Digital Transformation and Firm Performance: The Mediating Role of Human Centric Capabilities

Naveen Sunkara , Rafi Mohmmad

Abstract:In today’s digital economy, organizations increasingly adopt advanced technologies to improve efficiency and competitiveness; however, technology implementation alone does not always lead to better performance outcomes. The aim of this study is to explore how digital transformation contributes to firm performance by emphasizing the role of human-centric capabilities. The main objective is to examine whether capabilities such as employee digital competence,leadership support, and a collaborative work culture mediate the relationship between digital transformation and organizational performance. A quantitative research approach was employed, and primary data were collected from 200 respondents, including managers and employees from different industries, through a structured questionnaire using a five point Likert scale. Structural Equation Modeling (SEM) was applied as the sole analytical technique to test the proposedrelationships and mediation effect. The results show that digital transformation positively influences human-centric capabilities, which subsequently lead to significant improvements in firm performance, while the direct impact of digital transformation alone is relatively limited. The conclusion suggests that organizations can achieve sustainable performance benefits only when technological initiatives are supported by skilled employees and a supportive organizational environment. The study highlights the importance of integrating people-focused strategies with digital investments for long-term success.
Keywords: Digital transformation, firm performance, human-centric capabilities, mediation, structural equation modelling