Digitalization, E-Commerce Capability, and Firm Value in GCC Countries: Evidence from a Panel Threshold Model

This study examines the relationship between digitalization, e-commerce capability, and firm value in Gulf Cooperation Council (GCC) countries. Using an unbalanced panel of 200 non-financial firms over the period of 2015–2024, the analysis employs a panel threshold regression model to investigate nonlinearities in the digitalization–performance relationship. The results indicate that digitalization (DIG) is positively associated with firm value, although the relationship is regime-dependent. A significant threshold effect is identified at DIG = 0.37, with the coefficient of digitalization declining from 0.405 in the low-digitalization regime to 0.162 in the high-digitalization regime, suggesting diminishing marginal returns to digital transformation. The findings also show that e-commerce capability becomes more strongly associated with firm value in the high-digitalization regime, where the interaction coefficient reaches 0.291 (p < 0.01), while remaining statistically insignificant below the threshold. These findings highlight the complementary relationship between digital infrastructure and e-commerce capability and suggest that the economic value of digital transformation depends on firms’ level of digital maturity. This study contributes to the literature by providing a nonlinear perspective on the digitalization–performance relationship and by offering new firm-level evidence from GCC economies. The results provide useful implications for firms and policymakers seeking to design effective digital transformation strategies.