately $1.85 trillion (a 16% year-on-year increase) in 2023 (Revankar, 2024), with this figure projected to grow to $3.9 trillion by 2027 (Shahmiri, 2025). These investments reflect a widespread belief that emerging technologies (e.g. artificial intelligence [AI], Internet of Things [IoT], big data analytics [BDA] and cloud platforms) can unlock new levels of efficiency, innovation and customer value. Digital transformation entails a firm leveraging digital technologies and other business assets to revamp its operational model, processes and performance in the hope of gaining sustainable competitive advantages (Benbya et al., 2020). This undertaking infuses digital technology into all organizational areas, fundamentally altering how a firm functions.Effective digital transformation comes with challenges despite its aggressive investment and clear potential. According to a recent report, only about one-third of digital transformation initiatives fully accomplish their goals (Revankar, 2024). Common barriers include staff resistance to change, cultural inertia, legacy systems and difficulties managing new technologies’ complexity. Today’s business environment is also evolving rapidly: the COVID-19 pandemic accelerated remote work and online services. Meanwhile, customers’ expectations around digital experiences are rising, and competition among platform-based and data-driven innovators is fierce (Verhoef et al., 2021). Such high stakes underscore the need for scholarly insights into how firms can successfully navigate digital transformation. Pertinent questions include the following: What organizational capabilities and governance mechanisms support digital transformation? How do emerging technologies such as AI and IoT affect firms’ performance and strategies? How can digital transformation align with sustainability goals and stakeholders’ interests? How should managers and policymakers respond to digital transformation’s risks and opportunities?This special issue of Internet Research, centered on “Digital Transformation of Firms”, was conceived to ponder these questions. The call for papers emphasized embracing retrospective and forward-looking positions on how firms’ digital transformation has developed and may unfold in the future – for employees, consumers and the business ecosystem as a whole. We received 109 manuscript submissions from authors in 31 countries and regions across six continents. Ten papers were ultimately accepted after being rigorously evaluated for theoretical contributions, methodological soundness and fit with this special issue’s theme. These articles span multiple contexts: large public companies in China, small enterprises in Europe and industries such as manufacturing, healthcare and e-commerce. The authors employed diverse methods (e.g. quantitative analyses of archival data, survey research, mixed methods and case studies), reflecting the multifaceted nature of digital transformation research. These studies collectively examine the phenomenon through lenses ranging from corporate governance and risk mitigation to platform ecosystems, sustainable manufacturing and societal technology adoption. They provide fresh evidence and conceptual syntheses on key themes such as digital intelligence transformation, digital governance, AI/IoT adoption, digital sustainability, platform-enabled ecosystems and organizational change management.In this guest editorial, we first provide an overview of research on firms’ digital transformation. Next, we summarize the insights from the 10 papers, highlighting their shared contributions, methodological variety and theoretical implications. We then offer practical guidance for managers and policymakers based on these articles. Finally, we propose several promising research directions at the intersection of digital technology and firm transformation. Our goal here is to present a state-of-the-art understanding of firms’ digital transformation and inspire further scholarly inquiry and actionable guidance in this critical domain.Digital transformation has emerged as a strategic pillar for organizations in varied sectors. It essentially modifies business models, operational processes and the customer experience via digital technologies (Verhoef et al., 2021; Vial, 2021). Fruitful transformation requires that a firm’s technology implementation, strategic vision and organizational culture be well aligned; committed leadership and relevant capabilities are especially critical (Majchrzak et al., 2016; Sebastian et al., 2020). Technological enablers of digital transformation include mobile technologies, analytics, cloud computing and social media (Nadkarni and Prügl, 2021). Innovations such as IoT, AI and blockchain are similarly influential (Khalid, 2024).The COVID-19 pandemic fast-tracked digital transformation initiatives across sectors. Fletcher and Griffiths (2020) documented how this crisis compressed transformation timelines from years to months, particularly for remote work technologies, e-commerce and digital service delivery. It is imperative to grasp the linkages between digital transformation efforts and firm performance. Dimensions to consider include financial outcomes (e.g. revenue growth, profitability, cost reduction), operational efficiency, innovation performance, and, increasingly, sustainability and resilience (e.g. Drechsler et al., 2020; Li, 2022). It is also necessary to identify factors that mediate or moderate these relationships. This context can shed light on why some firms succeed while others struggle.Despite its importance, digital transformation faces persistent challenges. Research has revealed implementation barriers such as organizational inertia, legacy systems and skills gaps (Müller et al., 2024). Svahn et al. (2017) pointed out four competing concerns that organizations must balance during digital transformation: capability (existing vs. requisite), focus (product vs. process), collaboration (internal vs. external) and governance (control vs. flexibility). Besides technological implementation, firms need to overcome barriers such as staff resistance, cultural inertia and strategic misalignment – all of which call for structural changes, capability building and cultural transformation (Kane et al., 2019).Digital transformation is a complex, sociotechnical process that touches on numerous aspects of organizations and their environments. The papers in this special issue stress different facets of this phenomenon. Nonetheless, meaningful thematic connections exist. We have hence grouped scholars’ contributions into five clusters: (1) Mapping the Intellectual Landscape of Digital Transformation Management; (2) Digital Intelligence Transformation; (3) Digital Governance and Corporate Transparency; (4) Platform Ecosystems and Data-enabled Trust; and (5) Digital Transformation for Sustainability and Inclusion. We highlight below how the associated papers complement one another and advance theory.In summary, this special issue’s theoretical framing spans several levels of analysis, including individual (e.g. user adoption, employee adaptation), organizational (e.g. capabilities, governance, strategy) and interorganizational (e.g. ecosystems, supply networks) points of view. It also brings together diverse theoretical perspectives, including dynamic capabilities, signaling theory, trust and cooperation, sustainability-oriented innovation and change management. This diversity reflects the interdisciplinary nature of digital transformation research. We now describe practical implications of this special issue, illustrating how each study provides valuable guidance for practitioners.The studies in this special issue yield ample practical insights. Their recommendations are especially relevant to the business leaders and policymakers steering today’s digital transformation of firms and economies. As with the authors’ contributions, these implications pertain to several domains: (1) strengthening digital governance for transparency and integrity; (2) fine-tuning the pace and scope of transformation; (3) holistically leveraging complementary technologies; (4) empowering stakeholders and fostering trust; (5) aligning digital initiatives with sustainability goals and (6) adopting a user-centric, inclusive design mindset.Strengthening digital governance for transparency and integrity. Managers should leverage digital tools to improve internal controls, compliance and reporting precision. For example, integrated data systems and analytics can reduce information asymmetries and flag irregularities; disclosure quality thus rises while fraud declines (Shang et al., 2025). Boards and CEOs ought to view investments in digital infrastructure not as mere IT upgrades but as governance interventions that preserve shareholder value. Policymakers and regulators, particularly in emerging markets, can persuade firms to digitalize by highlighting fraud-reduction and transparency benefits. They should also revise their regulatory frameworks to accommodate and promote digital reporting (e.g. data-rich disclosures). Offering guidelines on data governance and privacy can maximize the positive governance impact of digital transformation.Fine-tuning the pace and scope of transformation. Executives are encouraged to roll out digital initiatives carefully. Rushing headlong into concurrent projects can overwhelm an organization. Instead, companies are advised to implement initiatives in stages; early wins will build confidence and keep processes on track. A consistent pace that produces consistent results (while remaining agile) helps maintain enthusiasm. Each stage needs a clear yet reasonable focus (e.g. with a narrow scope) for meaningful change to stick (Zhao et al., 2025). CEOs may prioritize core processes first and then gradually extend into peripheral areas instead of overhauling all systems at once. Establishing a digital transformation office or a task force that monitors the rhythm of change can help ensure that firms’ early lessons inform subsequent stages. As for policy, government programs that support digital transformation (e.g. grants or digitalization roadmaps for SMEs) should emphasize training and change management. That way, firms can become adept at managing the transformation process itself, not simply at acquiring technology.Holistically leveraging complementary technologies. The research in this special issue indicates that implementing AI in isolation may not yield full benefits unless a firm also has the data (e.g. via IoT sensors or data analytics platforms) to feed and refine AI-based systems (Ardito et al., 2025). Managers should therefore identify complementary innovations that can be bundled to solve end-to-end business problems. In a retail SME, using an AI tool for demand forecasting will be much more effective if the firm integrates IoT devices or software to track real-time inventory and capture big data on sales. Policymakers can assist by devising integrated support programs (e.g. a scheme that helps firms deploy a suite of Industry 4.0 technologies rather than a single technology). Furthermore, awareness campaigns and case studies showing how technologies jointly promote growth could encourage SMEs to think outside one-off technology investments.Empowering stakeholders and fostering trust. For platform businesses and firms in extended supply chains, stakeholder relationships are as critical as technology implementation. Managers of digital platforms should invest in features that afford their stakeholders rich data, such as transparent performance metrics, analytics tools and open communication channels (Sun and Qu, 2025). By co-creating value in this way, platforms can increase complementors’ trust and loyalty to build a more vibrant ecosystem. Platform managers may wish to supply sellers with demand trend data or advertising analytics on an e-commerce site; drivers for a ride-sharing company could be given insights into customer ratings and route optimizations (Gawer and Cusumano, 2014). In supply chain relationships, sharing information such as forecasts, inventory levels and production plans with key suppliers or customers can ease tensions and forge partnerships focused on mutual efficiency (Zhang et al., 2016). However, managers should craft data governance agreements to ensure that trust will not be undermined by misuse of shared data. Policymakers could enact industry data-sharing standards to heighten firm trust.Aligning digital initiatives with sustainability goals. Corporate leaders should proactively link their digital transformation initiatives with environmental and social objectives. Such efforts could involve choosing technologies that reduce energy use, wielding data analytics to identify waste-cutting opportunities in manufacturing, or applying AI to adjust logistics routes for lower carbon emissions (Gregori and Holzmann, 2020). Case study evidence suggests that firms should home in on digital sustainability initiatives, like tracking their carbon footprint in real time and training staff on sustainable practices enabled by digital tools (Li et al., 2025). Managers in traditional industries might consider forming cross-functional teams that include IT, operations and sustainability officers to steer projects toward dual goals (i.e. efficiency and eco-friendliness). Policymakers can support this aim by offering green digital transformation grants or drafting digital criteria for environmental regulation compliance, such as requiring the use of digital monitoring for emissions reporting. They should also strive to standardize metrics for “digital sustainability performance,” as the lack of sustainability measures in digital systems has been cited as a challenge (Rai et al., 2006). Firms could then have clearer targets and incentives to pursue sustainable digitalization.Adopting a user-centric, inclusive design mindset. Managers deploying new systems must account for the user experience as well as necessary training (i.e. for staff, customers and other stakeholders). Leung et al.’s (2025) mobile-health study demonstrated how understanding the end user’s tasks and pain points can inform design choices that increase adoption. Likewise, when implementing an internal software platform or a customer-facing application, companies should actively engage with target users to ensure that the technology truly supports these groups’ work or lifestyles. This level of attention is especially important for users who may be less tech-savvy or more resistant to change (e.g. older employees, clients unfamiliar with technology). Providing robust support, simplifying interfaces and conveying a technology’s benefits in digestible terms can alleviate resistance. Corporate training programs need to accentuate both how and why to adopt innovation, stressing that new tools will expedite daily tasks. For policymakers in healthcare, finance or government services, the main implication is to promote digital literacy and inclusion programs. Running workshops to teach seniors how to use health applications or providing subsidies for low-income individuals to access digital services, can ensure no one is left behind as industries digitalize. Regulators should also bear usability and accessibility standards in mind when creating digital service regulations.In essence, the above advice can be summarized thusly: plan well, integrate mindfully, share wisely, aim for sustainability and design for users. 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Source: Internet Research
Authors: Yonggui Wang, Si Shi, Xiang (Robert) Li, Jie Meng
Language: English
Subfield: Management of Technology and Innovation
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7104539313