THE IMPACT OF DIGITAL TRANSFORMATION ON ENTREPRENEURIAL GROWTH AND INTERNATIONAL BUSINESS COMPETITIVENESS

Abstract

This study examines the relationship between Digital Transformation, Entrepreneurial Growth, and International Business Competitiveness using panel data from 15 countries over the period 2010–2022. Employing Fixed Effects and Random Effects models within the Baron and Kenny (1986) mediation framework, the analysis tests whether entrepreneurial growth mediates the digital transformation-competitiveness nexus. The results reveal that Digital Transformation has a significant direct positive effect on International Business Competitiveness (β = 0.078, p < 0.01). However, Digital Transformation does not significantly affect Entrepreneurial Growth (β = 0.126, p > 0.10). Entrepreneurial Growth independently shows a strong positive effect on Competitiveness (β = 0.225, p < 0.01). These findings do not support the mediation hypothesis. Instead, Digital Transformation and Entrepreneurial Growth operate as parallel pathways enhancing international business competitiveness. The study contributes by demonstrating that digitalization and entrepreneurship represent parallel not sequential pathways to national competitiveness, challenging the conventional assumption that digital investments automatically stimulate entrepreneurial ecosystems. From a policy perspective, governments should pursue integrated but distinct strategies targeting both digital infrastructure development and entrepreneurship support simultaneously, rather than assuming sequential effects. Robustness checks including quantile regression confirm the consistency of findings across alternative specifications.