Abstract

Digital transformation offers opportunities to improve innovation, efficiency, and competitiveness, yet its performance outcomes remain inconsistent. This digitalization paradox raises questions about why comparable technological investments generate divergent organizational returns. Existing explanations emphasize resources and capabilities while giving limited attention to managerial cognition, particularly managerial myopia, which prioritizes immediate financial outcomes over sustained capability development. This study develops an integrated framework examining how managerial myopia conditions the relationship between digital transformation and firm performance. Drawing on dynamic capability theory, strategic cognition, organizational ambidexterity, and the resource-based view, it proposes that digital investments create sustainable value through strategic alignment, organizational learning, and adaptive capabilities. Managerial myopia undermines these mechanisms by encouraging fragmented implementation, limited learning investment, and misalignment between technology adoption and strategic objectives. A mixed-methods design combines bibliometric analysis, panel-data econometric modeling, structural equation modeling, and executive surveys across manufacturing, financial services, retail, healthcare, and technology firms. Findings indicate that digital transformation strengthens innovation capability, organizational agility, and strategic adaptability, although these relationships weaken under high managerial myopia. Organizational ambidexterity and strategic adaptability mediate performance effects, while firms emphasizing sustained learning and capability integration achieve stronger outcomes. The findings identify strategic misalignment as a principal explanation for unrealized digital value. The study extends digital transformation research by integrating managerial cognition into technology–performance relationships and explaining heterogeneous organizational outcomes. It provides executives and policymakers with guidance for aligning digital initiatives with adaptive leadership, organizational culture, employee development, and sustained innovation to enhance firm performance.