The Relationship between Digital Transformation and Financial Performance of GCC Corporations: Mediating Effect of Operational Efficiency

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dc.contributor.authorIbrahim Ahmad Abu Alrob
dc.date.accessioned2025-11-25T10:25:26Z
dc.date.available2025-11-25T10:25:26Z
dc.date.issued2025-09-11
dc.description.abstractThis study aimed to identify the relationship between digital transformation and corporate financial performance. Furthermore, we examine whether operational efficiency plays a role as a mediating variable in the study model. The study uses data from the annual reports, financial reports and disclosures of 96 companies listed on the GCC stock exchanges. Excel and eViews were used to analyze the data and linear regression was used to test the study's hypotheses. Digital transformation is measured by a text-based index (DTI), which relies on extracting keyword frequencies from the annual reports on each company's website. Corporate financial performance (FP) is measured by two variables: ROA and ROE. Operational efficiency is also measured by profitability per employee (PPE). As for the control variables, company size (SIZ), financial leverage (FL), and COVID-19 (COV) were considered as control variables for this study and a VIF analysis was conducted for them. These measures were adopted after consulting previous studies indexed in journals within the Scopus index. A smooth and clear literature review was also created for the reader relying on recent and reliable references. The literature review clarified and defined the variables individually, and then the theoretical relationships between them were clarified. The results revealed that regarding the independent variable, the average DTI was 0.03, indicating that some companies have not yet embraced digital transformation to a significant extent. Even when the minimum and maximum values were 0.02 and 0.13, respectively, 0.02 indicates that some companies' digital transformation remains limited. The results indicate a positive relationship between DTI and both ROA (0.139) and ROE (0.130), suggesting that digital transformation is associated with a relative improvement in financial performance, albeit a weak one. DTI also showed a weak positive relationship with PPE (0.043), which may indicate that digital transformation contributes little to improving employee profitability. This study contained three main hypotheses, with the first and third hypotheses being divided into two sub-hypotheses. The results of the first hypothesis test indicate that digital transformation (DTI) partially affects the financial performance of GCC firms, but its impact varies depending on the performance measure used. The results of H1a show that DTI has a positive and statistically significant effect on ROA, while H1b shows no effect on ROE. This reflects that DT may partially contribute to improving companies' financial performance. However, the results of the main hypothesis (H2), which assumes the impact of digital transformation on the operational efficiency of GCC companies, are not statistically significant, indicating that digital transformation has not played an effective role in improving operational efficiency. The results of testing the third hypothesis (H3) indicate a significant and positive impact of PPE on the financial performance of GCC companies, represented by both ROA and ROE. As for testing the significant effect of the mediating variable operational efficiency between the independent and dependent variables Sobel’s test was conducted after analyzing the hypotheses and the results of the hypotheses were consistent with the results of Sobel’s test which showed that there was no statistically significant effect of the mediating variable in this relationship. Several recommendations were made based on the extracted results, the most prominent of which was the researchers' recommendation to continue conducting studies on this topic due to the insufficient information available and the discrepancy in the results of studies. They also recommended that company managements read as many studies as possible to gain a better understanding of this relationship.
dc.identifier.urihttps://hdl.handle.net/20.500.11888/20681
dc.language.isoen
dc.publisherAn-Najah National University
dc.supervisorDr. Muath Asmar
dc.titleThe Relationship between Digital Transformation and Financial Performance of GCC Corporations: Mediating Effect of Operational Efficiency
dc.title.alternativeالعلاقة بين التحول الرقمي والأداء المالي لشركات دول مجلس التعاون الخليجي: التأثير الوسيط للكفاءة التشغيلية
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