Digital transformation and profit growth: a configurational analysis of regional dynamics

Date published

2025

Free to read from

2025-04-01

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Journal ISSN

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Publisher

Institute of Electrical and Electronics Engineers (IEEE)

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Type

Article

ISSN

0018-9391

Format

Citation

Sawang S, Zhao J, Xu Z. (2025) Digital transformation and profit growth: a configurational analysis of regional dynamics. IEEE Transactions on Engineering Management, Available online 21 March 2025

Abstract

This study adopts Configuration Theory to explore how diverse combinations of regional factors contribute to profitability, emphasizing the principle of equifinality, which posits that multiple, equally effective configurations can lead to similar outcomes. This study examines the interplay of multiple factors—enterprise informatization, digital infrastructure, e-commerce, technological investment, innovation, hardware, and software—across four key themes: Digital Readiness and Technological Integration, Market and Economic Enablers, Innovation Capacity and Activity, and Foundational Artifacts and Resources. Using data from 31 provinces in China from 2015 to 2022, this study employs fuzzy-set Qualitative Comparative Analysis (fsQCA) to uncover pathways to regional profit growth. The study identifies five distinct configurations contributing to profit growth across China's provinces. In most configurations, e-commerce and technological investment emerge as central drivers. However, in less developed regions, profit growth relies more on improvements in digital infrastructure and hardware, with innovation and enterprise informatization playing a less significant role. The findings also reveal that profit growth requires addressing the weakest elements in the ecosystem—whether digital infrastructure, technological capabilities, or other factors. Strategies tailored to regional conditions must prioritize improving these weaker components to achieve sustained growth, as ignoring them can limit overall success.

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Software Description

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Github

Keywords

46 Information and Computing Sciences, 3503 Business Systems In Context, 35 Commerce, Management, Tourism and Services, Business & Management, 35 Commerce, management, tourism and services, 40 Engineering, 46 Information and computing sciences

DOI

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Attribution 4.0 International

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