Evaluating the Influence of Digital Strategy on the Interplay between Quality Certification and Sales Performance Using Data Science and Machine Learning Algorithms
Bivariate Gumbel Copula Regression Evidence from 121,429 Firms across 148 Economies (World Bank Enterprise Survey, 2006–2021)
1 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. Recognising this, the current study embraces signalling theory to explore the impact of digital transformation strategy (DTS) on a 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 modelling of 121,429 firms’ responses extracted from the World Bank’s Enterprise Surveys. Consistent with the hypothesised theoretical predictions, the findings reveal that DTS — in the form of website ownership — has a significantly positive impact on sales performance by increasing a 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 finds 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 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. 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 marketplace.
Keywords: Copula regression · Digital strategy · Global economy · Quality certification · Sales performance · Signalling Theory
2 Introduction
Defined as the worldwide inter-connected economic system in which all economic activities are inter-related between and within countries, the global open economy has witnessed a rapid digital transformation in recent years (Priyanto and Putri 2020; Fukawa, Zhang, and Erevelles 2021), compelling businesses to reassess their strategies and operations in order to survive (Priyanto and Putri 2020). From electronic administration of both public (Chawla and Goyal 2022; Khin and Ho 2018) and private (Tutak and Brodny 2022; Martínez-Caro, Cegarra-Navarro, and Alfonso-Ruiz 2020) enterprises — including digital logistics management, digital retail chains management, digital financial management, digital information management — as well as total quality management, digitalisation is supporting sustainable value creation through offering unprecedented opportunities for companies to expand their market reach, enhance operational efficiency, and engage with customers in new and innovative ways (Bui and Le 2023; Homburg and Wielgos 2022; Wang et al. 2023).
At the same time, achieving and maintaining international quality certifications is a crucial step for businesses seeking to grow their sales sustainably, by demonstrating their commitment to delivering superior products or services. International quality certifications such as ISO (International Organization for Standardization) for manufacturing and services, HACCP (Hazard Analysis and Critical Control Point) for food, and AATCC (American Association of Textiles Chemists and Colorists) for textiles are reported to benefit firms by improving their internal processes, enhancing their customer satisfaction, reducing their costs and errors, increasing their productivity and innovation, and facilitating their access to new markets and customers (Al-Abdallah, Fraser, and Alborq 2021).
Despite the growing significance of both digitalisation and international quality certification for businesses in the global economy, there remains an important literature gap in how a clear digital strategy influences a firm’s international quality certification status and the subsequent effects on sales performance at the global scale (Heredia et al. 2022). However, as businesses increasingly invest in digital initiatives, it is crucial to evaluate the effectiveness of these strategies in achieving and maintaining international quality standards and sales performance (i.e. sales goals and objectives).
The emphasis on sales performance in this analysis is paramount due to the challenges and changes caused by the recent COVID-19 pandemic. As companies focus on recovery, adaptation, and resilience, sales revenue serves as a critical measure of a company’s ability to adapt to new market dynamics, engage with customers, and make strategic decisions that will support long-term growth and stability in the face of future uncertainties (Bui and Le 2023; Masoud and Basahel 2023).
Furthermore, since various factors potentially condition a firm’s sales performance in the global economy — including the firm’s own characteristics (e.g. size, years of operation, industry sector etc.), the characteristics of the firm’s ownership, direction, and control, the conditions of the market in which it operates (i.e. characteristics and regulation), as well as the firm’s geographic location — it is important to examine the underlying mechanisms and contingencies that link these factors with digital strategy and international quality certification to shape the firm’s value proposition and overall performance in different settings and scenarios.
Therefore, this research aims to bridge the above highlighted gap, by exploring and analysing the relative influence of digital strategy on a firm’s international quality certification status and sales performance, shedding light on their interconnectedness to provide actionable insights into how companies can leverage digitalisation to meet their quality and sales objectives in the global market place. A secondary objective of the study is to provide a supply side counterpart to (Niankara and Islam 2023), by addressing the impact of digitalisation on the welfare of business themselves. This former study used a cross-sectional panel data that merges the 2014, 2017, and 2021 waves of the global Findex Survey spanning 155 economies, together with the inter-temporal theory of consumption, in conjunction with Random Utility Maximisation, reported on the impact of business process digitalisation on consumer welfare, in terms of digital payroll induced financial inclusion in the global open economy.
Because quality certifications can serve as signals of product quality and reliability for customers and stakeholders, especially in the context of international trade with prevalent information asymmetries, this study embraces “signalling theory” (Connelly et al. 2011) as the ideal theoretical lenses for exploring how firms can communicate their quality and capabilities through clear and observable digital strategies, that ensure better sales performances (Ullah 2020). Consistent with this theory, the broad question addressed by this research is: In the pursuit of performance excellence in the global economy, how much does strategic digital transformation assist firms to achieve their quality and sales objectives?
More specifically:
- RQ1: To what extent does digital strategy influence a firm’s sales performance in the global economy?
- RQ2: How much does international quality certification improve a firm’s sales performance in the global economy?
- RQ3: How much does digital strategy moderate the relationship between a firm’s international quality certification status and sales performance in the global economy?
- RQ4: How do factors such as firm’s ownership, direction, and control; firm’s own characteristics; market conditions and regulation; regional location; and time moderate the relationships among digital strategy, international quality certification, and sales performance of firms in the global economy?
3 Literature Review
3.1 Digital Transformation and Business Performance
With rising business digitalisation worldwide (Niankara and Islam 2023; Niankara and Traoret 2023), numerous studies have explored its impact on organisational performance (Jardak and Ben Hamad 2022; Mishra et al. 2023; Teng, Wu, and Yang 2022). While the operational stream of literature addresses digital tools utilisation in day-to-day operations to improve efficiency, automate processes, and enhance communication, without necessarily taking a broader strategic approach (Rajala and Hautala-Kankaanpää 2023); the strategic stream of literature goes beyond the mere usage of digital tools to encompass a long-term vision and plan for leveraging digital technologies for organisational transformation, value creation, and competitive advantage in the global marketplace (Heubeck 2023).
For example, in China, Teng, Wu, and Yang (2022) discovered that the digital transformation of small and medium-sized enterprises (SMEs), through enhanced digital technology, employee digital skills, and digital strategy, significantly influences their performance and sustainable development. Furthermore, by developing a theoretical framework grounded in strategic choice and dynamic capability theories, Mishra et al. (2023) demonstrated that the effective implementation of digital transformation strategies positively impacts open innovation, firm performance, and competitive advantage. Additionally, Jardak and Ben Hamad (2022) investigated firms listed on Sweden’s stock exchange, employing both static and dynamic panel regression models and the generalised method of moments to address endogeneity concerns. Their study explored the impact of a firm’s digital maturity (DM) on Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q.
Furthermore, assessing which digital customer experience strategies and practices have the most positive influence on organisational performance, Khin and Ho (2018) used the theory of relevance to argue for value driven digital customer experience strategy as a precursor for superior firm performance. Relying on resource-based theory, the research also uncovered significant trade-offs resulting from the moderating impact of organisational and environmental factors on the interplay between digital marketing capabilities (DMCs) and classic marketing capabilities (CMCs). Similarly, Homburg and Wielgos (2022) relied on SEM applied to data collected from 999 firms across 27 countries and extracted from the 2020 World Bank survey, to test a hypothetical model explaining how digital capabilities impact the performance of firms within the framework of business practices in the post-covid-19 era.
Additionally, using survey data from 227 companies in the Taiwanese financial sector, Tsou and Chen (2022) found that having a clear digital transformation strategy positively mediates the effectiveness of digital technology usage on firm’s performance in Taiwan. Moreover, Wang, Gao, and Yang (2022) revealed the significant impact of higher digital servitisation on performance in more technology intensive industry sectors. Their analysis demonstrated also that in all category of technology intensity, data driven services relying on big-data analytics provide the greatest performance dividend to manufacturing firms.
3.2 Quality Management Standards and Business Performance
Although prompted by legislative requirements since the early 1990s, international quality certifications are now important aspects of contemporary business practices, characterised by increasing pressure on firms to continually innovate and upgrade the quality of their product offerings. A growing stream of literature has delved into the topic of quality certification and organisational performance.
For example examining a set of 70 Singapore Stock Exchange listed companies over a span of six years, to study the correlation between ISO 9000 certification and advancements in three financial performance aspects — operating efficiency, sales growth, and overall financial performance — Sharma (2005) found consistency with hypothesised positive effects. Similarly, relying on signalling theory to assess how certification with ISO 9000 generates a competitive advantage among US manufacturing firms, Terlaak and King (2006) found that certified US manufacturing facilities grew faster at a rate much greater than that accounted for by mere operational improvements. More recently, with the aim of carrying out a systematic review of the extent literature on the relationships between quality standards management, innovation and organisational performance, García-Fernández, Claver-Cortés, and Tarí (2022) analysed 172 articles from the Scopus and Web of Science databases. Their findings revealed favourable direct and indirect connections among quality management, incremental and radical advancements in both product and process, as well as financial and operational performance.
3.3 Literature Gap and Current Paper’s Contribution
As highlighted in the above reviewed literature, none of the prior studies has taken up the challenge of addressing the triangular relationship between digital strategy, international quality certification and a firm’s performance at the scale of the global economy, and especially taking into account the potential endogeneity of quality certification in this dynamic. Therefore, the current research bridges an important gap, by examining how digital strategy and international quality certification interact with each other to affect the sales performance of firms in the global economy. As described in the next section, “signalling theory” is adopted as the adequate theoretical lenses for explaining this dynamics.
Consistent with the theory’s predictions and the above reviewed literature, this paper hypothesises that firms with both international quality certification and a well-defined digital strategy will have higher sales performance than firms that have only one or none of these factors. The paper also examines the moderating effects of several key factors (i.e. firm’s own characteristics; the characteristics of the firm’s ownership, direction, and control; market conditions and regulation; as well as locational and temporal influences) on this triangular relationship.
4 Theoretical Framework
4.1 Signalling Theory
Dealing primarily with qualitative concepts and principles, signalling theory emphasises the use of signals, such as quality certifications, to convey information and reduce information asymmetry between firms and stakeholders (Fu, Boehe, and Orlitzky 2022). The theory explores how these signals can influence perceptions, behaviours, and outcomes in the business environment. While some mathematical modelling can be applied to specific aspects of the theory, such as game theory or statistical analysis, its general application to the connection between quality certification and company performance does not necessarily involve specific algebraic expressions (Ballina, Valdes, and Del Valle 2020; Ullah 2020). The theory is based on the idea that when two parties possess distinct information, one of them (referred to as the sender) has the ability to communicate or convey that information to the other party (known as the receiver), who can then interpret the signal and act accordingly (Ullah 2020).
Signalling theory applied then to a firm’s international quality certification status refers to the strategic behaviour of companies in obtaining and displaying quality certifications as a means of signalling their quality and competence to external stakeholders, particularly in international markets. In the global marketplace, where firms face information asymmetry, signalling theory suggests that quality certifications can serve as credible signals to potential customers, partners, and investors about a company’s commitment to quality and its ability to deliver certain standards. By obtaining and prominently displaying internationally recognised certifications through a clear digital strategy (example a website), firms can differentiate themselves from competitors and build trust and confidence among stakeholders (Fu, Boehe, and Orlitzky 2022).
4.2 The Hypothesised Directions of the Relationships
By signalling their quality and capabilities through digital strategy and quality certification, firms can significantly improve their sales performance. More specifically, this study hypothesises that digital strategy and quality certification have direct and interactive effects on the firm’s sales performance. It is expected that digital strategy favourably impacts sales by increasing the firm’s reach, visibility, engagement, conversion, and retention of customers across different channels and touchpoints. It is also expected that quality certification has a positive effect on sales performance by enhancing the firm’s reputation, trustworthiness, and attractiveness in the global market. We further expect that digital strategy moderates the relationship between quality certification and sales performance, such that quality certification has a stronger effect on sales performance for firms that have a well-defined digital strategy than for firms that have a weak or no digital strategy.
4.3 Motivating the Theoretical Endogeneity of Quality Certification
One of the challenges in studying quality certification in its relationship with digital strategy and sales performance is the potential endogeneity problem. Indeed, “Statistical Endogeneity” refers to a situation where an explanatory variable is correlated with the error term in a regression model, which can lead to biased and inconsistent estimates of causal relationships (Sande and Ghosh 2018; Wooldridge 2020). In the context of quality certification and sales performance, endogeneity can arise from several sources, such as self-selection bias, reverse causality, or omitted variables bias. For example, self-selection bias can occur when firms that are already performing well are more likely to obtain quality certification than firms that are performing poorly; while reverse causality can occur when higher sales performance motivates firms to seek quality certification to maintain or enhance their competitive advantage.
4.4 Resulting Conceptual Framework
The above described relationships are summarised in the conceptual framework shown in Figure 1 of the original publication, which depicts: Digital Strategy (D) with its mediating relationship (+) to Annual Sales Performance (S); Quality Certification Status (Q) with its endogenous relationship (+) to S; and the moderating relationships of firm characteristics including Characteristics of the Firm’s Ownership, Direction, and Control (EODC), The Firm’s Own Characteristics (EOC), Market Regulation and Characteristics (MRC), and Spatial and Temporal Characteristics (STC).
5 Methodology
5.1 Research Design, Data Collection, and Sample Selection
This research study follows a cross-sectional panel design, based on a mixed (quantitative and qualitative) secondary data source extracted from the World Bank’s Enterprise Survey (World Bank 2022a). Conducted in collaboration with national statistical offices, business associations, and other partners in emerging markets and developing economies, the Enterprise Survey is a firm-level rich data source covering various aspects of the business environment and performance of firms, such as sales, employment, productivity, investment, innovation, exports, costs, taxes, regulations, corruption, finance, gender, informality, and quality management.
For the current study, the collected secondary data involved obtaining the relevant survey datasets (i.e. those operationalising the conceptual framework) from the World Bank Enterprise Survey website (World Bank 2022b). The website provides access to individual country datasets, aggregated datasets (across countries and years), panel datasets, and all relevant survey documentation for freely registered users.
The sample selection criteria were based on the availability and relevance of the survey data for the formulated research questions. This study uses the publicly released combined survey data for all countries as of July 2022, which covers 180,067 business establishments over the fiscal years 2006–2021. The study addresses both the manufacturing and services sectors, but excludes firms with 100% state ownership, as they are not eligible to participate in the original enterprise survey. The study also excludes firms with missing or invalid values for the key variables. The final sample size of 121,429 firms distributed across 148 economies (approximately 67.44% of the original raw data sample) contains all business enterprises that meet the above selection criteria.
5.2 Operational Definitions
In this study, digital strategy is measured using a binary indicator of website ownership — “D”. A firm is assumed to have a digital strategy if at least it owns a website that showcases its products and/or services to customers and stakeholders (D = 1); otherwise the firm is assumed to have no observable digital strategy (D = 0). International quality certification status is also measured using a binary indicator — “Q”. A business establishment is assumed to have an international quality certification if it has any certificate that is recognised in international markets (including ISO, HACCP, AATCC). Sales performance (“S”) is a continuously distributed random variable measured using the natural logarithm of the business establishment’s total annual sales.
Table 1 below presents the summary description of all variables.
| Variable Label | Variable Description |
|---|---|
| LogSales | Annual sales performance. Measured as the natural logarithm of total annual sales revenue |
| iCert | International quality certification status (Binary: 1 = has certificate; 0 = otherwise) |
| Web | Digital Strategy. Measured with a binary indicator (1 = if business has a website; 0 = otherwise) |
| legalStat | Business establishment legal status (5 qualitative levels) |
| largFirm | Whether the establishment is part of a large firm (Binary: 1 = yes; 0 = otherwise) |
| femOwner | Whether the establishment’s ownership includes a female (Binary) |
| extAudit | The establishment external auditing status (Binary) |
| Size | Size of establishment in terms of employees (1 = Small: 5–19; 2 = Medium: 20–99; 3 = Large: 100+) |
| sector_MS | Sector of business activity (Binary: 1 = Services; 0 = Manufacturing) |
| MangYrExpSect | The establishment manager’s years of experience in the sector of activity |
| nyearsOper | The number of years of operations |
| LoglaborCost | Annual payroll expenditure (natural logarithm of total annual labour costs) |
| PercSenManTimGovReg | % of senior management time spent on government regulatory compliance |
| PraCompInfSec | Practices of competitors in informal sector (obstacle level) |
| TaxRates | Tax rates constraints |
| BusLincPerm | Business licensing and permits constraints |
| PolInstab | Political instability |
| ElectricObstOP | Electricity supply constraints |
| TranspObstOP | Transportation constraints |
| CusTradRegObstOP | Customs and trade regulations constraints |
| Region | World region (6 levels: Europe/Central Asia; Africa; East Asia/Pacific; Latin America/Caribbean; Middle East/North Africa; South Asia) |
| Year | Fiscal year of data collection (2006–2021) |
5.3 Econometric Model Specification
To address the four research questions, while empirically assessing the theoretical endogeneity of international quality certification status on firms’ sales performances, this study embraces a sequential modelling strategy that considers three broad specifications.
Model M1 is the most restrictive specification. It assumes full linearity of the regression model, together with weak parameter exogeneity, and can be estimated using standard Ordinary Least Squares:
S_t = \beta_0 + \beta_1 Q_t + \beta_2 D_t + \beta_3 Q_t \cdot D_t + \boldsymbol{\beta}_4 EODC_t + \boldsymbol{\beta}_5 EOC_t + \boldsymbol{\beta}_6 MRC_t + \boldsymbol{\beta}_7 STC_t + \varepsilon_t \tag{1}
Model M2 relaxes the exogeneity assumption of quality certification in M1, while maintaining the full linearity assumption. Model M3 is the most general and relaxes both the exogeneity and full-linearity assumptions in the form of a semi-parametric bivariate specification.
5.4 Endogeneity and Model Identification
The identification issue springs from the correlation between Q_t and v_t, such that E(Q_t, \varepsilon_t) \neq 0, with \text{Corr}(v_t, \varepsilon_t) = \rho \neq 0. The bivariate system in M2–M3 is characterised by:
\begin{cases} Q_t = \alpha_0 + \alpha_1 D_t + \boldsymbol{\alpha}_2 EODC_t + \boldsymbol{\alpha}_3 EOC_t + \boldsymbol{\alpha}_4 MRC_t + \boldsymbol{\alpha}_5 STC_t + g_1(\alpha_0, v_t) \\ S_t = \beta_1 Q_t + \beta_2 D_t + \boldsymbol{\beta}_3 EODC_t + \boldsymbol{\beta}_4 EOC_t + \boldsymbol{\beta}_5 MRC_t + \boldsymbol{\beta}_6 STC_t + g_2(\beta_0, \varepsilon_t) \end{cases} \tag{2}
where g_1(.) and g_2(.) are unknown smooth functions on the non-linear parameters in the quality certification process and sales outcome process respectively.
5.5 The IV-Free Bivariate Copula Regression Spline Approach
The adopted copula framework relies on the latent variables approach to specify the marginal regression models for both (Q_t and S_t) outcomes, while combining them via a copula function to form a joint bivariate model with correlated error terms. More specifically, the framework uses the probit link function from generalised linear modelling (GLM) to characterise the marginal binary regression model of quality certification status (Q_t), while relying on the Gaussian link function of GLM to characterise the marginal regression model of sales performance outcome (S_t), as a log-normalised random variable (Leon and Wu 2011).
The general form of this copula function can be stated as:
F(q, s \mid \boldsymbol{z}_1, \boldsymbol{z}_2) = C\bigl(F_1(q \mid \boldsymbol{z}_1),\; F_2(s \mid \boldsymbol{z}_2);\; \theta\bigr) \tag{3}
where F_1(q \mid \boldsymbol{z}_1) is the marginal cumulative distribution function of the international quality certification process, and F_2(s \mid \boldsymbol{z}_2) is the marginal cumulative distribution function of the sales outcome process. Both F_1(.) and F_2(.) assume values between 0 and 1, and are linked with a dependence parameter \theta via the unique general copula function C(\ldots).
Four alternative copula specifications were evaluated — Gaussian, Gumbel, Clayton180, and Joe — with model selection based on AIC/BIC criteria and confirmed by Kullback-Leibler (Vuong) and Clarke tests (Vuong 1989; Clarke 2007). All models were estimated using the GJRM package in R (Marra and Radice 2018; Wojtyś, Marra, and Radice 2018).
6 Analysis and Results
6.1 Descriptive Results
A total of 112,232 business enterprise responses were used in the analysis. The regional distribution shows:
- Europe and Central Asia (ECA): 32,450 firms (28.91%)
- Africa (AFR): 24,298 firms (21.65%)
- East Asia and Pacific (EAP): 12,365 firms (11.02%)
- Latin America and Caribbean (LAC): 20,706 firms (18.45%)
- Middle East and North Africa (MNA): 9,653 firms (8.60%)
- South Asia (SAR): 12,760 firms (11.37%)
Temporal coverage spans 2006–2021, with peak representation in 2019 at 12.73% (14,287 firms) and the lowest in 2011 at 1.65% (1,850 firms).
Key qualitative characteristics of the sample: 26.27% (29,479) hold an internationally recognised quality certificate; 51.08% (57,333) have an observable digital strategy; 46.05% are small-size businesses; 56.24% are manufacturing firms; and the majority (43.36%) are shareholding companies with no or privately traded shares.
6.2 Spatial Trends
The cross-country frequency distribution of firms with digital strategy highlights national and regional heterogeneity, with the highest frequencies in Australia, Western Europe (Finland, Sweden, Denmark, Netherlands, Ireland, Germany, France, Spain), and Argentina. The least frequencies are recorded in Sub-Saharan Africa and some Central Asian countries. Similarly, countries with the highest reported quality certifications include China, Sweden, and Italy, while the least frequency is reported among firms in Africa, Russia, Kazakhstan, Mongolia, Uzbekistan, and Afghanistan.
6.3 Model Validation and Sensitivity
Statistical validity was assessed graphically and numerically through t-testing and ANOVA to evaluate relationships between quality certification status, sales performance, and their mediators/moderators. Key findings from the validation phase:
- Average sales performance (LogSales) among certified firms (17.765) is significantly greater than non-certified (16.350) at the 0.1% significance level, with p-value < 2.2\times10^{-16} and 95% CI of (1.375; 1.455).
- Average sales performance among firms with digital strategy (17.207) is significantly greater than those without (16.214) at the 0.1% level, with p-value < 2.2\times10^{-16} and 95% CI of (0.957; 1.028).
- Among the six business size categories, ANOVA produced an F-statistic of 14,590, p-value < 2\times10^{-16}, confirming significant size-based differences in sales performance.
Model comparison results across four copula specifications are summarised in Table 2.
| Model Specification | AIC | BIC | Direct Effect (Web) | Effect of iCert (\hat{\theta}) | Indirect (iCert×Web) |
|---|---|---|---|---|---|
| M1: Fully-parametric Single Eq (Exogenous) | 370,469.2 | 370,931.4 | 0.286*** (0.020) | 0.126*** (0.035) | 0.217*** (0.041) |
| M2: Fully-parametric bivariate Gaussian Copula (Endogenous) | 197,934 | 198,890.9 | 0.867*** (0.023) | \hat{\theta}=0.897^{*} (0.891, 0.902) | 0.537 (0.534, 0.540) |
| M3.1: Semi-parametric bivariate Gaussian Copula (Endogenous) | 197,869.8 | 198,748.9 | 0.865*** (0.023) | \hat{\theta}=0.896^{*} (0.891, 0.902) | 0.537 (0.534, 0.540) |
| M3.2: Semi-parametric bivariate Gumbel Copula (Endogenous) | 194,715.9 | 195,701.2 | 0.992*** (0.023) | \hat{\theta}=5.434^{*} (5.265, 5.602) | 2.977 (2.885, 3.070) |
| M3.3: Semi-parametric bivariate Clayton 180° Copula | 195,364 | 196,347.3 | 1.100*** (0.023) | \hat{\theta}=7.362^{*} | 4.034 (3.896, 4.171) |
| M3.4: Semi-parametric bivariate Joe Copula | 195,346.6 | 196,329.9 | 1.101*** (0.023) | \hat{\theta}=8.145^{*} | 4.463 (4.327, 4.606) |
Note: Numbers in parentheses are standard errors and 95% CI. * p < 0.05; ** p < 0.01; *** p < 0.001.
6.4 Econometric Results (Best-Fit Model: M3.2)
The selected model is the semi-parametric bivariate Gumbel Copula (M3.2), which yields the lowest AIC and BIC values among all specifications, confirmed by both Vuong and Clarke non-nested model tests. The penalised maximum likelihood estimates are reported in Table 3 below (selected key coefficients).
Primary factors of interest on firm’s sales performance:
- Given the endogeneity of quality certification with dependence parameter \hat{\theta} = 5.434 and 95% CI of (5.265, 5.602), a significantly positive association is observed between international quality certification status and sales performance. The 95% CI being void of zero confirms that compared to their counterparts with no international quality certificate, internationally certified firms highlight 5.43 times higher sales performance, globally.
- Firms with observable digital strategy (web = 1) show 99.2% higher sales performance than counterparts without a clear digital strategy (web = 0) in the global economy.
- The moderating effect of digital strategy on the relationship between international quality certification and sales performance is captured by the interaction term (iCert×Web). The estimated indirect impact is 2.977 (= 0.548 × \hat{\theta} = 0.548 × 5.434), with associated lower and upper 95% CI obtained as 2.885 (= 5.265 × 0.548) and 3.070 (= 5.602 × 0.548) respectively. These results imply that relative to firms with neither digital strategy nor international quality certificate, those business establishments with both have 2.977 higher sales performance in the global economy.
Key selected coefficients from Table 6 (Full Sample Results, N = 112,232):
| Variable | Quality Cert. (iCert) Eq. | Sales Performance (LogSales) Eq. |
|---|---|---|
| (Intercept) | −0.739*** (0.033) | 0.445*** (0.083) |
| Web (Digital Strategy) | 0.548*** (0.010) | 0.992*** (0.023) |
| legalStat (sole proprietorship) | −0.174*** (0.023) | −0.340*** (0.047) |
| largFirm | 0.220*** (0.011) | 0.365*** (0.022) |
| femOwner | −0.017 (0.010) | −0.100*** (0.019) |
| extAudit | 0.292*** (0.010) | 0.536*** (0.021) |
| Size (Medium) | 0.295*** (0.010) | 0.598*** (0.028) |
| Size (Large) | 0.661*** (0.013) | 1.225*** (0.028) |
| sector_MS (Services) | −0.283*** (0.010) | −0.577*** (0.020) |
| TaxRates | −0.037*** (0.004) | −0.070*** (0.008) |
| PolInstab | −0.027*** (0.004) | −0.039*** (0.008) |
| LoglaborCost | — | 0.937*** (0.003) |
| \hat{\theta} | — | 5.434 (5.265, 5.602) |
| \hat{\sigma} | — | 1.97 (1.949, 1.992) |
| AIC | 194,715.9 |
Note: * p < 0.05; ** p < 0.01; *** p < 0.001. Standard errors in parentheses.
Moderating effects of firm’s own characteristics: Larger firms record 36.5% higher sales performance in the global economy, with 22% higher likelihood of having an internationally recognised quality certification. Firms in the services sector highlight consistently lower relative performances than their manufacturing counterparts: 57.7% lower sales performance with 28.3% lower relative likelihood of owning an internationally recognised quality certificate.
Moderating effects of market conditions: Each percentage increase in senior management time spent on government regulatory compliance raises by 0.1% the likelihood that a firm reports ownership of an internationally recognised quality certificate; while having no significant impact on the firm’s sales performance in the global economy — suggesting that senior management time might be better spent on developing alternative sales strategies than on regulatory compliance.
Spatio-temporal moderating effects: Firms in the Africa region show on average 16.8% relative lower sales performance, with 25.6% lower likelihood of reporting ownership of an internationally recognised quality certificate, compared to European and Central Asian counterparts. The temporal fixed effects highlight significant year-to-year variability, with a consistently significant year-to-year decline in the post-pandemic period of 2019–2021, and the post-pandemic period showing respectively 54%, 83.1%, and 109% lower sales performance compared to the state of nature in 2006.
7 Discussion of Results
Acknowledged as a catalyst for economic expansion, the incorporation of cutting-edge technologies (such as Blockchain, artificial intelligence, 5G communication networks, and cloud computing) with the concurrent digital transformation in various industries is increasingly imperative. This is particularly notable in the context of sustainability pursuits across both the services and manufacturing sectors of the global economy. Indeed, presented by some authors as a business model shift toward sustainable practices, digital transformation is perceived as an integral part of a firm’s overall sustainability strategy in a digitally transforming world (Esquerre-Botton et al. 2023).
With regards to RQ1 (digital strategy and sales performance) and RQ3 (digital strategy moderates quality certification–sales nexus), the findings highlight 99.2% higher sales performance for firms with observable digital strategy than those without. It is also found that relative to firms with neither digital strategy nor international quality certificate, those with both achieve 2.977 higher sales performance. These results are consistent with Khin and Ho (2018), who reported positive effects of digital orientation and digital capabilities on digital innovation, with resulting influences on firm’s financial and non-financial performance in the Malaysian IT sector. They also corroborate Tsou and Chen (2022), which reported that having a clear digital transformation strategy positively mediates the effectiveness of digital technology usage on firm’s performance in the Taiwanese financial sector. The findings further corroborate Heredia et al. (2022), which tested a hypothetical model explaining the effect of digital capabilities in the post-COVID-19 business context, and reported a significantly positive effect on firm’s performance across 27 countries.
With regards to RQ2 (quality certification and sales performance), the current findings reveal that internationally certified firms highlight 5.43 times higher sales performance than their non-certified counterparts. While this finding contrasts with (Fonseca and Domingues 2018) on the financial performance of Spanish firms before and after certification, it is consistent with Terlaak and King (2006), whose results indicated that US manufacturing business establishments with ISO 9000 certification grew faster. The results imply that relative to firms with neither digital strategy nor international quality certificate, those business establishments with both have 2.977 higher sales performance in the global economy.
8 Implications of the Results
8.1 Implications for Business Practices
The results of this study carry various implications for individuals engaged in business practices. For instance, the study highlights the importance of firm ownership structure. It suggests that businesses registered as shareholding companies with publicly traded shares tend to have higher sales performance and are more likely to hold internationally recognised quality certificates. The study emphasises the role of firm size in driving performance outcomes. Medium and large-sized firms demonstrate higher sales performance and are more likely to possess international quality certificates. This suggests that businesses should aim for growth and expansion to improve their market position and competitiveness.
Moreover, the research underscores the significance of external audit involvement and the existence of female proprietors. Businesses that undergo external auditing and do not have female owners tend to have higher sales performance and are more likely to possess international quality certificates. Furthermore, the study emphasises the influence of market conditions and perceived obstacles. Practitioners should be aware of the impact of government regulatory compliance, market competition from the informal sector, political instability, and infrastructure limitations on their sales performance and quality certification outcomes.
8.2 Implications for Theory Development
The research findings contribute to theory development by providing insights into the moderating effects of various factors on firm performance outcomes. The study expands understanding of how firm characteristics, market conditions, and spatio-temporal factors shape sales performance and quality certification.
The study highlights the non-linear effects of manager’s experience on sales performance and quality certification, suggesting the importance of considering the quadratic relationship between experience and outcomes. This finding adds to the current body of literature by illustrating the nuanced role of the manager in driving firm performance. Additionally, the study sheds light on the impact of market regulations, perceived obstacles, and regional disparities on firm performance. These findings contribute to the understanding of how external factors influence firm outcomes. The study also utilises exclusion restrictions to enhance the model’s parameter identification — a methodological approach that can be valuable for researchers in addressing endogeneity issues and improving the robustness of empirical analyses in similar contexts.
8.3 Implications for Policy Development
The results of this study hold significant ramifications for policymakers. The study underscores the significance of creating an enabling business environment and implementing effective regulations to foster firm performance and international competitiveness. The study emphasises the positive impact of government regulations on quality certification outcomes. Policymakers should prioritise regulatory frameworks that facilitate and incentivise firms to obtain internationally recognised quality certificates. By reducing bureaucratic hurdles and providing support for compliance, governments can promote the reputation and competitiveness of their domestic firms in the global marketplace.
Furthermore, the study highlights the negative effects of perceived obstacles, such as competition from the informal sector, political instability, and infrastructure limitations on firm performance. The study also points out regional disparities in performance outcomes, with certain regions experiencing lower performance compared to others. Policymakers should pay attention to these regional differences and design region-specific policies to address the underlying factors contributing to the performance gaps.
9 Conclusion and Future Research
In 2017, the World Economic Forum’s white paper titled “The impact of the fourth Industrial Revolution on Supply Chains” suggested that digital transformation would contribute to 17.6% lower costs and 22.6% higher revenues for businesses worldwide (Lehmacher, Grotemeier, and Lorenzen 2017). Since then, several research works and monographs have attempted to provide more clarity on the concept of “digital transformation”, emphasising its strategic rather than operational nature, its multi-valent and complex character, as well as its ripple effects in both time and space (Lee, Malerba, and Primi 2020; Chawla and Goyal 2022). In line with this literature trend, the present study aimed at assessing how a firm’s digital transformation strategy affects its international quality certification status and sales performance in the context of the global economy.
In line with the hypothesised predictions from signalling theory, the analysis validated the fact that digital strategy in the form of website ownership has a positive effect on sales performance by increasing the firm’s reach, visibility, engagement, conversion, and retention of customers across different channels and touchpoints. Quality certification was also found to positively impact sales performance by enhancing the firm’s reputation, trustworthiness, and attractiveness in the global market place. Most importantly, the study found statistical evidence that digital strategy significantly moderates the relationship between quality certification and sales performance, such that quality certification has a stronger effect on sales performance for firms that have a well-defined digital strategy (web = 1) than for firms that do not (web = 0); leading therefore to the conclusion that digital strategy can amplify the signal of quality certification by making it more visible, transparent, and consistent across different digital channels and touchpoints.
9.1 Limitations
However, few aspects of the study remain limiting. For instance, the secondary and self-reported nature of the data used in the empirical analysis raise potential data limitation and measurement issues. Indeed, the self-reported data (i.e. perceived obstacles and managerial experience) may be prone to inaccuracies due to interpretation and response biases. Therefore, using objective measures or incorporating multiple data sources, such as financial reports or independent audits, could enhance the reliability of the data and the validity of the research findings.
Given the relatively complex and varying nature of the digital transformation strategies adopted by firms for competitiveness and sustainability in the global economy, this study’s use of the binary indicator of website ownership might not fully capture the concept of digital strategy. Alternative indicators of varying degrees of strategies can be considered in subsequent studies on the topic. Moreover, the observed regional heterogeneity in the current global analysis highlights the need for a prospective regionalised clustered investigation of the dynamic interactions between digital strategy, quality certification, and a firm’s performance; across each of the six world regions considered in this study.
9.2 Funding and Ethics
This research received no external funding. The author declares no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
CRediT authorship contribution statement: Ibrahim Niankara: Writing – review & editing, Writing – original draft, Visualisation, Validation, Supervision, Software, Resources, Project administration, Methodology, Investigation, Formal analysis, Data curation, Conceptualisation.