Knowledge Management as a Mediating Variable in the Relationship Between Digital Transformation and Enterprise Performance

Abstract

The main objective of this study is to develop a structural causal model that integrates both direct and indirect relationships among the study variables to measure the causal link between digital transformation and enterprise performance, with knowledge management acting as a mediating variable. Data were collected from 72 personnel working in Tramway Management enterprises in Western Algeria (SETRAM), responsible for urban transportation in Oran, Mostaganem, and Sidi Bel Abbes—cities characterised by high population densities. A purposive (judgmental) sampling method was employed, and the collected data were analysed using the PLS-SEM approach. The research demonstrates a strong, direct positive relationship between digital transformation and knowledge management, as well as between knowledge management and enterprise performance. Although digital transformation also exerts a positive and statistically significant influence on enterprise performance, this effect is not particularly strong. Importantly, knowledge management exhibits a partial mediating role in the link between digital transformation and enterprise performance.

The study offers insights into how government-supervised institutions perform during digital transformation. Findings emphasise the need to invest in digital transformation and knowledge management to maintain institutional continuity in line with Algeria’s economic reforms. This empirical study contributes to the ongoing debate by demonstrating that digital transformation enhances enterprise performance, particularly through the mediating role of knowledge management.