["European Journal of Education, Volume 61, Issue 2, June 2026. ", "\nABSTRACT\nThis study investigates the impact of digital transformation on firm performance using panel data from 5120 firm‐year observations between 2014 and 2024. Results show that digital transformation significantly enhances firm performance both directly and indirectly, with technology‐driven business management practices playing a significant mediating role in this relationship. IT capability, human capital, and digital leadership strengthen this relationship, while heterogeneity tests reveal stronger effects among private, small, and technology‐intensive firms. Robustness checks confirm result stability, highlighting digital transformation as a strategic managerial capability for sustaining firm competitiveness in the digital economy.\n"]