Innovation Management, Digital Transformation, and Firm Performance in the New Normal

The pandemic caused by SARS-CoV-2 and its variants forced all types of organizations around the world to accelerate their plans for digital transformation and more effectively manage innovation to adapt more quickly to the virtual environment. This process forced organizations in general and companies in particular to adapt their operations to the new normal. These changes also had a significant impact on companies’ business models, which made it necessary to understand the effects of these changes on their performance. Consequently, this investigation sought to study the relationship between innovation management and digital transformation, evaluated how both variables affect firm performance, and analyzed the mediating role of digital transformation in the relationship between innovation management and firm performance. To address these challenges, a theoretical framework was developed to study the relationships among the variables; managers at 291 companies in the retail sector in Lima, Peru, were surveyed; and structural equation modeling was applied. The findings revealed that innovation management had a positive impact on digital transformation. Furthermore, both variables had a positive impact on firm performance, and digital transformation acted as a mediating variable in the relationship between innovation management and firm performance. These findings contribute to the academic literature and provide practical guidance for decision and policy makers in innovation and digital transformation processes.