DIGITAL MANAGEMENT CAPABILITIES AND FINANCIALPERFORMANCE OF INNOVATIVE FIRMS IN THE AI ECONOMY

Abstract

This study investigated the effect of digital management capabilities on the financial performance of innovative firms operating in the AI-driven economy in Nigeria. The study adopted a quantitative research design and utilised a structured questionnaire titled Digital Management Capabilities and Financial Performance Questionnaire (DMCFPQ) to collect data from 196 respondents drawn from innovative firms across selected sectors. The population comprised managerial and senior operational staff, and a multistage sampling technique was employed to determine the sample size using Krejcie and Morgan’s (1970) formula. Data were analysed using descriptive statistics and simple linear regression analysis to test three hypotheses at the 0.05 level of significance. The findings revealed that digital leadership capability, data-driven decision-making capability, and digital infrastructure with technological integration significantly influenced the financial performance of innovative firms in Nigeria. The study was anchored on the Resource-Based View and Dynamic Capabilities Theory to explain how digital management capabilities serve as strategic organisational resources that enhance competitive advantage and financial outcomes. The study concluded that strengthening digital leadership, institutionalising data-driven decision-making, and investing in digital infrastructure are critical for improving firm performance in the AI economy. Recommendations were made to firm managers, policymakers, and academic institutions to promote digital capability development and policy support for digital transformation in Nigeria.