Evaluating the influence of digital strategy on the interplay between quality certification and sales performance using data science and machine learning algorithms

Abstract

In the context of international trade with information asymmetries, business certifications can serve as signals of product quality and reliability for customers and stakeholders. Recognizing this, the current study unbraces “signalling theory” to explore the impact of digital transformation strategy (DTS) on firm’s international quality certification status and sales performance in the global economy. To this end, treating quality certification endogenously, the study relies on bivariate copula regression modeling of 121429 firms’ responses data extracted from the World Bank’s Enterprise Surveys. Consistent with the hypothesized theoretical predictions, the findings revealed that DTS, in the form of website ownership, has a significantly positive impact on sales performance due to increasing firm’s reach, visibility, engagement, conversion, and retention of customers across different channels and touchpoints. As theoretically conjectured, quality certification is also found to positively impact sales performance by enhancing the firm’s reputation, trustworthiness, and attractiveness in the global marketplace. Most importantly, the study found empirical evidence that DTS significantly moderates the relationship between quality certification and sales performance, such that quality certification has a stronger effect on sales performance for firms with a well-defined DTS (web=1) than those without (web=0); leading therefore to the conclusion that DTS can amplify the signal of quality certification by making it more visible, transparent, and consistent across different digital channels and touchpoints. Hence, the study provides valuable empirical and theoretical insights that inform current business practices, future research, and potential policy measures to support business growth, and enhanced competitiveness in the global market place.