Digital Economy Competencies Through a Knowledge Management Lens: Identifying the Drivers of Managerial Performance

Abstract

Even with massive investments in digital transformation, manufacturing firms in emerging economies continue to demonstrate poor performance as a result of low workforce readiness to adopt new technologies. This study diverges from traditional research focus on technology implementation, examining instead the effect of digital economy capabilities on managerial performance from the standpoint of Knowledge Management (KM). It conceptualises digital competencies as human-centric and infrastructural KM capabilities using the Sarawak Digital Economy Competency (SarDEC) model. Using Partial Least Squares Structural Equation Modelling (PLS-SEM), this quantitative study analyses the survey data of 385 managerial and technical employees in Sarawak’s manufacturing sector. Managerial performance is found to be significantly driven by the human-centric KM competencies of digital literacy, digital communication, business enablers, and competency development. Showing no significant direct effects on performance are digital infrastructure and content creation. This means that performance improvements are primarily determined by human knowledge interpretation and application once the technology threshold is reached. Despite the Malaysian manufacturing setting, the findings are generalisable to other developing economies in the region investing in digital transformation.