Synergy Between Digital Transformation and Innovation Capabilities Towards Firm Performance in Startups

Abstract

In technology firms, particularly in the context of startups, Digital Transformation and Innovation Capabilities are strategic drivers of firm performance. In this study we analyze the effect of Digital transformation and Innovation capabilities on the performance of technology startups in Pakistan’s twin cities of Islamabad and Rawalpindi. Data are collected from 418 employees through structured survey questionnaire with the use of convenient sampling techniques and analyzed using regression analysis in SPSS. Findings showed the substantial positive effect of Digital Transformation (measured as technology adoption, digital literacy and digital infrastructure) and innovation capabilities on firm performance. These findings add more value to the importance of having digital infrastructure and innovation to improve the startups performance and competitive advantage. Drawing on the matching of digital transformation and innovation capabilities, this research contributes to literature by facilitating an innovative perspective of how startup performance is influenced by digital transformation.