From potential to performance: digital transformation through the lens of capabilities and support

This study examines how internal capabilities and government support affect digital transformation (DT) performance in Korean manufacturing ventures. While most DT research has focused on established firms, ventures face different resource constraints. Drawing on the Resource-Based View, we analyse the roles of development, manufacturing, and marketing capabilities using firm-level panel data from 2019 to 2023. Applying a Heckman two-stage model to correct for selection bias, we find that all three internal capabilities significantly enhance revenue among DT adopters, with manufacturing capability exerting the strongest positive effect. Notably, this effect is attenuated when firms receive government support, as external intervention weakens the performance benefits of both development and manufacturing capabilities. This finding suggests that external support may partially substitute for, rather than reinforce, firms’ own capability-driven efforts. The study contributes to DT research by advancing a venture-level, capability-based perspective and provides practical guidance for designing support policies that align with firms’ internal capabilities.