What Aspects Explain the Relationship between Digital Transformation and Financial Performance of Firms?

Abstract

The emergence of digital transformation and digitization has significantly influenced business growth, particularly in response to the COVID-19 pandemic. This study conducts a systematic bibliometric analysis to investigate the relationship between digital transformation and firms’ financial performance. The primary objectives are identifying research gaps and proposing future research directions and policy implications. Specifically, we examine the evolution of digital transformation in companies and its impact on their financial performance, while highlighting the major trends in digital transformation research. Employing text mining techniques, network analysis, and a systematic literature review (SLR), we evaluated 153 articles published between 2014 and 2023. Our analysis delves into academic publication journals, geographical locations, authors’, and academic institutions’ contributions, assessing their influence on the existing literature’s development. Our findings indicate a current absence of a consistent theoretical framework in the scientific literature pertaining to the study of digital transformation and its effects on firms’ financial performance. Furthermore, we have pinpointed specific areas that warrant further investigation, including SMEs, non-listed companies, and intermediary or mediating variables. Finally, this systematic bibliometric analysis contributes to the ongoing discourse on digital transformation and its influence on firms’ financial performance, summarizing the current scientific research and proposing new research directions for future studies, while also offering valuable insights for researchers, policymakers, and practitioners.

1. Introduction

Industry 4.0 can be defined as “a framework built upon the integration of vertical and horizontal value chains, the digitalization of management and projects, and the introduction of innovative business models” (Rejikumar et al. 2019).

The fourth industrial revolution has gained significant momentum recently, primarily propelled by the process of digital transformation (Alnafrah et al. 2020; Teng et al. 2022). Within the context of this revolution, the extensive utilization of digital technologies to reshape the methods and processes of value creation in business has given rise to the concept of digital transformation. This term has now become a prominent buzzword in the business world, with companies spanning various industries adopting it as a strategy to retain competitiveness in a swiftly evolving and dynamic market.

Industry 4.0 has provided a strong framework for the manufacturing sector to embrace digital operations and enhance the intelligence of the entire supply chain. As a result, digital and intelligent manufacturing has emerged as a significant global trend within the Industry 4.0 paradigm. The impetus of Industry 4.0 has propelled advancements in digital technologies including big data, artificial intelligence, cloud computing, and the Internet of Things (IoT), thereby orchestrating a transformative impact on the global economy and assuming a preeminent position in the digital realm. These digital technologies have a substantial impact on a company’s processes, allocation of resources, network connectivity, and overall performance (Urbach et al. 2017). In response to government policies and market dynamics, many companies are proactively embracing digital technologies, viewing digital transformation as a key growth strategy. Nonetheless, research reports indicate that inadequacies in information technology, digital strategies (Li et al. 2018), and delays in business repositioning may result in failures and impede value creation (Nylén and Holmström 2015). Hence, not all companies can effectively achieve digital transformation. Therefore, enterprises should develop digital business strategies that provide guidance on managing digital transformation within their organizations (Ukko et al. 2019).

Digital transformation is a high-level transformation based on digitization and digitalization that goes beyond the company’s core business and aims to create a new business model (Teng et al. 2022). According to the previous literature, digitalization is defined mainly as deploying and using specific information and communication technologies (ICTs) (Yu et al. 2021). However, digitalization is not just about using ICTs but should also include the modification of business processes and dynamics (Baraldi and Nadin 2006). Specifically, digital transformation can be defined as integrating new technologies to improve existing products, create new business models (Vial 2019), and facilitate the creation of new software and systems that improve company performance and increase its competitiveness (Chatterjee et al. 2022; Hulla et al. 2021; Ragazou et al. 2022).

During the last decade, the study of transformations brought by digital technologies has been increasingly attracting the attention of business research scholars (Ribeiro-Navarrete et al. 2021). In this context of radical changes, the structures and dynamics of company operations are undergoing drastic transformations towards building new business paradigms where digital technology plays a central role in businesses’ development (Zeng et al. 2022) and their value creation (Yu et al. 2021).

Digital transformation affects both digital capabilities and technology, and it is also a dynamic process that can create value for processes, business models, and consumer experiences (Morakanyane et al. 2017). At the same time, the application of these technologies has led to the current digital era, and the creation and development of these new digital technologies are providing value to the company (Parida et al. 2019; Ribeiro-Navarrete et al. 2021).

In the literature, a specific stream of studies has been dedicated to investigating the relationship between digital transformation and firms’ financial performance. Some studies suggest that digital transformation has a vital role and potential to improve firms’ financial performance through efficiency enhancement, increased productivity, and decision-making improvement (Guo and Xu 2021; Vitari and Raguseo 2016). On the other hand, some studies reveal that digital transformation does not have a significant impact on the firms’ financial performance (AlMulhim 2021), where digital transformation may bring various risks and challenges that may negatively affect firms’ financial performance. Therefore, it can be said that previous studies provide mixed evidence of this relationship, signifying the ongoing debate on how digital transformation may affect firms’ financial performance in different contexts and at different scales.

Accordingly, we seek to address two primary research questions. First, what are the prevailing research trends concerning the impact of digital transformation on firms’ financial performance? Second, what are the existing research gaps and potential avenues for future investigation?

Regarding the literature review studies, previous studies have predominantly focused on content analysis of digital transformation in firms in its relationship with the financial performance (Guo and Xu 2021; Jardak and Ben Hamad 2022; Zeng et al. 2022). However, to the best of our knowledge, no prior study has offered a comprehensive examination of the intricate relationship between digital transformation and financial performance from a microeconomic perspective. Consequently, our study aims to bridge this research gap by presenting a systematic bibliometric review of the extant body of literature. Through this approach, we aim to provide a clear understanding of the varied findings reported in prior research concerning the interplay between digital transformation and the financial performance of companies, offering a multifaceted analysis of these relationships.

To achieve our research objectives and conduct the systematic bibliometric analysis of the previous studies, state-of-the-art tools such as text mining and network analysis are utilised in this study. The results provided in this study provide stakeholders such as researchers and policymakers with deep insights into the shortcomings of current research in terms of the lack of a theoretical framework that forms the basis for practical studies on the relationship between digital transformation and financial performance of companies.

Our study contributes to the existing body of literature in several ways. Firstly, it provides a systematic and in-depth analysis of the factors that affect the relationship between digital transformation and financial performance of firms. Secondly, this study highlights the obstacles, challenges, and future research prospects of digital transformation and financial performance of firms.

The remainder of this paper is structured as follows: In Section 2, we conduct a comprehensive review of pertinent literature concerning digital transformation and its impact on financial performance. Section 3 is dedicated to presenting the data sources and the methodology employed in this study. In Section 4, we present the findings derived from our bibliometric analysis. Section 5 offers an in-depth discussion of these results. Finally, in Section 6, we draw our conclusions.

2. Literature Review

As the digital era is developing rapidly, along with the need for companies to attain and sustain competitive advantages, digital transformation has gradually emerged as a critical strategy. As a result, an increasing number of scholars are exploring the financial benefits of digital transformation (Urbinati et al. 2018). Most of previous studies have demonstrated that digital transformation impacts firms’ financial performance (Mubarak et al. 2019). However, there is mixed evidence on how digitalization affects firms’ performance. Modern digital technologies differ significantly from those previously used, and their development involves redefining goals, processes, capabilities, organizational structures, and cultures (Gurbaxani and Dunkle 2019; Warner and Wäger 2019). This implies that digital transformation costs are no longer confined to investments in digital technology alone but also include integrating and management costs associated with business and organizational transformation (Hanelt et al. 2020). Consequently, the final benefits and costs to the business are significantly different from those incurred with traditional information technology. Therefore, the impact of digital transformation on firms’ financial performance is still uncertain, and companies are seeking greater profits through digitalization (Guo and Xu 2021). Clear conclusions regarding the relationship between digital transformation and firms’ financial performance are yet to be drawn (Fernández-Rovira et al. 2021). Therefore, it can be said that the impact of digital transformation on firms’ financial performance remains a topic of debate, and existing empirical studies do not provide sufficient evidence on this relationship and its potential moderators (Kohtamäki et al. 2020).

That being said, one of the core areas of interest for existing scholarly research derived from the “digital paradox”—the possibility that a firm’s digital efforts do not yield equal returns—is whether digital transformation can contribute to firms’ financial returns or not (Gebauer et al. 2020). Two different views exist on this relationship. First, most scholars suggest that digital transformation can positively impact firms’ financial performance by promoting innovative behavior or creating new business opportunities (Heirman and Clarysse 2007). Second, a few scholars are hesitant about the impact of digital transformation, arguing that the relationship between digital transformation and firms’ financial performance may be complex (Kohtamäki et al. 2019), and proposing the idea of a digital paradox (Gebauer et al. 2020). While the benefits of digital technology for businesses are evident, firms need to balance beneficial innovations and damaging disruptions to avoid falling into digital paradox and potentially experiencing negative returns (Kohtamäki et al. 2019).

Furthermore, it is crucial for firms to consider the substantial risks related to adopting new technology while reaping the benefits of digital transformation. This transformation results in changes across all processes and management, making it difficult for firms to adapt to such significant changes that may lead to a decline in financial performance. The incorporation of new technologies comes with additional costs, thereby reducing firms’ financial gains from their investments in digital transformation (Dutta et al. 2014). As a result, it is essential to note that digital transformation is not a technology but a strategy.

In the same context, (Teng et al. 2022) suggest that emphasis on investing in digital technology, employees’ digital skills, and digital transformation are considered the three main factors that contribute to digital transformation for firms, helping to improve performance and maintain sustainable growth. Similarly, another study (Jeong et al. 2022) found a relationship between digital capabilities and the firm’s financial performance under the moderating effect of subsidiary autonomy.

To address the concerns about digital transformation’s impact on firms’ performance, various perspectives will be explored by analyzing previous studies on this topic. These perspectives will encompass the following research inquiries: (RQ1) citation and publication trends; (RQ2) most published journals; (RQ3) frequently used keywords; (RQ4) contributions of authors and research institutions; (RQ5) research collaborations; (RQ6) co-occurrence networks; (RQ7) research themes and their evolution; and (RQ8) developments and obstacles in the scientific literature and future research directions.

3. Materials and Methods

3.1. Data Collection

In this study, two-tier bibliometric analysis is applied while selected publications were retrieved from the Scopus database in September 2023. The articles were selected based on the following criteria:

• Articles written in the English language.
• Excluding Energy, Decision Sciences, Psychology, Mathematics, Medicine, Biochemistry, Genetics, and Molecular Biology subject areas.
• Exclusion of references that are inaccessible or have broken links, as well as journals that are no longer available online.
• Articles that have been retracted or have updates, such as corrections or errata, are not considered.
• Excluding conference papers, book chapters, conference reviews, books, erratum, and reviews.

After choosing the criteria, we conducted a search query to find the most relevant results. Based on the use of Boolean operators, the final selected formula queries were as follows (“digital transformation” or “digitalization” or “emerging technologies” or “digitization” or “digital economy” or “digital technology”) and (“financial performance” or “financial effect”). Lastly, we refined the article selection according to the PRISMA guidelines. As a result, only 153 papers were retrieved for a period spanning from 2014 to 2023. In addition, to carry out more profound bibliometric analysis and visualize the text mining results, we used Biblioshiny R package introduced by (Aria and Cuccurullo 2017).

3.2. Data Analysis

To scrutinize the scientific articles available in the overmentioned databases, the Bibliometric Analysis approach is utilized. To do so, the four-step bibliometric procedure outlined by Bashir (2022a, 2022b) was followed. As shown in Figure 1, these steps involve defining the purpose and scope of the bibliometric study, selecting appropriate techniques for the analysis, collecting relevant data, and conducting bibliometric analysis and reporting the results of the study. Our study emphasizes analyzing, visualizing, and interpreting the results.

Our method consists of five main analyses. First, a trend topic analysis is carried out. Trend topic analysis involves creating a visual representation where each topic is associated with a year, which provides a concise overview of the frequency of that topic over time. The reference year for each topic is established by determining the median of the frequency distribution within the given period. Second, field analysis is conducted to explore the relationships between the topics studied, publication journals, and related countries with the highest output of the relevant studies. Third, core words’ structure analysis is done to identify the most influential articles in the studied research field. Additionally, it can detect research hotspots, trends, and gaps. Fourth, we conduct a collaboration network analysis to uncover the interconnection between relevant research fields. This analysis is based on the co-occurrence of interrelated research fields. Finally, a thematic map analysis and evaluation is carried out to identify current and future research themes and trends of the studied topic. According to this analysis, the primary research themes are determined by the density and centrality of the most significant research content. Then, related and similar themes are clustered and classified to define different research avenues.

4. Bibliometric Analysis and Results

As mentioned earlier, the Biblioshiny R package is used as the primary analysis tool for 153 original articles from academic journals published from 2014–2023. Descriptive statistics on the studies examining the relationship between digital transformation and firms’ financial performance with a focus on research collaboration are presented in

Table 1. Descriptive Statistics.

Main Information About Data	Results
Timespan	2014:2023
Sources (Journals, Books, etc)	114
Documents	153
Document Average Age	1.52
Average citations per doc	18.78
References	9593
DOCUMENT CONTENTS
Keywords Plus (ID)	455
Author’s Keywords (DE)	559
AUTHORS
Authors	485
Authors of single-authored docs	9
AUTHORS COLLABORATION
Single-authored docs	10
Number of authors for each publication	0.315
Co-Authors per Doc	3.32
International co-authorships %	25.49
DOCUMENT TYPES
Article	153

. According to the results in Table 1, the number of authors per publication is 0.315, indicating that research articles on this topic are typically authored by three or more authors.

Then, Figure 2 depicts the yearly publication trends of research on digital transformation and firms’ financial performance. The results demonstrate a substantial rise since 2020, when the global economy encountered a complicated situation caused by the COVID-19 pandemic (Jiménez-Zarco et al. 2021), resulting in a shift in daily operations of markets worldwide (Hossain et al. 2022). This pandemic not only affected people’s wealth but also had a significant impact on the financial performance of the global economy (Doran et al. 2022), leading to a surge in the number of related studies.

To help in defining the future scope of the studied topic, Figure 3 utilizes graphical analysis to investigate the relationships between the three elements of studies related to digital transformation and firms’ financial performance These elements include published journals, keywords, and countries with the highest output of relevant studies. The research focuses on Industry 4.0, innovation, sustainable development, servitization, SMEs, China, sustainability, and internal control. as seen in the figure, along with the keywords of financial performance, digitalization, and digital transformation. The countries with the highest output of relevant studies are China, the United Kingdom, Indonesia, and Italy.

To understand the relationship between the topics depicted in Figure 3, an analysis of the context leading to this increase in research, related to the relationship between digital transformation and its impact on the financial performance of companies, is necessary.

Previous studies show that in recent years, companies have accelerated their digital transformation process to remain competitive in the digital environment (Guo and Xu 2021). Due to the COVID-19 pandemic, digitalization and digital technologies have become more widespread and are recognized as a crucial factor in promoting sustainable transformation towards sustainable development (Del Río Castro et al. 2021).

Additionally, previous studies in the existing literature show that green technology and innovation can enhance financial performance by reducing resource consumption, increasing productivity, and lowering production costs (Xie et al. 2019). Firms’ sustainability can also influence productivity and process efficiency, promote the development of sustainable products and services, and improve financial performance (Rauter et al. 2017). Recent studies indicate that digital technologies, particularly Industry 4.0-related technologies, are critical to digital transformation (Loonam et al. 2018). However, financial constraints are a significant obstacle to companies’ implementation of Industry 4.0 and digital transformation (Piccarozzi et al. 2018). Therefore, Industry 4.0 digital technologies have become increasingly important for companies seeking to improve their financial performance through digital transformation (Eslami et al. 2021).

4.1. Influential Aspects of Digital Transformation Literature

4.1.1. Most Influential Research Journals

Next, we applied Bradford’s law and source impact to measure the impact of journals on the development of the research theory. The top research journals with the highest number of publications and citations in their respective research fields from 2014–2023 are presented in

Table 2. Top 10 journals according to source impact.

Academic Journals	H_Index	TC	NP	PY_Start
Sustainability (Switzerland)	6	501	21	2018
Technological Forecasting and Social Change	5	477	5	2020
Journal of Business Research	4	594	4	2019
Technology Analysis and Strategy Management	3	48	3	2020
Cogent Business and Management	2	6	2	2021
International Journal of Physical Distribution and Logistics Management	2	10	2	2023
International Journal of Production Research	2	38	3	2021
Journal of Cleaner Production	2	190	2	2019
Journal of Media Business Studies	2	32	2	2017
Strategy and Leadership	2	6	2	2018

H-index (h): h number of publications cited at least h times (i.e., measure of influence). Citation-related metrics. Total citations (TC): Total citations of research constituent. NP: Number of publications. PY_start: publication years start.

. Additionally,

Table 3. Journal Rankings (Bradford’s law).

Academic Journals	Rank	Freq	cumFreq	Zone
Sustainability (Switzerland)	1	21	21	Zone 1
Technological Forecasting and Social Change	2	5	26	Zone 1
Journal of Business Research	3	4	30	Zone 1
International Journal of Production Research	4	3	33	Zone 1
Technology Analysis and Strategy Management	5	3	36	Zone 1
Cogent Business and Management	6	2	38	Zone 1
Electronics (Switzerland)	7	2	40	Zone 1
International Journal of Physical Distribution and Logistics Management	8	2	42	Zone 1
Journal of Cleaner Production	9	2	44	Zone 1
Journal of Media Business Studies	10	2	46	Zone 1

provides detailed insights on the categorization of journals into Zone 1, Zone 2, and Zone 3 based on Bradford’s law, with Zone 1 comprising the most influential journals with the highest research impact.

The results presented in Table 2 and Table 3 reveal the Sustainability journal to be the most impactful journal during the study period. This journal has had a substantial impact, publishing a considerable number of relevant papers across diverse industry sectors, including Chinese manufacturing, Chinese SMEs, Korean multinational subsidiaries, and Serbian banking. It covers a wide range of topics, such as internal control, digital capabilities, green innovation, green technology innovation, sustainability, and green sustainable development. The journal “Technological Forecasting and Social Change” emerges as the second most influential in its field. It focuses on the Intelligent Transformation of Manufacturing towards Industry 4.0, Sustainable Strategies within the Industry 4.0 framework, SMEs, and listed Chinese companies and their impact on financial performance. These findings provide insights into the research landscape, allowing us to identify current research limitations. This, in turn, forms the basis for understanding the limitations of the current studies and recognizing trends in the field that could further enhance a company’s financial performance.

Table 4. Most Cited Papers.

Title	Journal	Year	TC
How Entrepreneurial Smes Compete Through Digital Platforms: The Roles of Digital Platform Capability, Network Capability and Ambidexterity	JOURNAL OF BUSINESS RESEARCH	2019	290
The Relationship Between Digitalization and Servitization: The Role of Servitization In Capturing The Financial Potential of Digitalization	TECHNOLOGICAL FORECASTING AND SOCIAL CHANGE	2020	249
Sustainability Strategy as A Moderator in The Relationship Between Digital Business Strategy And Financial Performance	JOURNAL OF CLEANER PRODUCTION	2019	95
Intelligent Transformation of The Manufacturing Industry for Industry 4.0: Seizing Financial Benefits From Supply Chain Relationship Capital Through Enterprise Green Management	TECHNOLOGICAL FORECASTING AND SOCIAL CHANGE	2021	58
The Effect of Digital Transformation Strategy on Performance: The Moderating Role of Cognitive Conflict	INTERNATIONAL JOURNAL OF CONFLICT MANAGEMENT	2020	37
Digital-Related Capabilities and Financial Performance: The Mediating Effect of Performance Measurement Systems	TECHNOLOGY ANALYSIS AND STRATEGIC MANAGEMENT	2020	32
Organizational Readiness for Digital Financial Innovation and Financial Resilience	INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS	2022	31
Strategic Transformations in The Media	JOURNAL OF MEDIA BUSINESS STUDIES	2018	18
Enterprise Digitalisation and Financial Performance: The Moderating Role of Dynamic Capability	TECHNOLOGY ANALYSIS AND STRATEGIC MANAGEMENT	2023	11
Impact of Digital Finance on Energy Efficiency in The Context of Green Sustainable Development	SUSTAINABILITY (SWITZERLAND)	2022	10

shows a list of major papers in the field based on total citations. These papers consistently emphasize the role of digital technologies, strategies, and capabilities in improving financial outcomes for businesses. Many of these articles delve into the concept of digital platforms, highlighting their importance for small and medium-sized enterprises (SMEs) and the manufacturing industry. They also shed light on the moderating effects of factors like sustainability strategies, cognitive conflict, organizational readiness, and dynamic capability in the relationship between digital strategies and financial performance.

Furthermore, these papers underscore the significance of service-oriented approaches in capturing the financial potential of digitalization. They explore how digital transformation strategies impact financial performance, paying close attention to cognitive conflicts and readiness for digital financial innovation. Additionally, these articles investigate the role of digital finance in promoting energy efficiency and sustainable development. In summary, this body of work collectively reveals how the digital revolution is reshaping economic landscapes and how various factors, both within and outside the digital realm, influence financial performance.

4.1.2. Core Words

Table 5. Most Frequent Keywords.

Keywords Plus	Occurrences	Authors Keywords	Occurrences
China	21	financial performance	50
finance	19	digital transformation	32
financial performance	19	digitalization	27
sustainable development	11	innovation	10
digitization	9	industry 4 0	9
manufacturing	9	firm performance	8
digital transformation	8	sustainable development	8
industrial performance	8	performance	7
innovation	8	sustainability	7
sustainability	8	China	5
Titles	Occurrences	Abstracts	Occurrences
performance	78	performance	528
digital	68	financial	417
financial	51	digital	392
transformation	33	study	237
impact	24	transformation	180
role	23	firms	154
digitalization	19	companies	152
industry	17	impact	138
innovation	16	data	135
evidence	15	digitalization	135

Keywords Plus: Words or phrases that appear frequently in the title of references and not necessarily in the title of article or as author keywords. Authors Keywords: Consist of a list of terms that authors believe best represent the content of their paper. Titles: Words are extracted by titles (or abstracts) removing “stop word” and punctuation. Abstracts: Need to be cleaned by trivial terms such as “paper, study, work, data”.

records the keyword data in digital transformation and firms’ financial performance research for 2014–2023. Keyword analysis helps researchers find the relevant articles within their research area (Yang et al. 2016). At the same time, keyword analysis can also identify research hotspots, trends, and gaps. The keyword cloud in Figure 4 illustrates the frequency of occurrence of various keywords, with the larger the size of the keyword indicating its higher frequency. The figure depicts that China, Finance, Sustainable Development, Manufacturing, Innovation, Small and Medium-Sized Enterprise, and Sustainability frequently appear along with associated keywords such as digitalization, digital transformation, and financial performance. This is because digitalization has traditionally had the most significant impact on companies with high digital maturity, which are typically in the financial, technological, or communications industries, where digitization plays a fundamental role (Cherkasova and Slepushenko 2021).

The high frequency level in the aforementioned fields can be explained by the increased level of uncertainty and global challenges associated with supply chains during and after the COVID-19 pandemic, as well as the shift in consumer behavior towards online transactions, particularly in the banking sector. This situation has accelerated the process of digital transformation in companies (Chaimankong et al. 2021).

Additionally, the digitalization of all industries has disrupted even the most stable ones, as has been evident in recent years (Kohtamäki et al. 2020). This situation has been accompanied by other challenges, where previous studies have revealed that manufacturing companies have access to large amounts of market data, but they often lack the necessary capabilities to utilize them effectively (Ehret and Wirtz 2016; Hasselblatt et al. 2018). Moreover, manufacturing companies face significant pressure to make technological advancements due to the accelerating pace of globalization (Kusiak 2021).

The results also show that China is the most frequent case study analyzed in previous studies. This can be attributed to the Chinese government’s recent efforts to improve companies’ digital competitiveness. These efforts are a response to the increased demand for digital competencies of digital transformation in the Chinese manufacturing industry.

Another relevant research field is Innovation and Industry 4.0 in the context of digital transformation strategy to upgrade firms’ value chains. Previous studies indicate that innovation can positively impact firms’ financial performance by leveraging their competitive advantage, leading to continuous improvement and better adaptation to market changes, making it difficult for competitors to keep up with the pace of innovation and thus improving company performance (Fernández-Portillo et al. 2022).

Summing up, it can be said that most of the literature focuses on manufacturing, innovation, sustainability, financial performance, and digital transformation as interconnected research topics. Furthermore, future research could concentrate on areas such as China, Manufacturing, and Small and Medium-sized Enterprises (SMEs). Therefore, scholars may benefit from focusing their future studies on developing a theoretical and empirical framework to investigate these joint research directions.

Results reported in Figure 5 show the frequency of the most common keywords. We can analyze the emergence timeline of crucial topics and their developmental trends. Financial and digital transformation emerged in 2019 but grew dramatically in 2021. Sustainable development, sustainability, and innovation have been topics of concern recently and have grown since 2020. Since 2021, China has emerged as a prominent research area, experiencing significant growth, particularly between 2022 and 2023. Therefore, it also provides researchers with future research directions for related fields.

4.1.3. Main Research Institutions and Countries

To analyze the impact on scientific outputs, we examine research institutions and countries.

Table 6. Countries with the most publications and citations.

Countries/Regions	Most Publications	Countries/Regions	Most Citations
China	104	Finland	380
Indonesia	28	Hungary	354
Italy	25	Sweden	325
Romania	21	China	307
South Korea	19	Italy	302
Ukraine	19	Malaysia	229
Finland	18	Australia	175
UK	18	Romania	116
USA	17	Spain	112
Spain	15	Brazil	76

presents a ranking of countries based on their total number of publications, total number of citations, and average number of citations related to the impact of digital transformation on firms’ financial performance from 2014–2023. China emerges as the country with the most significant number of scientific publications and is included in both the publication and citation rankings. Other countries on the list include Spain, Italy, Romania, and Finland. On the other hand, the UK, Ukraine, South Korea, USA, and Indonesia only appear in the publication ranking, while Hungary, Sweden, Malaysia, Brazil, and Australia only appear in the citation ranking. This information is presented in Figure 6, darker blue color means more publications.

Furthermore, geographical cooperative efforts among researchers in the field of digital transformation and firms’ financial performance can lead to valuable insights and address current research gaps.

Table 7. Collaboration Network.

From	To	Frequency
China	Korea	3
Child	USA	3
Finland	Sweden	3
Finland	USA	2
Italy	UK	2
Romania	Pakistan	2
UK	France	2
Australia	Belgium	1
Brazil	France	1
Brazil	Portugal	1

shows that China with Korea, and USA have engaged in the most collaborative projects, while some joint project research also exists between Finland with Sweden, and USA. Overall, China, Finland, Italy, and United Kingdom are significant contributors in this field of research.

4.2. Co-Occurrence Network

Based on a network visualization of the co-occurrence of the authors’ keywords, Figure 7 shows the study’s co-occurrence network (Marcucci et al. 2021; Omotehinwa 2022). In this network, clusters of similar keywords are represented by colored circles, with lines indicating their interconnections. The size of each circle reflects the strength of co-occurrence, with larger circles indicating stronger co-occurrence. The selected articles were categorized into four clusters, each represented by a different color, totaling 47 keywords.

The green cluster is centered on investigating the intersection of digital transformation, financial performance, and various multi-factors including sustainable development, Industry 4.0, servitization, and competition. This research orientation enables scholars to delve into the multi-dimensional impact of digital transformation on firms’ financial performance. The red cluster highlights China, manufacturing, and establishing the link between them, and this area should receive particular attention. The blue cluster emphasizes innovation, sustainability, industry performance, and digitalization of SMEs, which face many challenges in digital transformation. With technology and industrial transformation undergoing a new revolution, SMEs need to adapt quickly to the rapidly evolving technological and social environment, leverage digital technology dividends, and develop perception, agility, and intelligent decision-making in the digital age to increase their ability to cope with risks and sustainably develop (Teng et al. 2022). Lastly, the purple cluster, which stresses the importance of commerce, environmental management, and economic and social effects.

Figure 7 also illustrates that a higher concentration of researchers investigating certain variables implies their frequent use in research. Conversely, smaller circles indicate less research involving those variables. This consideration is pertinent for new researchers, who may opt for variables that have received less attention in prior studies. Additionally, Figure 7 explains the correlation between the variables. Almost all the variables are correlated with each other. Therefore, firstly, in the green cluster, both strategy planning and decision-making are notable factors to consider. Secondly, in the red cluster, ownership and firm size also warrant attention.

First, future researchers may focus on the roles of strategists and decision-makers. To enhance data quality and establish data architecture and strategy, companies often necessitate the appointment of an executive, such as a Chief Digital Officer (CDO) or a similarly positioned executive. Studies have indicated that a CDO can assist a company in producing superior data products, gaining strategic advantages in the market, determining innovative growth strategies, and conceptualizing and experimenting with new information products to augment the company’s strategic value (Lee et al. 2014). Simultaneously, taking into consideration the gender of decision-makers, existing empirical evidence suggests that female executives tend to exercise greater caution than their male counterparts when making pivotal company decisions (Huang and Kisgen 2013; Levi et al. 2014). Additionally, female directors introduce distinct perspectives and experiences into the board, contributing to the heightened quality of board decisions (Hillman et al. 2007). Furthermore, in the areas of corporate innovation, innovation emerges as a critical determinant of a company’s competitiveness at both the company and national levels (Fang et al. 2014). Nonetheless, issues related to innovation are fraught with complexity, stemming from at least two underlying causes. On the one hand, risk-averse managers may curtail investments in innovation in favor of less risky conventional projects (O’Connor and Rafferty 2012). On the other hand, managers may prefer a quiet life (Bertrand and Mullainathan 2003) and may be disinclined to engage in the substantial efforts associated with innovation initiatives. Consequently, monitoring must be intensified to improve innovation management. The existing literature attests that female directors enhance the effectiveness of internal governance, as the heightened representation of women in the boardroom correlates with increased supervisory endeavors (Adams and Ferreira 2009) and improved board deliberations on complex issues (Huse et al. 2006). Thus, discussions are raised concerning the gender of decision-makers and whether this reduces the problem of providing effective monitoring to encourage firms to innovate and therefore improve firm performance.

Subsequently, on this basis, different ownership structures have different impacts on financial performance. This divergence arises from the fact that legal owners are primarily driven by profit motives, while state owners factor in both political and economic considerations (Chen et al. 2006). Last, the impact of CDOs or female executives on company performance constitutes a multifaceted and complex issue. Potentially, a multitude of additional factors may impact firms’ performance, including firm size (Hendricks and Singhal 2005; Johnson et al. 2007; Ramaswami et al. 2008; Yeung 2007). Future research could delve into the relationships between firm structure and size.

4.3. Thematic Map

A theme map can help identify current research themes and trends in digital transformation and firms’ financial performance. The selected literature was used to form Figure 8, which emphasizes how various research themes have influenced the relevant literature. The research themes are identified by the density and centrality of the most critical research content, with each clustered circle in the figure representing a research theme. Figure 8 divides the articles into four quadrants, each with a specific research theme and different attributes (Horvatinović and Matošec 2022). As shown in Figure 8, the top right corner represents a motor theme with a high density and centrality, making it a critical aspect to consider in the research analysis. The top left corner represents the niche theme, distinguished by high density and high centrality. The bottom right corner portrays the primary theme, which exhibits high centrality and low density, so this type of research theme requires special attention. Finally, the bottom left corner represents a new area of research, specifically the intersection of the Internet of Things and the industry revolution. The pandemic has caused significant changes in social habits and operational practices, forcing companies to undergo digital transformation in order to adapt to society’s needs and sustain their development.

Table 8. Thematic maps: keywords and themes.

Main Indicators	Theme	Keywords Frequency
China	Basic Theme	China (14) sustainable development (9) digitization (9) manufacturing (9) industrial performance (8) innovation (8) sustainability (8) empirical analysis (7) performance assessment (7) small and medium-sized enterprise (7) commerce (5) industry (4) business (4) COVID-19 (4) panel data (3) business development (3) financial services (3) firm size (3) Korea (3) competition (economics) (2) energy efficiency (2) firm performance (2) green economy (2) Guangdong (2) industrial enterprise (2) internet(2) manufacture (2) research work (2) shanghai (2) Shenzhen (2) state owned enterprise (2) transformation (2)
Internet of Things	Emerging Theme	internet of things (3) customer satisfaction (2) industrial revolutions (2)
Financial Market	Emerging Theme	financial market (2) financial system (2)
Financial Performance	Motor Theme	financial performance (19) finance (15) digital transformation (8) industry 4.0 (7) performance (7) digital technologies (5) digitalization (5) supply chain management (4) decision making (3) competition (3) industrial technology (3) investments (3) servitization (3) strategic planning (3) supply chains (3) surveys (3) technology adoption (3) competitive advantage (2) corporate governance (2) economics (2) enterprise resource management (2) governance approach (2) integration (2) investment (2) manufacturing companies (2) metadata (2) organizational (2) resource allocation (2) risk management (2) service quality (2) social development (2) strategic approach (2)
Banking	Motor Theme	banking (4) information management (4) economic and social effects (3) economic development (3) environmental management (3) corporate financial performance (2) emerging technologies (2) emission control (2) environmental performance (2) human resource management (2)
Spatiotemporal Analysis	Niche Themes	spatiotemporal analysis (5) article (4) ownership (3) human (3) technology (2) conceptual framework (2) digital technology (2) economic aspect (2) environmental protection (2) gross domestic product (2) human capital (2) humans (2)

has been created based on the findings in Figure 8.

4.4. Thematic Evolution

A comparison of the themes before and after 2021 to explore the changes in theme analysis is presented in Figure 9.

The first theme, China, has been transformed into small and medium-sized enterprises, while the second theme of financial performance has evolved into digitalization and small and medium-sized enterprises. Similarly, business development has been transformed into financial performance, and sustainability has been replaced by digitalization. This indicates a growing interest in the relationship between digitalization and financial performance among Chinese SMEs, expanding the academic discourse in this area.

SMEs face various barriers to digital transformation, including inadequate digital transformation thinking, weak digital foundations, and significant obstacles compared to large enterprises (Teng et al. 2022). As a result, SMEs are lagging in digitalization (Eller et al. 2020), and the rate of digital adoption is uneven (Li et al. 2018). However, SMEs possess certain advantages over larger enterprises, including their small size and flexibility, which can create positive values and norms for digitalization, contributing to their ability to innovate and proliferate due to their consistent culture (Eller et al. 2020). Moreover, digital transformation provides SMEs with a range of benefits, such as improved talent access, easier access to markets, and deeper collaboration and exchange, resulting in broader technology and application access, as well as access to financing. Consequently, scholars have increasingly focused on the digitalization and digital transformation of SMEs in recent years.

To gain deeper insights into the connections between the core concepts that underpin our primary areas of study, digital transformation, and financial performance, we employ tokenization on the abstracts of the gathered articles. The outcomes of the correlation analysis, which highlights the key associations between these pivotal concepts, are visually depicted in Figure 10.

Figure 10 presents the pairwise correlations between the different concepts related to digital transformation and financial performance. Given the large number of concepts included in the analysis, it is unsurprising that the correlation coefficients are mostly low to moderate. This is expected since each concept likely captures a distinct aspect or dimension of digital transformation or financial performance. A few notable observations can be made from the matrix. First, there are a handful of concept pairs with relatively stronger positive correlations, such as between “Digital Transformation” and “Financial Performance”, suggesting these broader topics tend to be discussed together. Second, some concepts do not exhibit strong negative correlations with others, indicating there are few clear opposing relationships between the concepts analyzed. And third, many concepts have near-zero correlations with most others, highlighting the dimensionality of this space and the uniqueness of many of the concepts.

5. Discussion

5.1. Main Findings Related to Research Questions

This section aims to discuss the research questions (RQs), evaluate their effectiveness, and recommend suggestions to help firms improve their financial performance through digital transformation. To address RQ1, this study conducted a descriptive statistical analysis of publication trends and data on corporate financial performance and digital transformation. The most frequently published journal is Sustainability (RQ2), and our findings reveal that relevant studies began to emerge after 2018, with limited academic literature available in 2018–2019.

By analyzing keywords, critical research topics (RQ3) can be identified, with the most important keywords being China, Finance, Sustainable Development, Manufacturing, Innovation, Small and Medium-Sized Enterprise, and Sustainability, in addition to inherent keywords such as digitalization, digital transformation, and financial performance. Our findings reveal that sustainable development and innovation have been major research areas, with a particular focus on Manufacturing and Small and Medium-sized enterprises (SMEs). Despite many SMEs investing in digital technologies, they have not achieved significant digital transformation. It is crucial for SMEs to understand and properly use various digital technologies to unlock their potential value for enabling digital transformation. Additionally, the digital transformation strategy of enterprises should align with value innovation and fully return to the essence of the business to achieve effective, rapid, and comprehensive digital transformation. While China represents a developing country, there is a noteworthy gap in previous research regarding the digital transformation of developing nations in the context of the COVID-19 pandemic. This study provides a valuable foundation for future researchers to explore underexamined variables, such as the presence of CDO roles, the influence of female executives, and the potentially differing roles of firm size and ownership structure in this process. The results-based values (RBV) theory provides a powerful explanation of differences in firm performance (Alexy et al. 2017), with valuable, scarce, not fully imitable, and irreplaceable resources as the source of sustained competitive advantage for firms. Therefore, it is important to deeply integrate digital transformation with business and management to form a strong dynamic capability and realize the value of digital technology (Coates and McDermott 2002).

Regarding scientific publications, China dominates (RQ4). Furthermore, projects from Indonesia, Italy, Romania, and South Korea were published most frequently (RQ5). To better understand the knowledge structure, we used the co-occurrence analysis tools (RQ6 and 7). The analysis allowed us to divide the scientific literature into four clusters, including 47 projects. Four main clusters identify the factors influencing digital transformation and firms’ financial performance, document the role of digital transformation, financial performance, and corporate sustainability, and clarify the relationship between digital transformation and firms’ financial performance. Next, we performed a statistical analysis of the evolution of the research themes (RQ8). We found a trend of keywords and studies evolving towards small and medium-sized enterprises in recent years.

5.2. Barriers to Further Research

The impact of digital transformation on firms’ financial performance is a significant research concern due to recent changes in social factors and the economic environment. However, our analysis revealed several gaps in the current literature that require further attention.

Firstly, there is a lack of a systematic theoretical framework that explains the impact of digital transformation on firms’ financial performance. Most studies in this area rely on survey research in specific industries, which may affect the results, and lack a sound theoretical foundation. Developing a solid theoretical framework in future research is necessary to increase the development of theories in literature and to establish a unified and widely accepted theoretical framework.

Secondly, there is a lack of research on the joint effects of multiple digital innovations on firms’ financial performance. While many studies have focused on the impact of specific digital technologies on businesses, digital transformation is no longer just about adopting a single digital technology. We need to consider the digital foundation, willingness, and external conditions that vary greatly between countries and industries. In addition, the lack of research on non-listed companies, especially SMEs, is concerning. Comparing the differences between listed and non-listed companies from firms’ financial performance and digital transformation perspectives is necessary.

Thirdly, the absence of discussions regarding the roles of Corporate Chief Digital Officers (CDOs) and female executives in the context of digital transformation presents an opportunity for new research areas. For instance, an exploration of the CDO’s key roles and responsibilities, their interactions with other CXOs, and the potential influence of the CDO’s personality on a firm’s productivity are areas ripe for investigation. Given that the CDO often overlaps with the roles of Chief Information Officer (CIO) or Chief Innovation Officer (CIO), it is essential to discern the similarities and differences between these positions and assess their relative importance. Moreover, there is room to investigate whether gender, specifically the presence of female executives, impacts decision-making and, consequently, a company’s financial performance. This analysis may also be influenced by factors such as company size and ownership structure.

Looking ahead, it would be valuable for future researchers to concentrate on the Chinese market, which presents a compelling landscape for digital transformation studies. China, being the largest emerging market for digital development, stands in contrast to mature digital markets like the United States. This distinction makes research conducted in China more likely to have broader applicability to other developing nations. Additionally, many Chinese companies have actively engaged in digital transformation efforts, yielding a wealth of data for research purposes. This robust data environment provides an excellent opportunity for studying the effects and implications of digital transformation.

Moreover, most studies have focused on short-term financial performance considerations, but the impact of digitization on firms’ financial performance is continuous. Therefore, subsequent studies could focus more on the long-term impact of digitization. Addressing these gaps in the literature will provide a more comprehensive understanding of the impact of digital transformation on firms’ financial performance.

Scholars have employed both questionnaires to collect primary data and studies based on secondary data to assess the impact of digital transformation on firms’ financial performance. However, both methods have certain limitations. For instance, studies based on secondary data can only reveal some characteristics of complex phenomena, and some key digital actions may not be disclosed in annual reports. Even if some critical information about digital transformation is reflected in annual reports, its validity needs further verification. Therefore, future studies can be conducted to explore the joint impact of different dimensions to enhance data reliability and broaden the applicability of findings. Moreover, the digital paradox phenomenon persists, where many firms invest heavily in digitalization but still experience negative returns. Hence, we believe that the relationship between digitalization and firms’ financial performance may be influenced by other variables, either moderated or mediated, which necessitates further investigation.

6. Conclusions

The present study employs the RBV theoretical framework to elucidate the relationship between digital transformation and firms’ financial performance. Previous research has mainly viewed digitalization as a mere technological tool, neglecting its strategic significance. However, this study shows that digitalization is not just limited to internet, software, or hardware applications but is a crucial strategic resource in firms’ transformation, corroborating the argument for digitalization as a strategic resource. Senior management roles represent a crucial aspect of enterprises’ human capital. Previous studies have focused on the relationship between traditional executives and enterprises’ performance, ignoring the influence of diverse backgrounds within the executive team, such as the roles of Chief Digital Officers (CDOs) and female executives. Moreover, the importance of complementary resources such as enterprise, human, and sustainability are evident in our findings, which demonstrate that these resources enhance digitalization’s impact. Thus, our study contributes significantly to the scientific research literature on RBV.

The results of this study have significant practical implications. While initial investment costs for digital transformation may be high, the majority of studies found a positive correlation between digitalization and financial performance. This suggests that digitization can enhance operational efficiency, prompting managers and decision-makers to invest in data technology. However, it is important for companies to carefully evaluate their current resource utilization, expected profits, and transformation costs to select the appropriate digital transformation strategy, as a U-shaped relationship between digital transformation and profitability has also been identified. Furthermore, the study provides a theoretical framework for enterprises to calculate the future payback period of digital investments.

The link between digital transformation and firms’ financial performance has been widely explored in the existing scientific literature, with many studies demonstrating a positive impact. However, most of these studies are limited to specific industry contexts or national environments, indicating the need for systematic exploration of the drivers of digital transformation and potential factors affecting enterprises’ financial performance. By analyzing co-occurring keywords, this study highlights the importance of digitalization, digital transformation, and digital technology in shaping enterprises’ financial performance. Additionally, we identified several variables that may contribute to the relationship between digital transformation and enterprises’ financial performance, providing new insights into the driving factors of firm digitalization. Establishing CDO positions to maximize data value is an increasing trend because enterprises’ strategies for achieving success increasingly rely on data in the big data era. As a newcomer to the top management team (TMT) sector, is there a contribution from CDOs to enterprises’ performance? Do CDOs improve the profitability of an enterprise through data management and analytics? Will the key value CDOs provide to enterprises become evident to the industry over time? Will more organizations appoint CDOs to elevate their business value and enhance performance? Also, are female executives investing more in innovation to achieve greater innovation success? How many other attributes or characteristics of female directors act as mediators in the relationship between digital transformation and performance? These are all vital directions for future exploration.

Although our study provides valuable insights, it is important to note its limitations. Firstly, our sample size is relatively small as we only considered articles that investigated the impact of digital transformation on corporate financial performance. Secondly, our search terms were based on the definition of digital transformation, which may have excluded relevant studies that used different terminology. Therefore, future research should expand the scope of the search terms to capture a broader range of studies and keywords that may contribute to a more comprehensive understanding of the topic.