Digitalization, Innovation Capability, and Organizational Performance: A Literature Review

Abstract

The rapid development of digital technology has encouraged organizations to transform various operational aspects to improve effectiveness, efficiency, and competitiveness. This study aims to analyze the relationship between digitalization, innovation capability, and organizational performance through a literature review approach. The research method employed is a literature review based on scientific articles, academic books, and institutional reports published over the last five years. The analysis was conducted through the processes of identifying, selecting, categorizing, and synthesizing relevant literature. The findings indicate that digitalization contributes to improved organizational performance by enhancing operational efficiency, decision-making quality, and adaptability to environmental changes. Furthermore, innovation capability plays a significant role in linking digitalization with organizational performance improvement. Organizations that effectively utilize digital technologies to generate innovation tend to achieve stronger competitiveness and long-term sustainability than those focusing solely on technology implementation. This study highlights that the integration of digitalization and innovation capability represents a strategic factor that supports sustainable organizational performance in an increasingly dynamic business environment.