Digital Transformation and Its Impact on Strategic Supremacy
Mediating Role of Digital HRM: an Evidence From Palestine
OHOUD KHATIB
Faculty of Economics and Business
Palestine Technical University – Kadooriee-PTUK-- Ramallah Branch
Ramallah, PALESTINE
KHALED ALSHAWABKEH
Faculty of Business and Finance-
The World Islamic Science & Education University-W.I.S.E
Amman, JORDAN
Abstract: This study aims to identify the impact of digital transformation in achieving strategic
sovereignty in a world that is intensely competitive and in a digitalized era. In the study, the human
resource management variable serves as an intermediary variable in the relationship between digital
transformation and strategic leadership. The study population consists of (420 top and middle)
managers in two
mobile telecommunications companies in Palestine, namely: Jawwal and Ooredoo.
The study is based on the quantitative approach using a proportional stratified sample, as a 201- item
questionnaire is developed using the Seven-Point Likert Scale to study the three variables. The
independent variable is digital transformation and its dimensions (Business Model, Customer
Experience, Digital Processes, and Impact on People), while the dependent variable is Strategic
Supremacy including its three dimensions (Scope of Influence, Competitive Configuration, and
Competitive Compression), while digital human resources management serves as an intermediate
variable. The data contained herein is analyzed by the Smart PLS Program - structural equation
modelling (Second Order). The study shows a positive and good impact of digital transformation on
strategic supremacy. The same applies to the impact of digital human resources management thereon.
The study concludes that even though digital transformation has a very good impact on human
resource management, digital human resources management is a mediating variable in the relationship
between digital transformation and strategic supremacy, or even a partial mediator.
Keywords: Digital Transformation, Digital “HRM”, Strategic Supremacy, Business Model, Structural
Modeling Analysis (SEM), Customer Experience, Digital Processes, Digital Influence on People,
Sphere of Influence
Received: June 22, 2021. Revised: December 28, 2021. Accepted: January 11, 2022. Published: January 14, 2022.
1 Introduction
Organizations are racing globally to shift
towards the virtual business model, and to
maintain a position in the cyberspace of their
competitors, in line with the digital hurricane
happening to the economic and social
organizations. This rabid and vicious race is
leading organizations to shift from digitization
to digital transformation to digital organization
without the need for a traditional physical
presence to meet the requirements of digital
customers and their needs around the clock.
On the way to achieve superiority and market
control with what is known as strategic
supremacy; such sovereignty cannot be
attained without the human resources
department keeping pace with the global
transformations in digitization. The Palestinian
Telecommunications Sector, in general, and
the Mobile Sector, in particular, operates in an
intensely competitive environment despite the
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small market size and the insignificant extent
of customers compared to other Arab markets.
This is in addition to the greater rate of labor
on the Palestinian side (skilled and unskilled)
working within the Israeli Economy Sectors,
which enables them to purchase ther Israeli
cellular SIMs. It is worth mentioning that the
number of Palestinian labor officially
registered in the Israeli market reached
142,000 according to the Palestinian Central
Bureau of Statistics 2020. This along with
other determinants has contributed to a severe
conflict between the two largest cellular
communication companies in Palestine
(Jawwal and Ooredoo), and resulted in them
competing to acquire the greatest market share
of sales of their services through a set of
additional services accompanying the cellular
communication service, which increases the
tension of competition. The market of the
Palestinian economy is open to the Israeli
economy due to the political relationship
thereto, in which Israel has a comparative
advantage compared to the Palestinian
telecommunications sector, and even compared
to the world. Israel was ranked among the best
countries in the world in terms of the quality
and low prices of its telecommunications
services, according to (Abu Daqqa, 2018, 8).
2 Problem Formulation
2.1 The Research Problem is to answer the
main question herein: “What is the impact of
digital transformation in achieving strategic
sovereignty within the Palestinian cellular
communications companies?”
2.1.1 Research Objectives:
This research aims to:
Identify the impact of digital
transformation on strategic supremacy
in the Palestinian cellular
telecommunications companies.
Identify the impact of digital
transformation on the management of
digital human resources in the
Palestinian cellular communications
companies.
Identify the impact of digital human
resources management on strategic
sovereignty in the Palestinian cellular
communications companies.
2.1.2 Research Hypotheses
H01: Digital Transformation positively
impacts Strategic Supremacy.
H02: Digital Transformation positively
impacts Digital Human Resources
Management.
H03: Digital Human Resources Management
positively impacts Strategic Supremacy.
H04: Digital Human Resources Management
mediates between Digital Transformation and
Strategic Supremacy.
2.3 Literature Review: This part of the
research outlines a theoretical background
based on the three research variables: Digital
Transformation (DT), Strategic Supremacy
(SS), and Digital Human Resource
Management. (D-HRM).
2.3.1 Digital Transformation:
The world of business associated with Internet
and social media platforms is imposing shifts
in business models that organizations need to
adopt to complete their activities and have
access to their customers. This digital model
may partially affect several organizations
around the world, as it is the most common
model among business organizations.
However, many of these organizations have
taken radical means to completely transform to
the virtual model. Digital transformation” as
a process aimed at improving an entity, by
bringing about significant changes in its
characteristics, through combinations of
information, computing, communication and
technologies” (Vial, 2019). It can also be
defined as “The transformation of business
activities, processes, products, and models to
fully exploit the opportunities of digital
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technologies, which profoundly affects the way
value is created and obtained, and leads to the
development of new business models, by
employing digitalization, to reshape, and
innovate the current business model”,
Bresciani, et. al., (2021, 6). Modifying
processes, products, business models, as well
as human behaviors, through digital
technologies, aimed at designing businesses’
business activities more efficiently and
effectively”. (Wengler, 2021).
Digital Transformation passes through five
successive phases. In other words, it is not
possible to reach an advanced phase without
passing through the above said five phases. It
starts with “Digitization”, followed by “Data
Integration” leading to “Automation of
Operations” moving to “System Integration
until the fifth phase, which is the most rational,
"Self-Learning System” (Wengler, et. al.,
2021). It is the main driver of radical
transformations of all types from business
organizations to legal institutions, consulting
companies in the field of medicine, hospitals,
and all service and production sectors. It is the
Global Economy (OECD 2020: 5). This is in
addition to the hurricane of "Digital
Innovation" all-encompassing the world which
is the creation of, and successive changes in,
market offerings, business processes, or
models resulting from the employment and use
of digital technology, driven by a continuous
flow effort to increase, expand, and integrate
new digital technologies, into broader
infrastructure and ecosystems (Nambisan, et
al. ,2017).
Business Model (B.M): Peter Drucker (1985)
is considered one of the first to write about
Business Model, which he views as the basis of
the organization’s success and demonstrates
how any organization can passes on its
products or services to the market, Amma
Mehrotra and Velamuri (2021). The time-range
perspective presented by DaSilva and Trkman
(2013) is intended to clarify the relationship
between strategies as a long-term management
perspective, which requires dynamic
capabilities in the medium term to be able to
reach the depicted strategic plan. These
capabilities are employed in a business model
that demonstrates management practices on the
long run. Therefore, the business model is the
way organizations conduct their business.”
While O’orman (1997) considers that the
business model is the business idea,” which
distinguishes the internal environment of the
organization from its external environment. On
the other hand, Teece (2010: 179) considers the
business model as “the logic and data that
enhances the value proposition to the
customer, the structure that can be adopted to
generate revenue and the interpretation of cost
trends for organizations that adopt the value-
creation pattern that delivers that value”.
A business model changes due to several
drivers, Rieple and Wikström, (2016),
including as the driver of “Disruptive
Innovations” which are innovations that create
waves of change resulting from developments,
especially technical developments, which force
strong competitors to change their strategies
with skill and strategic agility to seize
opportunities or to avoid threats that may
afflict their organizations. Thus, leading to the
development of new business models. As for
the weak organizations, they will face the risk
of disintegration or decay. The change in the
business model takes several forms which may
include changing the mechanisms of
conducting businesses or producing innovative
services by engaging the customer in designing
the service experience or taking part in its
performance. The business model changes by
disrupting the cultural systems prevailing in
the organization and transforming such into
customer-oriented systems (Müller and
Reichmann 2015, 14). The radical change
through which organizations seek to gradually
modernize activities and continue the
improvement of their operations is a quiet
mechanism represented in changing their
business models through cumulative
improvement and the creation of stable
environments and markets (Kodama, 2018,3).
Edwards & Starik, (2017,48) adds. The
organization shifts to focus on the “question
marks” pattern. In other words, it builds its
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business model on confidence by frequently
asking questions about the reasons behind its
existence, the changes to its environment, and
how to respond appropriately, rather than
continue with standard assumptions about its
stability and success through ready-made
solutions. See Thérin, & Yoon (2019, xii).
Technology complex environments within a
fiercely competitive environment “tech
entrepreneurship” acts as an active driver for
changing the business model of organizations
that are operating in an environment
characterized by such in which tech
entrepreneurship is the activities of start-up
companies in a technology-intensive
environment.
Mehrotra and Velamuri (2021) believe that
secondary innovation is a practical tool for
improving and developing business models
through successful companies replicating their
successful business model while making
adaptations to new environments through well-
studied systems for knowledge management
and inter-organizational learning, in a diverse
learning style through benefiting from the
experiences of others and the experiences of
consultants, or through partnering with other
organizations (such as vendors) in developed
countries. That is absorbing knowledge and
integrating the information of pioneers; then
spreading this learning while adding
internalization of each organization and its
culture. Likewise, the creative tradition or
innovative tradition proposed by Levitt (1966)
is one of the engines of developing business
models, in which organizations change their
business models by purifying, adding value
and differentiating in their existing products.
Hence, business model can be viewed as a
mechanism selected by organizations to
perform their activities in a manner that
ensures their persistence and competition
within the environmental conditions existing in
the economic model in which the organization
is operating. It is worth mentioning that digital
transformation has become the feature of the
era in which we work as a fifth level of human
life. The human life started with the hunting
era, then moved to the agricultural era, then the
industrial era, followed by the technological
era, reaching our present era of digital
transformation in which organizations thrive to
shift to the smart virtual pattern that exceeds
every limit to be able to communicate with the
greater market through cyberspace. The
business model will certainly be characterized
by digitization as a mandatory stage, leading to
the radical and complete digital transformation
of the organization.
The digital transformation in business model
means that the organization is to accept all
forms of digital products. This may be taking
place in its operational pattern for performing
its everyday activities, or as innovative digital
products, or in the form of converting its
traditional products and activities to the digital
model. The choice of Ryan Air as a business
model of an air carrier with the advantage of
low costs resulted in great competitiveness in
the face of major airlines. However, its
intelligence in employing its economic model
by adding optional paid services, such as
drinks and meals, enabled it to produce an
innovative revenue model. The same applies in
terms of shifting payments from the traditional
form of metal or paper money to the electronic
form between accounts through bank
applications on smart mobile phones. This
could be considered a gradual and partial shift
in the organization’s business model.
Furthermore, cellular companies were able to
digitally transform their business models
across cyberspace. Despite the cautions of
virtual currencies such as Bit Coin, they
continue to rise. The degree of complexity and
encryption used thereto is consistent with the
cellular communications sector. It will not be
long until such crypto currencies find ways to
overcome the legal cautions thereof and
become one of the most important tools of
innovation in business models. A default
addition to this is the recent and rapid
developments in Circular Economy (CE)
Systems and the dependence of industries on
renewable energy resources and waste
reduction. This requires a technological change
to the business models implemented by many
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organizations striving to promote a sustainable
economy through business models that are
based on “design or engineering for value
creation” “delivery, and acquisition
mechanisms”. (Pieroni and Pigosso, 2020).
Customer Experience (CE): one of the vital
pillars in today’s world is customer orientation.
In other words, institutions build and design
their models to meet the needs of customers by
identifying such needs and desires, as well as
their areas of satisfaction and dissatisfaction
through what is known as “Customer
Experience” which is a knowledge
management process to get to know the
customer. According to Grzybowska (2016),
CE is “a process of interactions between an
organization and a customer over the duration
of their relationship”. These interactions may
include the customer’s attraction, awareness,
discovery, cultivation, advocacy, purchase of
goods, and use of services. Moreover, Lemon
and Verhoef (2016) define CE as a customer
journey with the firm over time from pre-
transaction (including search) to transaction to
post-transaction.
Modern digital technologies can be employed
to enhance levels of trust and interaction
between the company and the customer, such
as RFID chip technology, which logically
employs Internet of Things (IoT) Technology
to employ product information, locate and
manufacture materials, distribute points, and
how it can be delivered home. This is in
addition to the use of “Smart Mirrors”
Technology to test products in the spare rooms
acting as a smart advisor to the consumer when
trying the item in the changing room. Smart
Mirrors indicate how well the product fit with
your body and the occasions where you can
wear such in the future. They also indicate how
to mix or coordinate clothes. Moreover, this
feature can be enhanced with the technologies
of augmented reality / virtual reality / mixed
reality (AR / VR / MR) into a futuristic mirror
of the reality by trying clothes in different
lighting conditions or different contexts (in the
office or in the street) and occasions (parties or
business meetings) providing a list of people
who have bought the item. Things can go even
further to predict he customer’s satisfaction
with the product based on previously analyzed
personality and a bot may come across the
customer and helps with what are known as
chat bots (Hoyer, et al., 2020).
Digital Process (D.P): Organizations’
traditional operational processes are based on a
mixture of employment and automation.
However, the introduction of technology
contributed to transformations that started
gradually and then became radical. The
evolution of the operating stages in the
manufacturing process can be viewed
according to (Margherita, and Bua, 2021)
Table1. The Development of Manufacturing
Operators Stages
Operator
Manufacturing
Style
1.0
Traditional
Manufacturing
2.0
Assistant
powered by PC
Tools
3.0
Operating with
computer tools
robots, other
machine parts.
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4.0
)OP40(
works in an
Industry 4.0
assembly line
cognitive and
physical
interactions,
wearable trackers
enable both
interactions,
technologies allow
for the tracking and
monitoring of
operator activities,
heart rate, health-
related metrics
In the cellular communications sector, the
industry is focused on providing services of
cellular frequency, sale of SIM cards, smart
devices, and the accessories thereof. However,
digital transformation forced these companies
to adopt new types of goods and products
known as digital products, which are goods
that can be delivered over a digital network.
Music tracks, video, Hollywood movies,
software, newspapers, magazines, and books
can all be expressed, stored, delivered, and
sold as purely digital products. Currently, most
of these products are sold as physical goods”.
(Laudon and Laudon,2016,380). Moreover,
Loebbecke (2003) defines such as “goods that
can be fully expressed in bits so that the
complete commercial business cycle can be
executed based on an electronic infrastructure
such as the Internet”. The revolutionary
impact of Internet on the market can be
described as a “digital hurricane” in several
areas, including:
Table2. Characteristics of Digital Products
Production of
the initial
unit of the
digital
product
very high
(Laudon and
Laudon, 2016,
380).
Marginal cost
of adding a
new unit
Almost zero
(file copies)
Storage costs
low
Researchers
Marketing
costs
Unchanged
(based on
digital and
traditional
media)
price control
Legalized in
the exchange
market
"perfect
competitive
market"
innovation
unlimited
Competitive
advantage
Too short due
to the speed of
imitation
Digital Influences of People (PoI)
:
Digitization has significantly affected the
behavior of individuals, Adhiarso, et.
al.,(2018). He added “that digital
communication tools or Java communities are
gradually shifting to the individual style,
moving away from the direct social exchange,
so that human society in general turns to the
individual style”.
OECD (2019,2) Report
indicates that“ despite
the focus on mastering digital skills, it is
necessary to focus on a range of emotional and
social skills in order to take full advantage of
digital technologies for fear of excessive health
risks, while it is believed that not everything
online is good despite all advantages of the
Internet given the risks related thereto such as
destructive behavior or the use of algorithms
that shake the foundations of democracy”
.
It can be said that the digital impact on
people’s lives ranges from facilitating
advantages to life, in general, at the personal,
professional, and societal levels, and
introducing some cautions that must be
seriously considered especially at the level of
organizations with influential and important
social interaction, such as universities and
schools. For instance, digital addiction and the
noticeable increase in household finances due
to the use of smart devices and digital products
are critical cautions. Therefore, parallel
strategies for digital transformation processes
must be drawn up. These can be referred to as
“digital shadow strategies” aimed at analyzing
the risks of digital transformation on humans,
to ensure consistency with transformation
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processes. As a compass to correct deviations
and reduce risks to the social integration of the
humans.
2.3.2 Strategic Supremacy (SS):
Strategic Supremacy is not a modern term or
human invention. It is the basis of human
conflict ever since the beginning of time. The
best description of supremacy in this context is
“dominance”. Dominance herein is more
powerful in expression compared to other
possible terms related thereto such as power,
influence, or the exclusion of competitors.
Even though these terms are all requirements
for dominance. In brief, it is the ability to
change the rules of the game and control
decision-making. This is supported by
Habermas who referred to this back in in 1981
as the colonization of the world or the
colonization of the living world. This is
already the key engine to social, economic, and
technological domination. Consequently, this
gave corporations the ultimate domination over
mankind social life due to acquiring legal and
economic privileges. (Jones, 2015, 17).
Strategic supremacy can be described as
administrative capabilities resulting from the
efforts of managers observance or environment
foresight. Although this is true, but not
categorically. As strategic supremacy is a
cultural pattern supported by the organization’s
management, and spreads at all levels,
according to Kotze (2003, 109), who also
pointed out that it is creating and maintaining
a culture of strategic thinking and spreading
such among the largest possible number of
administrative levels. It is the task of the
strategic leader to have access to an employee,
supervisor, and manager, who is working and
thinking about strategic issues. It contributes to
creating strategic value, through its nearly
constant day-to-day operations given this is
the way things are done”.
Strategic supremacy could also be defined as
building new advantages to replace the old in
order to move competitors and push them to
continue competition and expand their
influence by providing value to the recipient of
the service or commodity in directions that do
not conflict with their ambitions so that they
can shift their resources against other
competitors(D'Avenie, 2004: 37). As for Al-
Kinani, and Al-Najjar (2021), they define it as
the organization’s strength and dominance
over large competitive areas, and its ability to
influence those areas subject to the influence of
other competitors in the market”. Furthermore,
Hasan and Al-Sheikli (2020) refer to strategic
supremacy as a technique that reveals
whatever the organization does and its reason
for seeking its goals that it desired to achieve
in future”. Strategic supremacy management is
the special management style that does not
eliminate a basic management principle such as
planning, organization, execution, and control.
As it is concerned with the higher level. It is a
process of planning, organizing, coordinating,
and controlling the work to be done so as to
take the organization to its preferred position.
Moreover, strategic supremacy management
can be described as a roadmap for the future. In
this context, many management techniques are
used to analyze the organization’s supremacy
situation via strategic techniques such as the
Nominal Group Technique, SWOT Analysis,
Portfolio Analysis, Vision and Mission,
Benchmarking, (Mohammed and Mohammed,
2021). The most important tool of strategic
supremacy “planning for strategic supremacy
which shows which ways will be used in the
future to reach the desired goals and
determines the ways to be followed under a
framework of strategies which represents the
basic values of strategic supremacy
management. (Rashid and Muttar, 2020).
Strategic supremacy generates power strategies
in organizations focused on market dominance
based on three principles: )Zee & Strikwerda,
2003: 15( (Al-Bashqali & Sultan, 2021)
namely, (a) Perception which is a special force
of competitors. It reflects the organization’s
ability to shape and synthesize a social reality
in which competitors in the industrial sector
join the competitive field, (b) the power of
appropriation focused on attracting the loyalty
of the “mind and emotion” of customers over
the hearts and minds of primary customers. It
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is a customer-oriented force, where companies
focus on quality and competitive price, (c)
Business Environment-oriented force aimed at
designing a business environment ranging from
attack and defense, to competition, and
sometimes cooperation and alliances to
strengthen strategic supremacy.
To own up the game rules, organizations must
have three dimensions. (1) Sphere of
Influence” (SoI) which defines the social and
market domain that can play a part within as a
strategic force. According to Hasan, and Al-
Sheikli (2020), organizations operating in
highly competitive environments usually
reallocate resources to reshape their
competitive space given the intensity of the
competition. This basically conveys the
organization’s products portfolio in areas that
have strong points and market control )Al-
Kinani, and Al-Najjar ,2021). It denotes the
field of influence and the force relationship
(Hast (2016,5). (2) Competitive configuration
focused on the construction and competitive
formation. It is the result of deliberate and
focused processes of competitive training by
directing the organization’s strategy towards
alliances and partnerships. In this context, it is
necessary for the organization to ascertain and
ensure its internal capabilities so that such
partnerships may turn into competitive
advantage and not merely partnerships
compared to other competitors. Thus,
Competitive Configuration (C.CON) is a
process implemented by organizations that
seek and strive to supremacy periodically to
analyze the structure of industry in an attempt
to break through the state of competitive
balance and reach superiority given the
difference in companies or organizations
behavior, or due to discrepancy and frequent
fluctuations in the industry structure itself,
calling for follow-up analysis of the industry
structure. (Al-Kinani, and Al-Najjar, 2021). (3)
“Competitive Pressure” (C.COM) that
represents the ability of organizations to
survive competitive pressures imposed by
other competitors. From a marketing
perspective it may be argued that in addition to
the three abovementioned dimensions, the
oscillatory strategies are also employed by
organizations that strive for sovereignty, and it
may range between fierce competition in cases
where they are able to hit the competitor. It is a
sovereign strategy as the competitive field is
not always favorable. Therefore, companies
striving for sovereignty have to adjust rapidly
with alliances and cooperate with competitors
to form focal structures to assume the process
of market control based on less dominant
competitors. The desire to dominate the market
by strong companies allied with competitors
can be referred to as “Cooperative Competitive
Fluctuation”. Given the importance of focusing
on customer loyalty throughout all stages and
activities of the organization through Customer
Attraction, organizations may be preoccupied
with their sovereign battles and disregard the
changes in customer needs resulting in a gap
that is created due to the ability of the customer
to access the large market via the Internet.
Companies seeking sovereignty must not lose
guidance to the customer through the use of
electronic platforms and the allocation of
budgets and resources to analyze data and learn
about the changes in customer needs. It is
necessary to establish in the attitudes of
organizations and marketing strategists an
important market rule that “there is no absolute
loyalty of customer, as the customer’s loyalty
is always intended for the added value to
maximize their benefits”. – (See Figure1).
Today, digital transformation has entered all
fields of life to enable strategic excellence and
supremacy tools so companies can create value
to reach sovereignty through the seamless
integration of digital and physical processes so
as to improve operations and assets, or through
closeness with customers, or through
operational excellence. Excellence is also used
in information and advanced algorithms to lead
solutions of connecting smart products and
services with social media to produce
integrated solutions and systems for product
service systems. Weinman (2015, 6)
contributed to identifying four digital
disciplines acting as drivers and catalysts for
strategic supremacy, namely: information
excellence, solution leadership, collective
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intimacy, and accelerated innovation. These
are considered as technological tools that
stimulate sovereign strategies. As information
excellence contributes to the ability of
exploiting technological potential of
information and allocating advanced
algorithms in a manner that serves the
company’s strategic dominance and superiority
by improving operational processes. This is
similar to what Uber has done by synthesizing
digitization with its field and material nature to
reach what is known as “operational
excellence” compared to competitors. That is,
creating a unique value for customers.
“Solution leadership” is a process of deep
thinking and a procedure to develop smart
products and services by converting such from
one-time exchange transactions to build a long-
term relationship with customers through
linking sales operations with cloud applications
so that consumers’ data and desires can be a
flexible tool to develop valuable solutions
therefor. It also contributes to sales preferences
for the company compared to traditional
competitors to turn into a strategic dominant
market.
The other driver referred to as “Accelerated
innovation’ is the lever for the organization's
operations. It invests in innovation and
improvement of cash-generating products as a
pillar of Strategic Supremacy, by providing the
company with product packages that are faster,
less expensive, and more valuable to the
customer. An example thereof is Apple that
invests in innovation to generate fast-
discharge, and high-return products. Collective
intimacy is the behavioral pillar of strategic
supremacy to convert sales transactions from
mere anonymous relationships to long-term
interactive relationships by investing in “big
data” analysis to simulate the characteristics
and behavior of customers and build profitable
relationships so that sales shift from potential
demand to predictive and commensurate with
the customer’s personality and preferences,
such as Amazon.com
This significance of strategic supremacy can be
illustrated through an environmental analysis
which shall enable organizations to reduce or
even change the behavior of competitors to
serve their interests thereof and increase the
probability of competing faster and more
confidently. Al-Kinani, and Al-Najjar (2021).
However, the crucial question remained: Is
investing in “exploratory and exploitative”
innovation and ingenuity still a strategic
option? The answer is that it may be an option
for companies that take risks for its survival as
in the case of organizations aware of how
fierce the competition is in an open digital
world with highly Tech-savvy and all means of
empowerment, the most important of which is
the “Internet of Things”. It is a pattern that may
be described as a cancer that feeds on
everything it reached to expand, grow, and
increase. This enormous power was realized
by many companies such as “Netflix”, which
became able to realize its efforts in marketing
by understanding its working mechanism.
Weinman, Joe (2015) explains how the “”
works by creating “exponential value” for a
huge set of real data. This is taking place in
reality linked to smart devices such as updating
the status on social media to turn into
predictive algorithms. On the other hand,
Yaïci, et al. (2021) describes the architectural
perspective of the “Internet of Things” as the
interconnection between smart devices and
sensors through controllers linked to cloud
applications to transfer data in real time for
controllers and provide immediate responses,
so as to enable algorithms to perform adaptive
and predictive operations”.
2.3.3 Digital Human Resource Management
Digital transformation along with the
increasing number of millions of people using
the Internet and engaging in the digital world
have imposed changes to the nature of work
and workers involved in technology-integrated
organizations, given the rapid developments to
follow up in the digital environment. Donnelly
& Johns (2021) explain Digital employee
management as the planning,
implementation, and in particular application
of digital technologies to support and network
the HR profession, a phenomenon also known
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as electronic HRM”. (Bondarouk and Ruël,
2009).
The digital field of human resources
management will give more flexibility in
working times and greater diversity in
harmony. That is work will be more efficient
and smarter. )Strauss, 2018). However, it will
provide an environment for challenges. These
challenges include legal disputes about the
nature of contracts. This is in addition to the
diversity in the amount of work and the place
of performance as well as the difference in
timing. (Donnelly and Johns, 2021).
Furthermore, the despite the advantages of
flexibility of working hours, it may lead to
demands for achievement without taking into
account the privacy of individuals and their
public life )Cooper & Lu, 2019(. Another
challenge, is the social inequality in the access
to digital spaces which may be noted among
some workers due to considerations of
countries and divisions between classes and
urban sites (Neufeind et al., 2018).
The changes in human force towards
digitization are led by four drivers: (a) the
administrative engine and the apparent increase
in complexity processes, (b) temporary part-
time contracts or the periodical system
increase, (c) contractual drivers where the
nature of modern work is individualistic and
(d) contracting with experts individually, and
spatially towards smaller work units of a
solitary nature.
Studies indicate that digital human resource
management specifies fundamental shifts in
human resource management functions in
terms of the mechanism of practice and not in
terms of professional content recruitments,
training, compensation and other human
resource functions. However, the mechanism
of its implementation changes with the change
of technology. If the evolution in the concept
of employees in the Human Resources
Department is tracked, one can note that
“digital employees” was an expression of a
changing role from the automated office work
pattern to the electronic one. Then there is the
“Millennial Generation” or the “Net
Generation”. Parry and Strohmeier. (2014).
However, the concept has turned into the same
function to indicate that there are differences
between older employees and younger
employees in terms of experiencing less
complex work patterns compared to digital
work patterns that the younger employees are
more familiar with (D’Netto and Ahmed,
2012(.
The problem of human resources in the digital
era may appear more clearly in industrial
organizations that adopt (4.0) technology such
as robots and the “Internet of Things” as a
central weight in manufacturing processes,
Elia, et al., (2021). Human resources
management process turned to a fundamentally
transformative nature, especially in terms of
training and crew synthesis processes with
computer thinking.
Despite the enormous capabilities of digital
transformation and the breakthrough
innovations in entrepreneurship that resulted
thereof, it is necessary to validate the social
impact on human resources in particular.
3 Problem Solution
3.1. Sample and Data Collection
To test the hypothesis mentioned above, a
survey is conducted targeting cellular
communication companies in Palestine
(Jawwal Company, Ooredoo Company)
starting 18th to 28th September 2021. The
researcher targeted a sample of middle and
upper managers in both companies as they
represent the decision-making category, and
their role is to participate in drawing up
strategies, which is the focus of the research.
The number of the study population amounted
to 420 mangers (252 from Jawwal Company,
while 168 from Ooredoo Company) under the
categories (Head of Department, Assistant
Director, Director). The survey was conducted
based on stratified sampling. The sample size
used in the analysis is 201 mangers (122 from
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Jawwal Company, while 79 from Ooredoo
Company). Cross-sectional data is collected
through online distributed of the survey via e-
mail to all mangers. Table (3) below elaborates
the sample characteristic.
Table 3. Sample characteristics
Count
Percentage
(%)
Gender
Male
119
59.20
Female
82
40.80
Job
description
Head of
Department
95
47.26
Assistant
Director
50
24.88
Director
56
27.86
Undergraduate
138
68.66
Educational
Level
Postgraduate
63
31.34
Years of
Experience
Less than 5
61
30.35
5 - less than 10
73
36.32
10 – less than 15
39
19.40
5 and More
28
13.93
3.2 Measurements
The study adopted a seven-point Likert scale as
it can provide many options to increase the
probability of discovering the objective reality
of the respondents, and the “raw” description
of the idea behind the subject of the research.
Table4. Seven-Point Likert Scale
Very low
low
Somehow
low
Medium
Somehow
great
Great
extent
Very
great
extent.
1
2
3
4
5
6
7
The study consisted of three variables: (1) The
independent variable “Digital Transformation”
measured through four sub-dimensions
“Business Model, Customer Experience,
Digital Process, and Impact on People”, (2)
The dependent variable “Strategic Supremacy
measured by the sub-dimensions “Sphere of
Influence, Competitive Configuration, and
competitive Compression”. (3) “Digital
Human Resource Management” introduced as
an intermediate variable. These variables were
used to examine and evaluate the impact of
digital transformation on strategic supremacy.
See Figure 2.
3.3 Data Analysis
To test the research hypotheses, the Structural
Equation Modeling (SEM) is used. It is a
second-generation type of modeling that
examines the predictive ability of the model
explaining the variance of endogenous
variables (Richter et al.2016). There are two
types of SEM: (1) the covariance-based SEM
(CBSEM), and (2) the variance based (PLS-
SEM). The variance-based partial least square
structural equation modelling (PLS-SEM) is
used in this study since PLS-SEM can estimate
a study model with a large number of
underlying variables and indicators (Chin et
al., 2008). It further works effectively on
small-sample size (Hair et al., 2017), and it
does not require any distributional assumptions
(Henseler et al., 2014). Smart PLS version 3
(Ringle et al., 2012) software package is
employed herein.
3.4. Result: to evaluate the research model,
two steps of analytical procedure are followed:
(1) measurement evaluation (validity and
reliability of the measures), and (2) structural
model evaluation (research hypothesis
evaluation).
3.5. Measurement Model Evaluation
There are three main stages to evaluate the
measurement model: (a) the assessment of
internal consistency, (b) the convergent
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validity, and (c) discriminate validity. The
result of internal consistency, convergent
validity and discriminate validity are shown in
Table 2 for the first-order and the second-order
construct as Sarstedt et al(2019) recommended
3.5.1. Internal Consistency Reliability
The internal consistency is assessed by the
Cronbach's α coefficient (CA) and the
Composite Reliability (CR). According to the
result shown in Table 2, the CA value for the
first-order and second-order construct are
found to range between 0.679-0.884. This
which indicates an excellent internal
consistency among the constructs (Hair et al.,
2010). Composite reliability values above 0.70
are considered satisfactory (Hair et al., 2017).
The models CR values of constructs are 0.819
and above for all constructs which is
satisfactorily and meets the cutoff value.
3.5.2. Convergent Validity
Both outer loading and Average Variance
Extracted (AVE) are used or the assessment of
convergent validity of the measurement model.
Hair et al. (2010) suggested that if the
indicators with outer loading are more than
0.50, they can be accepted in the model.
Furthermore, Fornell et al. (1981) suggested
that the AVE should be greater than 0.50.
Accordingly, that the outer loading of all
indicators that is between 0.591 and
0.867tindicates that all indicators are
acceptable, while the result of AVE values of
all constructs are suggesting convergent
validity is ensured (see Table 5,6).
3.5.3. Discriminate Validity
Table 3 and Table 4 report the result of
discriminate validity of constructs examined by
Fornell-Larcker criterion of first-order and
second-order. The Fornell-Larcker criterion is
more conservative to examine the discriminate
validity. It compares the square root of AVE
values of each construct (in bold in the matrix
diagonal) with the paired construct correlation
(off-diagonal). It can be noticed that all values
of square root of AVE are greater than the
constructs correlation. Hence, the discriminate
validity is satisfactory (Fornell et al., 1981).
The higher correlation found between every
pair of constructs is between Digital Human
Resource Management and Digital
Transformation (0.684), followed by the
correlation between Customer Experience and
Digital Process (0.646).-see table 7-
Table 8. Fornell-Larcker Criterion for Second-
Order Construct
D.HR.M
DT
SS
D.HR.M
0.762
DT
0.684
0.824
SS
0.494
0.500
0.776
Note: Diagonals in bold represent the square root of
each construct AVE. Off-diagonal represent the
constraint’s correlation
3.5.4. Structural Model Evaluation
After the reliability and validity of the
constructs are established, the second step is to
examine the structural model which estimates
hypothesized paths between the constructs. To
assess the structural model Co linearity Test,
Path Significance, Coefficient of
Determination, and the Predictive Accuracy are
used.
3.5.6. Co linearity Test: this is the first step to
assess the structural model according to the
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result shown in Table (5) were no presence of
Collinearity in the structural model is seen
since all Variance Inflation Factors of all
construct are below 5 (Hair et al., 2017).
Table 9. Co linearity Assessment
D.HR.M
DT
SS
SOI
1.000
C.Com
1.000
C. Con
1.000
BM
1.000
CE
1.000
D.HR.M
1.000
DP
1.000
IOP
1.000
SS
1.877
1.877
3.5.7. Path Coefficient
Table 6 shows the path coefficient of all
hypotheses and their t-values associated with
p-values. Research model proposed a total of
four hypotheses. The first three thereof
propose a direct relationship, while the last one
propose an indirect relationship. According to
the result, all hypotheses are supported. In
other words, there is a significant and positive
relation between digital transformation and
strategic supremacy 󰇛  󰇜
and this supports .Moreover, there is a
significant and positive relationship between
digital transformation and digital human
resources management 󰇛 
󰇜 supporting . Additionally, there is a
significant and positive relation between digital
human resources management and strategic
supremacy 󰇛  󰇜
supporting Furthermore, digital human
resources management significantly mediate
between digital transformation and digital
human resources management 󰇛 
󰇜 supporting . There is also a
significant and positive relation between digital
human resources management and strategic
supremacy 󰇛  󰇜
supporting  Digital human resources
management significantly mediate between
digital transformation and strategic supremacy
󰇛  󰇜 supporting . This
confirm that digital human resources
management acts as a partial mediator
occasionally between digital transformation
and strategic supremacy. (See Table 9)
3.5.8 Coefficient of Determination 󰇛󰇜and
Predictive Relevance 󰇛󰇜
A major part of the structural model evaluation
is the assessment of coefficient of
determination 󰇛󰇜and predictive relevance
󰇛󰇜. The Coefficient of Determination 󰇛󰇜
represents the amount of variance in the
endogenous construct that is clarified by all of
the exogenous constructs. Hair et al. (2017)
suggests that if value is 0.25 it means its
weak, while if 0.50 and 0.75 then it is
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moderate and strong respectively. Furthermore,
Falk and Miller (1992) recommend that the
minimum required value of should be at
least 0.10. To assess the Predictive Relevance
󰇛󰇜 value a blindfolding procedure relevance,
Chin (1998) and Henseler et al.(2009) suggest
that a model confirm a good predictive
relevance when its value is greater than zero.
According to the result in the Table of and
, 46.7% of variations in digital human
resources management can be explained by
construct of digital transformation, while
29.3% of variations in strategic supremacy can
be explained by construct of digital human
resources management and digital
transformation (See Table 10.11).
4.5.8. Effect Size 
The Effect Size  is used to estimate the
effect of specific exogenous constructs that
contribute to an endogenous construct by
means of change if deleted from structural
model. Chin (1988) and Cohen (1988) suggest
that the  value of 0.02, 0.15, and 0.35 are
often used to represent small, medium, and
great effect, respectively. According to the
result shown in Table 8, the exogenous
variables digital human resources management
and digital transformation have a medium
effect on strategic supremacy, where digital
transformation has a great effect on digital
human resources management.
Table 12. Effect Size of Exogenous constructs
4 CONCLUSION
The study concludes that there is a positive and
good impact of digital transformation on
strategic supremacy. The same applies to the
impact of digital human resource management
on strategic supremacy, while digital
transformation has a very good impact on
human resource management. Relevant studies
show that digital transformation is effective in
cases of transformation of industrial
organizations from the traditional pattern to the
industry 4.0 pattern. Digital transformation
imposes a transformational reality in human
resources management to maintain a strategic
function. It further concludes the importance of
the role that human resources management
must play in the digital age to spread the
culture of Digital transformation within
organizations and build human resources
capabilities that fit into the digital era.
Exogenous
constructs
Endogenous
constructs
D.HR.M
DT
Effect
size
D.HR.M
0.877
Great
effect
SS
0.062
0.070
Medium
effect
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The results of the study also show that Digital
Human Resource Management serves as
mediating variable in the relationship between
digital transformation and strategic supremacy,
and as a partial mediator, not as strong as
expected. It is also noted that the direct impact
of digital transformation on strategic
supremacy is higher than the indirect impact.
This study also addresses the expected effect of
digital transformation in competing and market
fencing industries, especially in sectors where
markets are characterized by oligopoly, such as
Mobile Communications in Palestine, in which
only two companies compete towards Strategic
Supremacy. On the other hand, the study
introduces the role of Digital Human element
as a mediating variable to clarify the crucial
role that the trained human resources play in
digital transformation processes in the existing
digital era.
The study provides insights of digital
transformation from an internal perspective of
“digitizing business models and digitized
operational processes”. This is in addition to an
external perspective of customers’ expectations
and their experience in digitized companies as
well as the expected impact of digitization on
humans. The understanding of corporate
management of the mechanism of their digital
transformations will contribute to a clear
understanding of the new rules of the game in
strategic supremacy and their response to
market pressures.
Practical Implications
The results of this study are useful for policy
makers in companies concerned with digital
transformation. Seeking to extend their market
dominance over competitors, drawing the lines
of competition in the digital world depends on
the organization’s ability to transform from
digitized organizations to smart organizations
(Wengler, et al.,2021).
Recommended Studies
Researchers recommend that more in-depth
studies be conducted to examine the impact of
digital transformation on strategic sovereignty
using more variables such as digital
empowerment and financial allocations.
The study also recommends further studies be
developed on digital competencies in digitally
transformed organizations into smart
organizations
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Contribution of Individual Authors to
the Creation of a Scientific Article
(Ghostwriting Policy)
Khtib Ohoud, carried out the
Conceptualization Ideas; formulation or
evolution of overarching research goals and
aims. Data curation, simulation and the
optimization, Writing - original draft,
statistics.
Alshawabkeh Khaled, was responsible for
Supervision, Oversight, and leadership
responsibility for the research activity
planning and execution, including
mentorship external to the core team, as
well as validation.
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Table 5. Reliability Measurement of Constructs
Constructs and Indicators
Outer
loading
First-order construct
BM
Business Model (CA=0.825; CR=0.877; AVE=0.588)
BM1
The company sets a strategy based on digitization to reach its goals
0.793
BM2
The company considers digital transformation processes, as a competitive advantage in its favor
0.761
BM3
The company's digital transformation provides a better quality of its services
0.782
BM4
The company's digital transformation provides greater flexibility in work
0.743
BM5
The company relies on continuous innovation in its products to maintain its growth
0.755
CE
Customer Experience (CA=0.843; CR=0.885; AVE=0.564)
CE1
Digital alternatives provide comprehensive information for all services requested by customers
0.829
CE2
Digital alternatives provide solutions to the problems facing the customer at any time
0.801
CE3
Digital alternatives provide solutions to customer problems before they happen
0.722
CE4
Digital alternatives to company services increase customer satisfaction
0.741
CE5
Digital alternatives to the company's services provide individual advantages that suit the differences in needs between
customers
0.759
CE6
Digital alternatives to company services allow to discover all the services offered by the company
0.639
DP
Digital Process (CA=0.739; CR=0.852; AVE=0.658)
DP1
The company relies on smart business systems in its daily operations
0.799
DP2
The company adopts electronic data systems to improve its procurement processes
0.862
DP3
The company provides digital marketing services for its products
0.770
IOP
Influence on people (CA=0.872; CR=0.904; AVE=0.610)
IOP1
Digital alternatives to company services provide the ability to interact with the provider
0.729
IOP2
The company creates electronic communities for its employees
0.769
IOP3
The company uses its digital platforms to motivate customers to submit their personalized suggestions
0.844
IOP4
Companies’ digital services contribute to protecting the security of personal data
0.804
IOP5
The company directs its customers to the best ways to protect the security of their digital data
0.781
IOP6
digital services provided by the company contribute to better understanding of customers to reduce smart devices
complications
0.755
SOI
Sphere of Influence (CA=0.758; CR=0.846; AVE=0.581)
SOI1
The company deals with a different strategy for each geographical area in which it operates.
0.713
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SOI2
The company deals with a different strategy, for each geographic area
0.694
SOI3
The company builds predictive mind maps of competitors' moves
0.815
SOI4
The company seeks to enhance its technological strength to achieve greater strategic influence compared to competitors
0.818
C. Con
Competitive Configuration (CA=0.803; CR=0.872; AVE=0.630)
C.Con1
The company ally with other institutions to maintain its market dominance
0.748
C.Con2
The company seeks to expand its competitive sphere of influence through the lowest price strategy
0.787
C.Con3
The company cooperates with its competitors in products that enhance its market presence
0.782
C.Con4
The company's relationship with its people ranges between "cooperation and competition"
0.854
C.Com
Competitive Compression (CA=0.679; CR=0.824; AVE=0.612)
C.Com1
The company clearly identifies the sources of competitive pressures it faces
0.776
C.Com2
The company is based on providing "luxuries" "mobile phone accessories" to overcome the pressure of competitors
0.694
C.Com3
The company continuously develops its cash-generating products
0.867
D.HR.M
Digital Human Resource Management (CA=0.884; CR=0.908; AVE=0.556)
D.HR.M1
The company has a department dedicated to managing human resources digitally
0.689
D.HR.M2
HR staff are adequately trained to deal electronically with business requirements
0.815
D.HR.M3
Employees' financial dues are received electronically
0.591
D.HR.M4
human resource management system provides a better way to attract talent compared to the paper-based system
0.723
D.HR.M5
human resource management system contributes to enabling employees to access the information necessary to perform
their work efficiently
0.796
D.HR.M6
Employee performance appraisal is done electronically
0.767
D.HR.M7
Digital transformation contributes to improving the services provided to employees
0.851
D.HR.M8
Digital human resources management system enables participation in decision-making within the "authorities of my
work"
0.702
Table 6. Reliability Measurement of Constructs- Second-order construct
DT
Digital Transformation (CA=0.845; CR=0.894;
AVE=0.670)
BM
Business Model
0.769
CE
Customer Experience
0.885
DP
Digital Process
0.775
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IOP
Influence on people
0.859
SS
Strategic Supremacy (CA=0.647; CR=0.819;
AVE=0.602)
SOI
Sphere of Influence
0.809
C. Con
Competitive Configuration
0.775
C.Com
Competitive Compression
0.742
Table7. Fornell-Larcker Criterion for first order construct
BM
C.Com
C.Con
CE
D.HR.M
DP
IOP
SOI
BM
0.767
C.Com
0.499
0.782
C.Con
0.129
0.369
0.794
CE
0.587
0.513
0.086
0.751
D.HR.M
0.581
0.592
0.189
0.614
0.746
DP
0.483
0.378
0.177
0.646
0.466
0.811
IOP
0.507
0.504
0.217
0.644
0.569
0.587
0.781
SOI
0.232
0.431
0.410
0.358
0.397
0.234
0.479
0.762
Note: Diagonals in bold represent the square root of each construct AVE. Off-diagonal represent the constraint's
correlation.
Table 10. Path Coefficient of Research Direct Hypothesis
No.
Hypothesis
Coefficient
()
SD
value
value
Result

DT SS
0.304
0.087
3.512
0.000**
Significant
DT D.HR.M
0.684
0.036
18.895
0.000***
Significant
D.HR.M SS
0.286
0.068
4.198
0.000**
Significant
DT D.HR.M SS
0.196
0.048
4.080
0.000***
Significant
Note: *** a significant relation at 1%.
Table 11. Assessment of Coefficient of Determination and Predictive Relevance
Endogens
variables
SSO
SSE
  
D.HR.M
0.467
1608.000
1209.788
0.248
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SS
0.293
2211.000
2000.597
0.095
Note: SSO= Total Sum of Square; SSE= Sum of Square due to error
Figure 1. Dimensions of Strategic Supremacy from a Marketing Perspective. Figure prepared by
researchers.
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Figure2: Study Model
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Figure 3: Structural Model
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