Decision-making Logic, Learning from Failure and Enterprises’ Digital Transformation Performance

Abstract

In the background of digital transformation, the validity of decision-making logic is not only related to the formulation and implementation of digital transformation, but also the key to stand out among of the many enterprises. As the two bases of decision-making logic, causation refers to the enterprise advocates low cost and high yield, and avoids risks reasonably to complete established goals; effectuation emphasizes the process in which the enterprise uses its own resources to find the possible results in the continuous trial and adjustment in the unpredictable environment. In the process of digital transformation, causation and effectuation have their own advantages and disadvantages. This study aims to address the gap that despite the relationship between decision-making logic and enterprise performance has already been confirmed, limited research has been dedicated to understanding how digital transformation performance would perform under causation and effectuation logic. Therefore, it’s necessary to clarify the mechanism and boundary conditions of decision-making logic and digital transformation performance.Based on the effectuation theory and the situational characteristics of digital transformation, this study constructs a theoretical model of decision-making logic and digital transformation performance, in which learning from failure plays a mediating role and environmental dynamics play a moderating role. Using 247 samples for empirical test, the results show that:（1）Causation and effectuation logic have a positive impact on digital transformation performance respectively.（2）Learning from failure plays a mediating role in the relationship between decision-making logic and digital transformation performance.（3）Environmental dynamics play a negative moderating role in the relationship between causation logic and learning from failure, and play a positive moderating role in the relationship between effectuation logic and learning from failure. Through comparative analysis, it is found that effectuation logic is more significant when the environment is more dynamic.This study has the following theoretical contributions: First, it extends the applied range of the effectuation theory to the digital transformation situation, and provides a new perspective for future. Second, based on the effectuation theory and combining with the characteristics of trial and error in the context of digital transformation, the transmission mechanism between decision-making logic and digital transformation performance is deeply explored. Third, through discussing the effect of causation and effectuation logic on learning from failure under different degrees of environmental dynamics, it deepens the cognition and understanding of the two kinds of decision-making logic.