Digital Transformation and Digital Trade Performance: A Comparative Empirical Study with a Systems Thinking Perspective on Capability and Institutional Factors (2015–2024)

Document Type : Research Article

Authors

Mohadeseh Kazemi

Mohsen Shafiei Nikabadi

Department of Industrial Management, Faculty of Economics and Management, Semnan University, Semnan, Iran

10.22067/jstinp.2026.98926.1207

Abstract

Digital transformation has become a critical driver of economic competitiveness and global trade integration. However, the mechanisms through which domestic digital adoption translates into digital trade performance remain insufficiently understood, particularly in emerging and transitional economies. This study investigates the relationship between business-level digital adoption and digital trade dynamics through a comparative longitudinal analysis of four economies—China, India, South Korea, and Iran—over the period 2015–2024. To capture these dynamics, the study constructs two composite indices: Business Digital Adoption and Integration (BDAI), reflecting the extent to which firms adopt and integrate digital technologies into economic activities, and Digital Trade Momentum (DTM), representing the growth and intensity of digitally enabled trade participation. The indices are built using internationally comparable indicators from sources including the World Bank, International Telecommunication Union) ITU (,United Nations Conference on Trade and Development )UNCTAD(,Organisation for Economic Co-operation and Development )OECD(, and International Monetary Fund )IMF(, and are normalised using a min–max scaling procedure. The findings reveal significant cross-country divergence in both digital capability formation and digital trade performance. South Korea demonstrates consistently high levels of digital adoption and stable digital trade competitiveness, while China exhibits rapid growth driven by large-scale digital ecosystem expansion. India shows gradual improvement in digital adoption but more moderate progress in digital trade diversification. In contrast, Iran remains structurally constrained, with comparatively limited digital adoption and weak integration into global digital trade networks. Interpreting the results through a system dynamics perspective suggests that digital transformation operates through reinforcing feedback mechanisms linking infrastructure development, firm-level digital capabilities, innovation capacity, and global trade participation. Economies that successfully align these dimensions experience cumulative advantages, whereas structural constraints may reinforce persistent digital gaps. The study contributes to the digital economy literature by linking micro-level digital capability formation with macro-level trade outcomes and by highlighting the systemic conditions required for translating digital adoption into sustainable digital trade competitiveness.

Keywords

Digital Transformation

Digital Trade

Business Digital Adoption

Digital Economy

Absorptive Capacity

Dynamic Capabilities

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