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Amidst the Industry 4.0 landscape, organizations are increasingly harnessing cutting-edge technologies and embracing digital change to fuel innovation. However, the full potential of innovation cannot be realized without organizational readiness. This study explores how various dimensions of organizational readiness and innovation influence digital change and firm performance.

Data were gathered via a survey of 303 managers from both state-owned and private-owned enterprises in Ho Chi Minh City, Vietnam, and analyzed utilizing partial least squares–structural equation modeling (PLS–SEM).

Organizational readiness positively influences both digital change and innovation. Additionally, innovation positively impacts digital change and mediates the relationship between organizational readiness and digital change. Furthermore, both innovation and digital change positively affect firm performance, whereas the control variable of ownership type has no significant correlation with firm performance. Finally, digital change mediates the relationship between innovation and firm performance.

This study contributes to the digital innovation literature by empirically testing the influence of organizational readiness on digital change and innovation within the context of Vietnam. By investigating whether innovation and digital change enhance firm performance, this study also addresses inconsistencies in the literature.