The effectiveness of digital transformation on improving firm performance: evidence from Indonesia

Purpose – This study assesses the effectiveness of digital transformation on improving firm performance. A prominent financing company in Indonesia was selected in this study considering that financing industry is at the forefront of implementing digital transformation. Research methodology – The assessment of digital transformation effectiveness is approached as a multi criteria decision-making problem. The Analytic Hierarchy Process (AHP) is employed across a 5-level decision hierarchy encompassing objective, desired value creation, expected outcomes, processes, and effectiveness of digital transformation. Senior executives at the company provided expert judgments through pairwise comparisons. To strengthen validity, a funnel triangulation approach integrates findings with resource-based view and dynamic capabilities theoretical lenses. Findings – The study reveals that digital transformation has moderately to strongly enhanced firm performance in the examined company. With respect to value creation, the company being studied places firm value as the most prioritized value creation, followed by customer value and stakeholder value. Research limitations – The decision model developed in this study only consider all processes that have direct impacts on firm performance. Realizing digital transformation requires interaction between people, machines, business processes and leadership from top management. Practical implications – While this is a single-company case study, the AHP-based decision model can be adapted to assess digital transformation in other firms. Originality/Value – The study provides a structured decision model for assessing digital transformation effectiveness.