The Role of Digital Transformation in Enhancing Business Competitiveness: A Review of Emerging Practices in Developing Economies

Abstract

Digital transformation (DT) is a revolution of the competitive landscape of the world of business. The strength of its influence is well-reported in developed economies, but its role and emerging practices of particular socio-economic and infrastructural settings of developing economies are poorly understood and under researched. This paper conducts a systematic review of the available literature to generalize the role of digital transformation in increasing the competitiveness of business in the developing economies. It seeks to determine which major practices of DT influence the competitive facets and explain the enablers and barriers that are critical to this process. A systematic literature review (SLR) was undertaken according to PRISMA protocol. The intensive search of databases Scopus, Web of Science, and EBSCOhost provided 2,831 initial records, based on which 78 peer-reviewed articles, published between 2018-2024, were selected and included in the in-depth qualitative synthesis and thematic analysis. The analysis disclosed that there are four prevailing thematic areas of DT practice: (1) Operational Excellence and Efficiency, which are realized with the help of cloud ERP and automation; (2) Customer Intimacy and Market Expansion, which are facilitated with e-commerce and mobile platforms; (3) innovative business models, including platform based and servitized models; and (4) Agile, Data-Driven Decision Making. The research also finds that a group of critical success factors (e.g., strategic leadership, digital skills) and obstacles (e.g., financial constraints, regulatory uncertainty) moderate the results of DT. It is on this synthesis that the paper has proposed a new conceptual model that places the DT practices as the creators of dynamic capabilities that subsequently result in improved competitiveness. It is concluded that DT is a complex yet a powerful agent of competitiveness in the developing economies that is changing competitive dynamics fundamentally. The results are useful in theoretical terms as they provide a synthesis of the literature and a new framework, as well as offer practical implications to managers to focus on a digital investment and policy-makers on creating a favorable digital ecosystem. The paper suggests that further studies on sector-specific DT processes, generative AI effects, and longitudinal research on long-term competitive results are required.