Digital Transformation and Innovation Performance in Manufacturing Firms: The Mediating Role of Absorptive Capacity and the Moderating Role of R&D Human Capital

Abstract

This study empirically investigated the effect of digital transformation on innovation performance in manufacturing firms and examined the mediating role of absorptive capacity and the moderating role of R&D human capital. As manufacturing industries increasingly experience rapid technological changes driven by artificial intelligence (AI), big data, the Internet of Things (IoT), and smart manufacturing systems, digital transformation has emerged as a critical strategic factor for enhancing organizational competitiveness and innovation capability. However, prior studies have suggested that the adoption of digital technologies alone does not necessarily guarantee sustainable innovation performance. Therefore, this study attempted to explain the relationship between digital transformation and innovation performance from the perspectives of organizational learning and human capital. Data were collected from 402 employees working in Korean manufacturing firms through online and offline surveys. The collected data were analyzed using Structural Equation Modeling (SEM) with SPSS 29.0 and SmartPLS 4.0. The results indicated that digital transformation had a significant positive effect on innovation performance and absorptive capacity. In addition, absorptive capacity positively influenced innovation performance and partially mediated the relationship between digital transformation and innovation performance. Furthermore, R&D human capital significantly moderated the relationship between digital transformation and innovation performance, indicating that the positive effect of digital transformation on innovation performance was stronger in firms with higher levels of R&D human capital. The findings suggest that digital transformation contributes to innovation performance not only through technological efficiency but also through enhanced organizational learning and knowledge utilization capabilities. This study provides academic implications by integrating digital transformation, absorptive capacity, and R&D human capital into a comprehensive research framework. In addition, it offers practical implications for manufacturing firms by emphasizing the importance of organizational learning systems and the development of R&D personnel capabilities alongside digital technology investment.