Enhancing organizational performance through digital transformation strategies: An empirical study of Saudi startups

Abstract

This study investigates how digital transformation strategies influence organizational performance in startups operating in Saudi Arabia, aiming to fill a notable research gap within emerging market contexts. The research adopts a mixed-methods design, combining quantitative data from surveys of 331 startup professionals across multiple sectors with qualitative insights from semi-structured interviews. Structural Equation Modeling (SEM) was employed to test hypothesized relationships derived from the DeLone and McLean IS Success Model, Resource-Based View, and Dynamic Capabilities Theory. The results indicate a strong positive relationship (R² = 0.67) between digital transformation strategies and organizational performance, particularly through improvements in customer experience (β = 0.49), operational efficiency (β = 0.42), and innovation capacity (β = 0.31). Effective digital leadership and higher digital readiness substantially enhanced these outcomes. Larger, technology-focused startups outperformed their smaller, service-oriented counterparts, which faced challenges including limited technical expertise, system integration issues, and financial constraints. The findings underscore that digital transformation is not merely a technological initiative but a holistic strategic endeavor that requires alignment across leadership, culture, and infrastructure to drive meaningful performance gains. The study offers a diagnostic framework and actionable recommendations for entrepreneurs and policymakers to craft context-sensitive digital strategies that bridge the execution gap, thereby advancing Saudi Arabia’s Vision 2030 objectives and fostering resilient, innovation-driven startup ecosystems.