Digital Transformation and Competitive Priorities Applying the Cumulative Theory

Understanding the relationship among competitive priorities is essential in establishing an operational strategy. In addition, successful digital transformation will be essential in securing competitive priorities in the fourth industrial revolution era. By applying the cumulative theory, this study investigates the relationship among competitive priorities (quality, dependability, flexibility and cost), including digital transformation. The analysis was conducted on 153 manufacturing companies using SEM(structural equation modeling). The result shows a statistically significant causal relationship in the order of quality - dependability - flexibility - digital transformation - cost. Alternative models were established to validate the order of competitive priorities in digital transformation and compare with the research model in this study. Consequently the sequence established in this study was the most appropriate one. This study has major implications as it is a preemptive empirical study on digital transformation, and quantitatively and qualitatively expanded on the well-studied Cumulative theory.