Factors influencing digital transformation adoption in manufacturing: big data analytics, digital literacy, and firm performance

The adoption and use of modern technologies are an increasingly important discourse in the context of the manufacturing paradigm. This study aims to identify the holistic factors that influence digital transformation (DT) to meet firm performance (FP) goals. This study also examines how internal and external factors influence firms’ adoption of modern technologies to achieve a competitive edge. This study used a self-administered survey; data were gathered from (n = 487) innovative Pakistani manufacturing firms. The research model was proposed, and the hypotheses were tested using structural equation modeling. Moreover, the robustness of the structural test can be increased using critical performance map analysis. The empirical findings indicate that factors such as TOE, TAM, and institutional theory influence organizations’ adoption of DT. Similarly, DT has a significant and positive association with FP. BDAC positively mediates the relationship between DT and FP, and digital literacy moderates the relationship between BDAC and FP. This research enhanced the current knowledge. It provided valuable insights into promoting the DT adoption environment for digital technologies within manufacturing firms, while advancing the theoretical perspective on technology adoption within the context of dynamic capability theory. It offers a clear pathway for harmonizing and effectively integrating technology to increase firms’ performance.