Research Article

Exploring the Impact of Digital Transformation on Organizational Performance: The Moderating Role of Employee Engagement: A Case Study of Telecommunications Firms in Ghana

Stanley Amankwaa Rahman
GISMA University of Applied Sciences, Germany
* Corresponding author
Sara Ravan Ramzani
GISMA University of Applied Sciences, Germany
DOI icon 10.24018/ejbmr.2025.10.4.2365

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Submitted 2024-04-04
Published 2025-07-15

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Article Main Content

In the rapidly evolving landscape of business and technology, organizations are compelled to undergo digital transformation to stay competitive. This study explores the impact of digital transformation on organizational performance in the telecommunications sector, focusing on the moderating role of employee engagement. The integration of technologies such as social media, mobile platforms, cloud computing, and artificial intelligence has the potential to reshape operational processes, create new business models, and enhance customer experiences. However, the success of these transformative initiatives depends on understanding the intricate relationship between digital transformation, employee engagement, and organizational performance. This study aims to fill this gap by investigating the interplay between digital transformation, employee engagement, and organizational performance in telecommunications firms. The study adopts a mixed-method approach, combining qualitative and quantitative methods through 200 structured questionnaires to gather insights from employees in major telecommunication firms in Ghana, such as MTN, Vodafone, and AT. Data collected from the study analyzed using statistical tools such as SPSS, to establish the relationship between the dependent and independent variables. This study provides insights for effective digital transformation initiatives and identifies best practices for employee engagement, contributing to discussions on the Fourth Industrial Revolution’s impact on organizational success. 

Keywords: Digital transformation employee engagement organizational performance telecommunication industry

Introduction

Organizations are navigating a dynamic business landscape characterized by evolving customer demands and market dynamics, driven by the rapid advancement of digital technologies. The Fourth Industrial Revolution, marked by technologies like social media, mobile technologies, cloud computing, big data analytics, artificial intelligence, and blockchain, has prompted businesses to embark on digital transformation initiatives to stay competitive (Kutzneret al., 2018). Digitalization holds immense potential for creating new business models, enhancing customer experiences, improving operational processes, fostering collaboration, and reducing costs and errors (Dellermannet al., 2017; Maedche & Brocke, 2017). However, realizing these benefits requires organizations and individuals to embrace change and adapt to the increasing utilization of information technologies and data.

The transformative nature of digitalization often leads to disruptions, necessitating changes in products, processes, organizational structures, and management approaches (Bughin & Van Zeebroeck, 2017; Abolfathi & Santamaria, 2018; Mattet al., 2015). In the telecommunications industry, for instance, digital transformation initiatives involve deploying high-speed networks, introducing innovative communication platforms, and developing data-driven services (Bughinet al., 2018). The pervasive nature of digital transformation across sectors underscores the importance of understanding its impact on organizational performance. Organizational performance, encompassing financial performance, productivity, innovation, customer satisfaction, and market share, is a critical area of research concerning digital transformation (Westermanet al., 2014). Previous studies have explored the positive effects of technology adoption and digital capabilities on various performance indicators (Bharadwajet al., 2013; Sabherwalet al., 2019). However, despite the growing body of literature, there is still a need for a comprehensive understanding of how digital transformation mechanisms influence organizational performance.

This paper looks at the interplay between digital transformation, employee engagement, and organizational performance in telecommunications firms and addresses this gap by specifically focusing on the moderating role of employee engagement in the relationship between digital transformation and organizational performance. Employee engagement, defined as the level of commitment, passion, and enthusiasm employees have towards their work and the organization, plays a crucial role in organizational success (Saks, 2006; Bakkeret al., 2011). Limited research has explored how employee engagement moderates the impact of digital transformation on organizational performance. Therefore, this study aims to investigate the impact of digital transformation on organizational performance in the telecommunications sector, with a specific focus on the moderating role of employee engagement.

Review of Literature

Scholarly research has increasingly emphasized the crucial role of digital transformation in shaping organizational performance, particularly in the telecommunications sector. Organizations have recognized the imperative to embrace digitalization to stay competitive and meet the evolving demands of the digital era (Berman & Marshall, 2015). This shift involves the integration of digital technologies into organizational processes, services, and customer interactions (Westermanet al., 2014). Several studies have acknowledged the potential benefits of digital transformation, such as improved operational efficiency, enhanced customer satisfaction, and increased competitiveness (Weill & Woerner, 2018; Kohli & Melville, 2019; Berman & Hagan, 2020).

Employee Engagement

Despite the growing acknowledgment of these benefits, the literature highlights a significant research gap concerning the complex relationship between digital transformation initiatives and employee engagement. Employee engagement, characterized by commitment, enthusiasm, and dedication to work and the organization (Schaufeliet al., 2002), is recognized as a critical driver of organizational performance (Harteret al., 2002). Engaged employees contribute to higher levels of productivity, innovation, and customer satisfaction (Bakkeret al., 2011). However, the extent to which employee engagement moderates the relationship between digital transformation and organizational performance has been largely unexplored in the literature (Fuchs & Stoehr, 2019).

Within the telecommunications sector, the unique context of intense competition, rapid technological advancements, and changing customer expectations adds complexity to the exploration of digital transformation’s impact on organizational performance (Jung & Yoon, 2018). The studies conducted during this period have focused on the positive outcomes of digital transformation in terms of operational efficiency, customer experiences, and strategic alignment (Kohli & Melville, 2019; Brynjolfsson & McAfee, 2014; Verhoefet al., 2019).

Digital Transformation

In the broader landscape of business and society, the concept of digital transformation has emerged as a pivotal driver of change and innovation. This transformation entails the fundamental reimagining and redesign of organizational operations, processes, and services through the integration of digital technologies (Westermanet al., 2014). The literature underscores the multifaceted nature of digital transformation, which goes beyond technology adoption to encompass cultural shifts, customer-centricity, and a focus on data-driven decision-making (Rosset al., 2016; Liuet al., 2020; Hesset al., 2016).

Review of Theory

To theoretically frame these discussions, the Resource-Based View (RBV) has been employed, emphasizing the strategic importance of aligning digital capabilities with existing organizational resources and dynamically adapting to changing environments (Teece, 2018). Additionally, the Job Demands-Resource (JD-R) Theory has been utilized to understand the impact of digital transformation on employee well-being and engagement (Schaufeli & Taris, 2014). This psychological framework highlights the balance between job demands, associated with the stressors of change, and job resources, crucial for motivating and engaging employees during digital transformation initiatives (Demeroutiet al., 2001).

Empirical studies conducted within this timeframe reinforce the positive impact of digital transformation on organizational efficiency, customer satisfaction, and financial performance (Kohli & Melville, 2019; Berman & Hagan, 2020). These studies underscore the strategic significance of digital transformation in enhancing overall organizational outcomes. However, the literature consistently points to the need for more in-depth exploration of the moderating role of employee engagement in the relationship between digital transformation and organizational performance (Fuchs & Stoehr, 2019).

There has been an increased recognition of the transformative potential of digital technologies in organizations, especially within the telecommunications sector. The literature has identified the positive outcomes of digital transformation, but a notable research gap exists in understanding how employee engagement moderates these relationships. As organizations continue to navigate the digital landscape, further research is needed to uncover the intricate dynamics between digital transformation, employee engagement, and organizational performance.

Drawing on empirical evidence, we hypothesize a significant positive relationship between digital transformation and organizational performance (H1). Similarly, we anticipate a positive association between employee engagement and organizational performance (H2). Recognizing the mediating role of employee engagement, our model posits that engaged employees mediate the link between digital transformation and enhanced organizational performance (H3). This relationship is illustrated in Fig. 1. This theoretical framework integrates insights from the Resource-Based View, emphasizing the strategic value of digital capabilities, and established relationships between engagement and performance.

Fig. 1. Conceptual framework. Source: Author’s construct, 2024.

Conceptual Framework

Digital transformation initiatives, evidenced by studies like Berman and Marshall (2015), are associated with enhanced operational efficiency and cost reduction, fostering improvements in organizational processes and overall performance. Innovation, a core component of digital transformation, correlates with heightened organizational productivity (Bughinet al., 2018), while leveraging digital tools for customer engagement leads to increased satisfaction and performance (Verhoefet al., 2019). Strategic alignment of digital transformation with organizational goals is crucial for performance enhancement (Henderson & Venkatraman, 1993), and leveraging resources for competitive advantage (Barney, 1991). Concurrently, engaged employees, as indicated by studies such as Harteret al. (2002), contribute to improved profitability, performance, and customer satisfaction, underscoring their pivotal role. Employee engagement also mediates the relationship between digital transformation and organizational performance, facilitating adaptation to new technologies and enhancing resilience (Kularet al., 2008; Schaufeli & Bakker, 2004).

Hypothesis Development

• H1: There is a significant relationship between digital transformation and organizational performance.

• H2: There is a significant relationship between employee engagement and organizational performance

• H3: Employee engagement mediates the link between digital transformation and organizational performance.

Research Methodology

This study utilizes a descriptive research design with a quantitative approach to measure the mediating role of employee engagement in the impact of digital transformation on organizational performance. The population includes all staff from major telecommunication firms in Kumasi, Ghana. However, due to practical constraints, a sample size of 133 staff members will be selected for data collection, aiming to represent the entire population.

A systematic sampling technique will be employed, and the sample size, determined by Sloven’s Formula, is estimated at 133 respondents from the major telecommunications firms in Kumasi, Ghana. Primary data will be collected through self-administered questionnaires from respondents. Structured closed-ended questionnaires will be used, employing a three-point Likert scale for ease of response and subsequent analysis. Statistical Package for Social Sciences (SPSS) will be used for data analysis. Both descriptive and inferential statistics will be applied. Demographic data will be presented using pie charts and bar graphs, while measures of central tendency (mean) and variation (standard deviation) will assess the impact of digital transformation on organizational performance.

The study ensures the validity and reliability of data collection tools. Reliability, assessed using Cronbach’s alpha technique, ensures the internal consistency and dependability of research constructs. The research strategy involves a quantitative approach, focusing on numerical data to measure the relationships between digital transformation, employee engagement, and organizational performance.

Three major telecommunication firms in Kumasi, Ghana, are under scrutiny: MTN Ghana, with over 17.83 million subscribers, is the leading provider of mobile telecommunications services, representing 55.09% of the market. Vodafone Ghana, part of Vodacom Group, holds around 9.3 million mobile voice subscribers, constituting 13.81% of the Ghanaian market. AT Ghana, born from the merger of Airtel and Tigo in 2017, focuses on innovation and simplicity in providing mobile voice, data, financial services, and business connectivity.

The study implemented ethical safeguards, adhering to the principles outlined by Babbie and Mouton (2001). Confidentiality was maintained by excluding personal identifiers in the questionnaires, and informed consent was obtained from participants, following the guidelines proposed by Saunderset al. (2019). Anonymity measures were also in place to protect the identity of respondents throughout the research process.

Results

The research findings conduct an in-depth analysis, and engage in a comprehensive discussion of the impact of digital transformation on organizational performance, with a specific focus on the moderating role of Employee Work Engagement.

Table I provides a comprehensive overview of the demographic characteristics of the 113 respondents, shedding light on the sample composition for the study on digital transformation’s impact on organizational performance in the Ghanaian telecommunication industry. The majority, 64.66%, identified as male, while 35.34% were female. The age distribution revealed that the largest group (39.85%) fell within the 26 to 30 age range, with 27.07% aged between 31 to 41. In terms of education, 39.10% held undergraduate degrees, 29.32% had diplomas, and 22.56% had secondary education. Regarding professional experience, 64.66% reported one to five years, 27.07% had six to ten years, and 6.77% accumulated 11 to 20 years in the telecommunication industry. The findings offer valuable insights into the diverse backgrounds and experiences that may influence participants’ perspectives on the research topic.

Variables Frequency Percentage (%)
Gender
 Male 86 64.66
 Female 47 35.34
Age
 18–25 25 18.80
 26–30 53 39.85
 31–41 36 27.07
 Above 41 8 6.02
Educational level
 Secondary education 30 22.56
 Diploma certificate 39 29.32
 Undergraduate degree 52 39.10
 Masters’ degree 9 6.77
 PHD 3 2.26
Years of experience
 1–5years 86 64.66
 6–10 years 36 27.07
 11–20 years 9 6.77
 21 years and above 2 1.50
Table I. Demographic Characteristics of Respondents

Reliability and Validity Assessment

KMO and Bartlett’s Test

In this study, the suitability of the dataset for subsequent factor analysis was assessed using the Kaiser-Meyer-Olkin (KMO) value and Bartlett’s sphericity test. The KMO value of 0.881, surpassing the critical threshold of 0.5, indicates the dataset’s appropriateness for factor analysis. Concurrently, Bartlett’s test yielded a significant chi-square statistic (979.853, df = 376, p = 0.000), confirming a substantial correlation in the data. These results fulfill the prerequisites for factor analysis, with the variables meeting both the KMO criterion (>0.5) and the significance criterion (<0.05). Detailed outcomes of the Kaiser-Meyer-Olkin measure and Bartlett test are presented in Table II.

Kaiser-Meyer-Olkin measure of sampling adequacy 0.881
Bartlett’s test of sphericity Approx. Chi-Square 979.853
df 376
Sig. 0
Table II. KMO and Bartlett’s Test

Exploratory Factor Analysis (EFA)

The exploratory factor analysis in this study utilized the principal component analysis extraction method, Varimax rotation with Kaiser Normalization, and achieved convergence after six iterations. Notably, three distinct factors emerged—Digital Transformation (Factor 1), Organizational Performance (Factor 2), and Employee Work Engagement (Factor 3). The analysis revealed associations of specific items with each factor, collectively explaining 61.767% of the overall variance. Notably, five items related to Digital Transformation, six to Organizational Performance, and six to Employee Work Engagement were retained for further analysis due to their clear factor associations and significance. Detailed factor loadings can be found In Table III.

Items Factor
1 2 3
DT1 0.047 0.015 0.662
DT3 0.159 0.121 0.829
DT4 0.029 0.27 0.675
DT5 0.191 0.004 0.840
DT8 0.258 0.09 0.855
OP1 −0.049 0.695 0.071
OP2 −0.109 0.717 0.026
OP3 −0.007 0.664 0.122
OP4 −0.133 0.700 0.184
OP5 −0.07 0.770 0.113
OP6 −0.083 0.707 0.361
EWE1 0.813 0.091 −0.059
EWE2 0.913 0.077 −0.101
EWE3 0.897 0.089 −0.05
EWE4 0.883 0.004 −0.038
EWE5 0.746 0.155 −0.04
EWE7 0.826 0.068 −0.021
Table III. Factor Loadings for Exploratory Factor Analysis (N = 133)

Reliability Analysis

Reliability measurements gauged through Cronbach’s Alpha, were conducted to evaluate the questionnaire’s consistency and accuracy in reflecting the underlying relationships between different scales and outcomes. The reliability statistics analysis, presented in Table IV, indicated that all variables surpassed the acceptable threshold of 0.70 for Cronbach’s Alpha. This implies that the items within each variable exhibited a high level of reliability, reinforcing the accuracy and dependability of the scale in providing effective findings.

Variable Cronbach alpha No. of items
Digital transformation 0.881 5
Organizational performance 0.835 6
Employee work engagement 0.782 6
Table IV. Reliability Statistics

Descriptive Statistics and Inter-Construct Correlation

Table V presents descriptive statistics and inter-construct correlations among the key variables in the study. Mean scores indicate generally positive perceptions of Digital Transformation (3.68) and Organizational Performance (4.26), with the latter having the highest mean, suggesting a relatively higher perceived level of performance. Low standard deviations imply consensus among respondents. Inter-construct correlations reveal a moderate positive correlation (0.302) between Digital Transformation and Organizational Performance, suggesting that improved perceptions of Digital Transformation align with enhanced Organizational Performance. Additionally, significant correlations between Digital Transformation and Employee Work Engagement (0.385), as well as Organizational Performance and Employee Work Engagement (0.481), indicate that favorable perceptions of Digital Transformation and Organizational Performance correspond to increased levels of Employee Work Engagement.

Variables Mean SD 1 2 3
1 Digital transformation 3.68 0.793
2 Organizational performance 4.26 0.568 0.302**
3 Employee work engagement 4.01 0.637 0.385** 0.481*
Table V. Descriptive Statistics and Inter-Construct Correlation

Hypothesis Testing

Digital Transformation and Organizational Performance

The empirical analysis, as presented in Table VI, supports the study’s central contention that Digital Transformation significantly and positively influences Organizational Performance. The effect coefficient of 0.357 (SE = 0.081) indicates a statistically significant relationship between Digital Transformation and Organizational Performance. The bootstrapped confidence intervals (LLCI: 0.197, ULCI: 0.517) further confirm this finding, excluding zero and highlighting the robust and consistently positive impact of Digital Transformation on Organizational Performance. This empirical validation underscores the strategic importance for organizations to invest in and effectively implement digital transformation initiatives to optimize overall performance outcomes.

Effect type Paths Effect (Boot) SE (Boot) LLCI (Boot) ULCI
Direct effect DT → OP 0.357 0.081 0.197 0.517
EWE → OP 0.248 0.053 0.254 0.546
Conditional effect DT → (DT × EWE) → OP 0.62 0.09 0.456 0.783
DT (DT × low EWE) → OP 0.48 0.07 0.351 0.613
DT (DT × high EWE) → OP 0.75 0.1 0.582 0.923
Table VI. The Direct and Conditional Effects

Employee Work Engagement and Organizational Performance

The study investigates the relationship between Employee Work Engagement (EWE) and Organizational Performance (OP) in the Ghanaian telecommunication industry. The analysis reveals a substantial and statistically significant connection, emphasizing the crucial role of employee engagement in shaping organizational success. The findings highlight the importance of investing in initiatives that foster employee engagement for enhanced performance outcomes. This aligns with broader industry trends and literature, providing actionable insights for industry leaders aiming to optimize performance through targeted employee engagement strategies.

Moderating Role of Employee Work Engagements

The study explores the interplay between Digital Transformation (DT), Organizational Performance (OP), and the moderating role of Employee Work Engagement (EWE) in the Ghanaian telecommunication industry. The analysis uncovers a significant positive influence of Employee Work Engagement on the relationship between Digital Transformation and Organizational Performance. The study delves into nuanced insights, revealing that the impact of Digital Transformation on Organizational Performance is more pronounced in the presence of highly engaged employees, emphasizing the amplifying role of workforce engagement in optimizing the effects of digital transformation initiatives. This nuanced understanding provides valuable insights for organizations aiming to leverage employee engagement for enhanced performance outcomes in the context of digital transformation.

Discussions

Digital Transformation and Organizational Performance

The study robustly supports the hypothesis of a significant positive impact of Digital Transformation (DT) on Organizational Performance (OP). The findings, demonstrated in Table VI, reveal a substantial effect coefficient, affirming that organizations investing in digital transformation initiatives experience a discernible improvement in overall performance. This result is particularly relevant in the context of the Ghanaian telecommunication industry, characterized by rapid technological advancements and a growing demand for digital services. The study’s implications extend beyond academia, offering actionable recommendations for telecommunication companies operating in Ghana and potentially serving as a template for similar industries in sub-Saharan Africa. The positive influence of digital transformation on performance aligns with prior research, reinforcing the global applicability and strategic significance of digital transformation for organizational success.

Employee Work Engagement and Organizational Performance

The study’s direct effect analysis establishes a significant and positive influence of Employee Work Engagement (EWE) on Organizational Performance (OP) within the telecommunication industry in Ghana. The substantial effect coefficient indicates that motivated and committed employees play a crucial role in driving organizational success, contributing effectively to the achievement of goals and objectives. This finding aligns with established theories and empirical evidence highlighting the positive correlation between employee engagement and enhanced performance outcomes. In the context of the dynamic and competitive telecommunication sector in Ghana, where technological advancements and evolving consumer demands prevail, engaged employees are seen as valuable assets contributing to organizational adaptability, customer service, and innovation. The study’s results align with prior research, reinforcing the universal significance of employee engagement as a driver of organizational success across different industries and regions.

Moderating Role of Employee Work Engagements

The study’s findings on the moderating role of Employee Work Engagement (EWE) in the relationship between Digital Transformation (DT) and Organizational Performance (OP) offer significant insights, especially within the specific context of the telecommunication industry in Ghana. The observed positive moderating effect emphasizes the crucial role of engaged employees in enhancing the impact of digital transformation initiatives on organizational performance, particularly in a sector marked by rapid technological advancements and a competitive landscape. This underscores the strategic importance for telecommunication companies in the region to prioritize employee engagement as a key driver of enhanced organizational performance through digital transformation. The nuanced aspect of the findings, indicating a more pronounced moderating effect at higher levels of Employee Work Engagement, provides valuable guidance for organizations seeking to optimize the outcomes of their digital transformation efforts, especially in areas like innovation, customer service, and operational efficiency. The study’s results resonate with prior research, reinforcing the strategic significance of employee engagement in the success of digital transformation initiatives within the unique context of the telecommunication industry in Ghana.

Conclusions

To conclude, this study sheds light on the intricate dynamics shaping organizational success within the telecommunication industry in Ghana by examining the synergies between digital transformation, employee work engagement, and organizational performance. The confirmed positive effects of both digital transformation and employee work engagement underscore their significance as strategic imperatives for achieving heightened organizational performance. The nuanced revelation that higher levels of employee work engagement amplify the positive impact of digital transformation adds depth to this understanding. For industry practitioners and managers, the study offers actionable insights, advocating for comprehensive digital transformation strategies and the prioritization of employee work engagement initiatives. By fostering an environment that combines technological proficiency with deep employee commitment, organizations can navigate the evolving landscape of the telecommunication sector in Ghana with resilience and success. The study not only contributes empirically to the current understanding of these dynamics but also provides a roadmap for future research and strategic decision-making in the ever-evolving realm of digital transformation and organizational performance.

Considering the identified limitations, future research in the field of digital transformation, employee work engagement, and organizational performance should broaden its geographical scope to encompass diverse industries and regions. This expansion would enhance the generalizability of findings, allowing for a more comprehensive understanding of the dynamics at play. Additionally, researchers should explore innovative data collection methods beyond self-reported surveys to minimize biases and strengthen the validity of results. Employing mixed-method approaches or alternative data sources could offer richer insights. Furthermore, longitudinal designs or experimental methods should be prioritized to establish causal relationships between variables. Lastly, researchers are encouraged to delve into unexplored moderating or mediating variables, contributing to a more nuanced understanding of the complex relationships in this context. By addressing these recommendations, future studies can advance the knowledge base in this dynamic field and provide more robust insights for both academia and industry practitioners.

Conflict of Interest

Conflict of Interest: The authors declare that they do not have any conflict of interest.

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