ISSN: 2226-3624
Open access
This study focused on the impact of digital transformation on financial performance, considering financial adaptability as a mediating factor in this relationship. The study selected Malaysian companies for the period 2015-2024. The quantitative approach was employed, with digital transformation as the independent variable, financial performance as the dependent variable, and financial adaptability as the mediating variable. To achieve the study's objectives, a range of statistical analyses were applied to the data, including linear regression, correlation, analysis of variance (ANOVA), and t-tests. SPSS and Smart PLS software were used for data analysis. The data used in the statistical analyses were obtained from the annual reports and websites of companies listed on the Malaysian stock market. The results of this study indicate a positive relationship between digital transformation and financial performance, as well as a positive relationship between financial adaptability and financial performance. Furthermore, the indirect relationship between digital transformation and financial performance showed a statistically significant positive effect. The contribution of this scientific study lies in its attempt to arrive at accurate estimates and a precise understanding of the study variables, and to adapt to financial changes in order to reach optimal financial decisions in volatile circumstances.
Bates, T. W., Kahle, K. M., & Stulz, R. M. (2009). Why do US firms hold so much more cash than they used to?. The journal of finance, 64(5), 1985-2021.
Björkdahl, J. (2020). Strategies for digitalization in manufacturing firms. California management review, 62(4), 17-36.
Bloom, N., Garicano, L., Sadun, R., & Van Reenen, J. (2014). The distinct effects of information technology and communication technology on firm organization. Management Science, 60(12), 2859-2885.
Camara, A.B. (2024), “The impact of digitalization on customer knowledge management”, Management Dynamics in the Knowledge Economy, Vol. 12 No. 1, pp. 21-38.
Cappa, F., Oriani, R., Peruffo, E., & McCarthy, I. (2021). Big data for creating and capturing value in the digitalized environment: unpacking the effects of volume, variety, and veracity on firm performance. Journal of Product Innovation Management, 38(1), 49-67.
Cenamor, J., Parida, V., and Wincent, J. (2019), “How entrepreneurial SMEs compete through digital platforms: the roles of digital platform capability, network capability and ambidexterity”, Journal of Business Research, Vol. 100 No. 1, pp. 196-206.
Chakrabarti, A. (2015). Organizational adaptation in an economic shock: The role of growth reconfiguration. Strategic Management Journal, 36(11), 1717-1738.
Dalenogare, L. S., Benitez, G. B., Ayala, N. F., & Frank, A. G. (2018). The expected contribution of Industry 4.0 technologies for industrial performance. International Journal of production economics, 204, 383-394.
Day, G. S., & Schoemaker, P. J. (2016). Adapting to fast-changing markets and technologies. California Management Review, 58(4), 59-77.
Denis, D. J. (2011). Financial flexibility and corporate liquidity. Journal of Corporate Finance, 17(3), 667–674
Duchek, S. (2020). Organizational resilience: A capability-based conceptualization. Business Research, 13(1), 215–246.
Duchek, S. (2020). Organizational resilience: A capability-based conceptualization. Business Research, 13(1), 215–246.
Duchek, S. (2020). Organizational resilience: a capability-based conceptualization. Business research, 13(1), 215-246.
Eller, R., Alford, P., Kallmünzer, A., & Peters, M. (2020). Antecedents, consequences, and challenges of small and medium-sized enterprise digitalization. Journal of Business Research, 112, 119-127.
Erevelles, S., Fukawa, N., & Swayne, L. (2016). Big Data consumer analytics and the transformation of marketing. Journal of business research, 69(2), 897-904.
Fahlenbrach, R., Rageth, K., & Stulz, R. M. (2020). How valuable is financial flexibility when revenue stops? Evidence from the COVID-19 crisis. The Review of Financial Studies, 34(11), 5474–5521.
Gajdosikova, D., Valaskova, K., Lopatka, A., and Lazaroiu, G. (2024), “Corporate debt dynamics: sectoral clustering analysis using NACE classification in Slovakia”, Journal of Business Sectors, Vol. 2 No. 1, pp. 32-46
Gamba, A., & Triantis, A. (2008). The value of financial flexibility. The journal of finance, 63(5), 2263-2296.
Ganbat, K., Sodnomdavaa, T., Buyantsogt, A., & Dangaa, G. (2026). Financial Adaptability and Firm Performance Under Macroeconomic Shocks: Evidence from a Commodity-Dependent Emerging Economy. International Journal of Financial Studies, 14(5), 107.
Hanelt, A., Bohnsack, R., Marz, D., & Antunes Marante, C. (2021). A systematic review of the literature on digital transformation: Insights and implications for strategy and organizational change. Journal of management studies, 58(5), 1159-1197.
Juracka, D., Nagy, M., Valaskova, K., and Nica, E. (2024), “A meta-analysis of innovation management in scientific research: unveiling the frontier”, Systems, Vol. 12 No. 4, p. 130.
Kewangan, K. (2017). Debt and financial performance of REITs in Malaysia: A moderating effect of financial flexibility. Jurnal pengurusan, 50, 3-12.
Li, F. (2020). The digital transformation of business models in the creative industries: A holistic framework and emerging trends. Technovation, 92, 102012.
Li, L. (2022). Digital transformation and sustainable performance: The moderating role of market turbulence. Industrial marketing management, 104, 28-37.
Linnenluecke, M. K. (2017). Resilience in business and management research: A review of influential publications and a research agenda. International journal of management reviews, 19(1), 4-30.
Liu, C., Li, Z., Tang, J., Wang, X., & Yao, M. J. (2022). How SERU production system improves manufacturing flexibility and firm performance: an empirical study in China. Annals of Operations Research, 316(1), 529-554.
Luu, H.N., Le, D.D., Nam, V. H., and Van, P.B.N. (2024), “The impact of digitalization on the financial performance of small- and medium-sized enterprises: empirical evidence from an emerging economy”, International Journal of Information Technology and Decision Making, Vol. 23 No. 2, pp. 651-686.
Mahmood, F., Khan, A. Z., & Khan, M. B. (2019). Digital organizational transformation issues, challenges and impact: a systematic literature review of a decade. Abasyn University Journal of social sciences, 12(2).
McKee, D. O., Varadarajan, P. R., & Pride, W. M. (1989). Strategic adaptability and firm performance: a market-contingent perspective. Journal of marketing, 53(3), 21-35.
McManus, S., Seville, E., Vargo, J., & Brunsdon, D. (2008). Facilitated process for improving organizational resilience. Natural Hazards Review, 9(2), 81–90.
Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital innovation management: Reinventing innovation management research in a digital world. MIS quarterly, 41(1), 223-238.
Oduro, S., De Nisco, A., & Mainolfi, G. (2023). Do digital technologies pay off? A meta-analytic review of the digital technologies/firm performance nexus. Technovation, 128, 102836.
Pucci, T., Casprini, E., Zanni, L. and Bonaccorsi, A. (2023), “Profiting from the digital integration of the value chain and digital competencies: does open innovation matter for manufacturing SMEs?”, Technology Analysis and Strategic Management. Early Access, Vol. 36 No. 12.
Reeves, M., & Deimler, M. (2012). Adaptability: The new competitive advantage. Own the future: 50 ways to win from the boston consulting group, 19-26.
Reeves, M., & Deimler, M. (2012). Adaptability: The new competitive advantage. In Own the future (pp. 19–26). John Wiley & Sons, Ltd.
Ribeiro-Navarrete, S., Botella-Carrubi, D., Palacios-Marques, D. and Orero-Blat, M. (2021), “The effect of digitalization on business performance: an applied study of KIBS”, Journal of Business Research, Vol. 126 No. 1, pp. 319-326.
Saberi, S., Kouhizadeh, M., Sarkis, J., & Shen, L. (2019). Blockchain technology and its relationships to sustainable supply chain management. International journal of production research, 57(7), 2117-2135.
Saeedikiya, M., Salunke, S., & Kowalkiewicz, M. (2025). The nexus of digital transformation and innovation: A multilevel framework and research agenda. Journal of Innovation & Knowledge, 10(1), 100640.
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. In Resources, firms, and strategies (pp. 268–285). Oxford Academic.
Tian-Cheng, W., Zi-Shu, Z., & Yu-Dong, X. (2020). Determination of Risk Factors for Pain After Transarterial Chemoembolization with Drug-Eluting Beads for Hepatocellular Carcinoma. Journal of Pain Research, 13, 649.
Tognazzo, A., Gubitta, P., & Favaron, S. D. (2016). Does slack always affect resilience? A study of quasi-medium-sized Italian firms. Entrepreneurship & Regional Development, 28(9–10), 768–790
Vogus, T. J., & Sutcliffe, K. M. (2007, October). Organizational resilience: Towards a theory and research agenda. In 2007 IEEE international conference on systems, man and cybernetics (pp. 3418-3422). Ieee.
Volberda, H. W. (1999). Building the flexible firm: How to remain competitive. Oxford university press.
Wu, W., Le, C., Shi, Y., & Alkaraan, F. (2024). The influence of financial flexibility on firm performance: the moderating effects of investment efficiency and investment scale. Journal of Applied Accounting Research, 25(5), 1183-1202.
Ali, M. S., & Hussein, M. K. (2026). The Mediating Effect of Financial Adaptability in the Relationship between Digital Transformation and Financial Performance. International Journal of Academic Research in Economics and Management Sciences, 15(3), 373–385.
Copyright: © 2026 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode