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Systems 2023, 11, 172

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Capabilities on Digital
Transformation

Abstract: The imperative of changes associated with digital transformation gave impetus to this study,
which aims to examine the impact of digital capabilities and digital citizenship on digital transformation,
as well as to identify the role of digital citizenship in the relationship between digital capabilities and
digital transformation
...
A survey was carried out, and respondents were managers employed in companies from
various industries in Serbia
...
Results suggest that digital capabilities
have a significant positive impact on change management, information and data literacy, and
information security management
...


Keywords: digital transformation; digital capabilities; digital citizenship; information and data literacy;
information security management; change management; risk management

Systems 2023, 11, 172
...
org/10
...
mdpi
...
To ensure success, employees must develop a “digital mindset” [7]
...

Previous studies have proved that dynamic capabilities have an important impact on the
ability to effectively address digital transformation challenges [9,10]
...
Therefore, digital capabilities entail creative, critical, and safe
use of information and communication technologies; empirical evidence shows that digital
capabilities have a positive impact on digital innovation [14] and organizational performance [15]
...
It accomplishes this study’s purpose through

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acquiring a more comprehensive knowledge of customer needs, developing new channels for
selling and promoting products and services, or communicating with consumers
...
Traditional business
models are increasingly losing their competitiveness and are replaced by new models that
promote digital transformation
...
In the literature, digital citizenship is defined as the ability to
manage information and interact with others using digital technologies [19]
...

Digital citizenship refers to safe and responsible behavior in using digital technologies [23,24];
therefore, the most common elements of digital citizenship are digital security, rights and
responsibilities, digital literacy, and communication [24]
...
Widespread use of digital technologies offers significant
benefits to users, but at the same time, opens a field of possible risks associated with their use,
which is confirmed by the aforementioned research
...

Previous studies have focused on the drivers of digital transformation, success factors, and
implications [25]
...
Digital citizenship explains an individual’s ability to access, use, and
create information in the digital environment while exercising safety-consciousness and
responsible behavior [26]
...
There is a limited
number of empirical studies on the effects of employees’ capabilities on the effectiveness of digital
transformation [18,28,29]
...

Digital citizenship is becoming the key to individual behaviors, integrating them in modern
society based on collectively shared values [30]
...

To ensure rapid technology adoption and satisfy citizens’ needs, it is necessary to allow
suggestions on directions in ensuring appropriate behaviors with contemporary digital tools [31]
...
Previous studies investigated the mediating role of a digital transformation strategy
[33], ICT self-efficacy, ICT interest [34], and the ability to use communication technology [35], but
to our knowledge, there is no evidence on the mediating role of digital citizenship
...

The contribution of this study is the validation of the favorable impact of digital capabilities
on digital transformation in the change management domain
...
The findings of this study provide an
answer to the questions of how and to what extent digital citizenship influences digital
transformation
...


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The paper is divided into several sections
...
Following this section, the study’s methodology is described, followed by the
results and their analysis
...
In addition, the study limitations and future research
directions are integrated and provided in a separate section
...

2
...

Legner et al
...
Digital transformation considers a
broad range of changes, including cultural, organizational, and operational transformations, by
integrating digital technologies, orientation, and capabilities at all levels of organization [37]
...
As a multidimensional phenomenon [39], digital
transformation entails a wide range of changes supported by the usage and applications of
technology, which will transform the existing human-driven process into a software-driven
process [37]
...
0 [40], change management and risk
management are considered dimensions for analyzing the accomplished degree of digital
transformation in order to evaluate organizational readiness for the transformation
...
The first stage includes
changes in technology, products, services, and behavior, while the other dimensions include
building a good cooperation between actors in a digital environment and the development of
ecosystems that will provide the integration of hardware and software
...
The transformation affects all organizational aspects, so it is relevant
to formulate directions and initiatives that will be communicated and avoid a sense of lack of vision
[43]
...

Apart from calculating the probability (or frequency) of a potential problem and its consequences,
in the digital transformation process, it is necessary to identify the possible barriers to successful
organizational change and to define the actions that should be taken in order to overcome the
aforementioned obstacles [43,44]
...
Schnasse et al
...
Respecting the dynamic managerial capabilities
approach [47], companies need to constantly adjust and modify their resources and capabilities in
a dynamic and volatile environment to ensure sustained innovation and market survival [25]
...
While
digital transformation depends on digital technology, it will not be successful if employees do not
have an appropriate set of skills and competencies [48]
...
In correlation with the
demands of digitalization, digital capabilities entail leading the development, articulation, and
effective utilization of technologies and organizational resources
...
According to the digital
capabilities framework, there are six key areas: ICT productivity and proficiency; information, data,

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and media literacy; digital creation, problem-solving and innovation; digital communication,
collaboration, and participation; digital learning and development; and digital identity and wellbeing [52]
...
For example, digital literacy enables entrepreneurs to connect their ventures to digital
platforms [54] and to achieve improvements in efficiency and effectiveness [55]
...
Previous research confirms the relationship between digital capabilities and business
performance [14,28,37]
...
Organizational capabilities encompass digital
capabilities, and according to the findings of Konopik et al
...

Moreover, digital capabilities have a positive impact on digital innovation [14]
...
Carcary et al
...
Heredia et al
...
Based on a summary of
prior research, it can be stated that digital capabilities are an important premise for digital
transformation; however, to our knowledge, there are no studies assessing the direct effect of
digital capabilities on digital transformation
...
Digital transformation as a risk-involved change implies decomposing this
variable into two constructs: change management and risk management
...
Digital capabilities have a positive direct effect on change management
...
Digital capabilities have a positive direct effect on risk management
...
As a result of certain
trends, the concept of digital citizenship has emerged in the literature [19,24,30]
...
According to Simsek and Simsek [19], digital citizenship is
defined as the ability to uncover information and interact with people digitally
...
Recently, Ribble and Miller defined digital
citizenship as comprising the concepts of responsibility, rights, safety, and security
...
Morandi Sheykhjan [16], Spector [17], and Oberländer et al
...

Digital citizenship contains several elements, such as digital access, digital commerce, digital
communication and cooperation, digital etiquette, digital governance, digital health and wellbeing, digital law, digital rights and obligations, and digital security and confidentiality [24,30]
...
In this paper, digital citizenship is presented by the
constructs of: (i) Information security management; and (ii) Information and data literacy
...
Doyle [57] explains that
information literacy is “the ability to access, evaluate and use information from a variety of
sources”
...

Digital citizenship is a set of abilities that are necessary for conducting activities in the context
of the digital environment in an appropriate way to evaluate information and realize the
consequences responsibly [19]
...
Digital technologies are becoming a part of
everyday life and are integrated into nearly all professions
...
The development of digital technologies requires that citizens use a
growing range of skills to complete a task and solve problems in the digital environment [30]
...
Many facets of digital citizenship have been
discussed in previous research, with a focus on those pertaining to data, information
management, and security
...
Digital capabilities have a positive direct effect on information and data
literacy
...
Digital capabilities have a positive direct effect on information security
management
...
Previous studies were mainly focused on investigating digital
transformation from the technological perspective, neglecting the managerial and organizational
aspects [59]
...
Considering the fact that about 70% of change initiatives regarding
digitalization fail [60], digital transformation is complex and risky
...
[61] argue that the
lack of communication skills, and change and risk management skills were the main reasons for
the failure
...
Jæger [20] argues that 60% of digital businesses
would suffer major service failures due to the inability of security teams to manage digital risk
...
According to a poll of 1500
executives conducted by Marsh and McLennan [62], 79% of worldwide executives rate cyberattacks and threats as some of their organization’s top concerns
...
The role of education in the process of developing digital
citizenship and enhancing the benefits of digital transformation is indisputable [30]
...
Many institutions
must invest in digital tools, devices, and technologies for learning and teaching [64] in order to

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assure that the students learn how to use technological solutions and acquire important
knowledge [65]
...
Additionally, information security management
can have a positive impact on risk management associated with digital transformation, and can
contribute to a better perception of the risks related to change management in digital
transformation
...
Thus, we have defined the following hypotheses:
Hypothesis 3a (H3a)
...


Information and data literacy has a positive direct effect on change

Hypothesis 3b (H3b)
...


Information and data literacy has a positive direct effect on risk

Hypothesis 3c (H3c)
...

Hypothesis 3d (H3d)
...

It has been revealed that digital skills are important for maintaining the normal course of
ongoing events and their interpretations [30]
...

To maximize the benefits of using advanced technologies, business models based on digital
technologies call for a different spectrum of skills, abilities, and competencies
...
In a time of crisis, digital citizenship contributes to the
community’s understanding and individual practices, along with the changes in organizational
culture that are necessary for survival [30,37]
...

Research conducted by Heredia et al
...
In
other studies, the mediating effect of digital citizenship was not recorded
...
Therefore, we present the following hypotheses:
Hypothesis 4a (H4a)
...

Hypothesis 4b (H4b)
...

Hypothesis 4c (H4c)
...

Hypothesis 4d (H4d)
...

3
...
1
...

The first limitation relates to the exclusion of IT companies due to the industry’s specificity, which
is characterized by the imminence of digital transformation, as well as the assessment that digital
literacy is highly prevalent among all employees, and above average compared to companies
outside this industry
...
We identified 3905 firms in central Serbia after applying the
exclusion criteria [67]
...
To form the initial sample, 356 firms from a variety of industries
were randomly selected
...
We employed a key
informant approach to present the purpose of our study and to map managers as potential online
questionnaire survey participants
...
In addition, all participants were assured that the responses base and their
demographic information will never be shared with a third party
...
The 287 managers who consented to participate were given two weeks
to complete the questionnaire
...

The structural analysis of the sample revealed that 71
...
6 percent are in the manufacturing industry
...
4 percent
...
2 percent, and small
firms with 10 to 49 employees, which account for 21
...
The smallest presence was microbusinesses, which employ less than 10 workers, with a participation of 12
...
The structure
of the sample does not reflect the structure of the population in the economy, in which small and
micro firms account for 81
...
4% of the total, respectively
...
8% of the total employees and generate
over 70% of the national GDP [69]
...
5 percent, while the rest of the sample
is made up of males
...
6 percent, followed by those between the ages of 31 and 40 years at 32
...
3 percent
...
2 percent of the sample,
followed by respondents with a high school degree (34
...
4 percent)
...
2
...

The questionnaire was divided into four sections
...
The questionnaire had four main
components
...
The third and fourth sections of the questionnaire featured information on the firms
and the respondents’ demographics, respectively
...
Specifically designed constructs and
statements have a substantial predictive value, and Amankwaa et al
...
The items used in the study were originally written in the English language
...
To ensure the initial validity of the
statement, preliminary testing was conducted on a sample of 30 respondents
...
Respondents were asked to evaluate each item on a 5-point Likert scale, from “strongly
disagree“ (value 1) to “strongly agree“ (value 5)
...
“Digital Citizenship“ comprises two constructs, information
and data literacy and information security management, whereas “Digital Transformation“
consists of two constructs, change management and risk management
...
This construct uses six statements proposed by
Westerman et al
...
The following are examples of statements used: “We are using digital
technologies (such as analytics, social media, mobile, and embedded devices) to understand our
customers better”, “We sell our products and services through digital channels”, and “Technology
is allowing us to link customer-facing and operational processes in new ways”
...
This construct consists of six statements, such as “I am
able to formalise customer requirements”,“I am able to translate/reflect business behavior into
structured information”, and “I am able to capture, storage, and analyze, data sets, that are
complex and large, not structured and in different formats”
...
0: A shared European Framework for ICT Professionals in all industry
sectors [40] provides statements for observing this construct
...
This construct consists of two items [40]: “I am
able to apply relevant standards, best practices and legal requirements for information security”,
and “I am able to anticipate required changes to the organization’s information security strategy
and formulate new plans”
...
For the observation of this construct, four items [40] were used,
such as “Awareness of the impact of business changes on legal issues”, and “Ability to select
appropriate ICT solutions based upon benefit, risks, and overall impact”
...
This construct has three statements: “Ability to communicate and
promote the organization’s risk analysis outcomes and risk management processes”, “Ability to
design and document the processes for risk analysis and management”, and “Ability to apply
mitigation and contingency actions” [40]
...
Results and Analysis
The study’s hypotheses (Figure 1) were examined by conducting the partial least squares
approach of structural equation modeling (PLS-SEM)
...
First, the study is based on a complex model
composed of a large number of constructs, in which the mediator impact is assessed in addition
to the direct relationships between the constructs
...
The selection of approach is supported by
the work of Hair et al
...
Third, the study incorporates some of the most important aspects of research in
business, management, and information systems
...

Anderson and Gerbing [75] suggest a two-step procedure for the deployment of the
aforementioned SEM approach, which we utilized for the validation of the measurement model
and evaluation of the structural model’s quality
...
The key indicators of the reflective model defined in the
study were then calculated using SmartPLS 3
...


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H2b

Information
Security
Management

H3c

H4c
H3d

H4d

Change
Management
H1a
Digital
Capabilities
H1b
Risk
Management
H3a
H4a
H4b

H2a

Information
and Data
Literacy

H3b

Figure 1
...


The research model is determined by five constructs in the study: digital capabilities (DC),
information and data literacy (IDL), information security management (ISM), change management
(CM), and risk management (RM)
...

4
...
Measurement Model Assessment
The consistent PLS algorithms procedure was ran to perform confirmatory factor analysis
...
The items “I am able to gather internal and external knowledge and information needs”
(IDL02) and “Ability to develop risk management plan to identify required preventive actions”
(RM01) did not meet the necessary criteria and were, therefore, excluded from further calculation
...
According to the criteria established by Nunnally and Bernstein
[76], the Cronbach’s alpha coefficient (α) is adequate for all model constructs
...
7 [77]
...
The average variance extracted (AVE) indicator value varies
from 0
...
832, and is above the cutoff value of 0
...
Collinearity statistics evaluated by
the variance inflation factor (VIF) reveal that multi-collinearity does not pose a difficulty for the
measurement model
...
436
to 0
...
In what follows, there is a discussion on
the results and how they can be interpreted from the perspectives of previous studies and the
working hypotheses
...
Future research directions may also be highlighted
...
Measurement model and constructs
...
792

2
...
914

0
...
639

Cross-Validated
Communality
Index (H2)
0
...
853

3
...
802

2
...
856

2
...
721

1
...
764

1
...
795

2
...
801

2
...
873

2
...
820

2
...
811

2
...
832

2
...
907

1
...
918

1
...
757

1
...
763

1
...
858

2
...
849

2
...
883

2
...
905

2
...
901

2
...
926

0
...
677

0
...
908

0
...
832

0
...
882

0
...
653

0
...
925

0
...
804

0
...
The variance inflation factor (VIF) was utilized
for assessment, and all values of this coefficient for the items employed in the study are
significantly lower than 5, the maximum acceptable value
...
85) criterion [79] were used to assess the discriminant validity
...
The results shown in Table 2 verify the discriminant validity
according to the Fornell–Larcker criterion, while the results shown in Table 3 prove the
discriminant validity according to the heterotrait–monotrait (HTMT0
...
Summarizing
the above, it can be concluded that the measurement model of our study matches the satisfactory
discriminant validity
...
Discriminant validity (Fornell–Larcker criterion)
...
CM: Change Management

0
...
IDL: Information and Data Literacy

0
...
823

3
...
581

0
...
912

4
...
492

0
...
466

0
...
RM: Risk Management

0
...
598

0
...
407

0
...
CM: Change Management

–

0
...
Discriminant validity (HTMT0
...


2
...
703

3
...
713

0
...
DC: Digital Capabilities

0
...
602

0
...
RM: Risk Management

0
...
668

0
...
2
...
For each relationship established in the research model,
the bootstrapping procedure was used to calculate the two-sided bias-corrected 95 percent
confidence intervals (CIs) in order to estimate the direct effect and test the corresponding
hypotheses
...
The results of the statistical analysis reveal that digital
capabilities are positively related to change management (β = 0
...
01), thus confirming
hypothesis H1a, but the relation between digital capabilities and risk management is not
statistically significant; therefore, hypothesis H1b is rejected
...
545, p < 0
...
466, p < 0
...
Additionally, empirical evidence indicates
that the one-point increase in digital capabilities would increase information and data literacy by
0
...
466 points, suggesting a strong
predictive impact on the stated outputs
...
324,
p < 0
...
334, p < 0
...
Considering the above, it can be
concluded that hypotheses H3a and H3b are confirmed
...
273, p < 0
...
466, p < 0
...

Table 4
...

Relationship

Path Coefficient

t-Value

95% CIs (Bias Corrected)

Results

DC → CM

0
...
257

[0
...
285]

Supported

DC → RM
DC → IDL

0
...
545 ***

1
...
470

[−0
...
187]
[0
...
640]

Not supported
Supported

DC → ISM
IDL → CM
IDL → RM

0
...
324 ***
0
...
096
3
...
343

[0
...
568]
[0
...
506]
[0
...
546]

Supported
Supported
Supported

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ISM → CM
ISM → RM

0
...
332 **

3
...
380

[0
...
449]
[0
...
517]

Supported
Supported

Notes: CM: change management; IDL: information and data literacy; ISM: information security management; DC: digital
capabilities; RM: risk management
...
01; *** p < 0
...


The bootstrapping procedure was also applied to evaluate the indirect effects determined by
the research model
...
The results of the indirect effects are shown in Table 5, which
provides a comprehensive insight of the mediating role of information security management and
information and data literacy
...
177, t = 3
...
01), as well as between digital capabilities and change
management through information security management (β = 0
...
840, p < 0
...

Information and data literacy was found to have a positive indirect effect and intervening role in
the association between digital capabilities and risk management (β = 0
...
191, p < 0
...

The same positive and statistically significant indirect effect was confirmed between digital
capabilities and risk management, including the intervening role of information security
management (β = 0
...
186, p < 0
...
The procedure described by Zhao et al
...
The role of information security management as a partial
mediator between digital capabilities and change management and digital capabilities and risk
management was validated
...

Based on the evidence presented, it is concluded that hypotheses H4a, H4b, H4c, and H4d were
confirmed
...

Table 5
...

Relationship
DC → IDL → CM
DC → ISM → CM
DC → IDL → RM
DC → ISM → RM

Change Management
Information and Data
Literacy
Information Security
Management
Risk Management
SRMR

Path Coefficient
0
...
383

[0
...
300]

Supported

2
...
191
3
...
046, 0
...
082, 0
...
057, 0
...
287

0
...
359

0
...
297

0
...
175

0
...
195

0
...
425

0
...
127 **
0
...
155 **
Stoner-Geisser Q2

0
...
** p < 0
...


In PLS-SEM, a blindfolding procedure was used to evaluate the quality of the structural
model
...
The Stone–Geisser Q2 coefficients for change
management, information and data literacy, information security management, and risk
management were calculated to be 0
...
199, 0
...
334, respectively (Table 5)
...
The coefficient of determination of the explained
variance (R2) was determined utilizing the same constructs as previously described
...
9 percent of change management, 29
...
7 percent of information security management, and 42
...

The goodness-of-fit (GOF) was manually calculated for all dependent and intermediate latent
variables by using the square root of the multiplication of communality and R2
...
195 to 0
...
The goodness-of-fit (GOF) was manually calculated for all dependent and intermediate latent
variables by using the square root of the multiplication of communality and R 2
...
195 and 0
...
Henseler et al
...

The proposed structural model of the current study has an SRMR value of 0
...
It provides a concise and precise
description of the experimental results, their interpretation, as well as the experimental
conclusions that can be drawn
...
Discussion
This paper proposed and tested a conceptual model of the impact of digital capabilities and
digital citizenship on digital transformation, and the mediating role of digital citizenship
...

The findings in this study show the positive significant impact of digital capabilities on change
management, while the impact of digital citizenship on risk management is not proven
...
The study conducted by Khin and Ho [14] contains digital capabilities as an
independent variable, but it analyzed the impact of digital capabilities on organizational
performance and digital innovation
...
[15] proves the impact of
digital capabilities on firm performance
...
Konopik et al
...
In addition, Konopik et al
...
In contrast to the aforementioned
research that examines the importance of many organizational capabilities for digital
transformation, our study focuses solely on digital capabilities
...
[15] reveal that digital capabilities positively influence firm performance only through
technological capabilities, while the research model of this paper includes digital citizenship as a
mediator variable
...

Furthermore, since “being a digital citizen” means overcoming numerous challenges, this
study tested the influence of digital capabilities on dimensions of digital citizenship
...
These
findings are consistent with the findings of an earlier study conducted by Wiesböck and Hess
[30], where it was found that citizens should use a growing range of skills to fulfill tasks and solve
problems in the digital environment
...
Although this study is the
first, to our knowledge, to look at this relationship, the results imply that information and data
literacy and information security management are some of the important factors that influence
digital transformation in times of crisis
...
The mediation results prove that digital citizenship mediates
the relationship between digital capabilities and change and risk management
...
Additionally, the empirical data reveal that digital citizenship serves as a significant
mediator between digital capabilities and risk management, meaning that overcoming challenges
in organizations, such as information and data literacy and information security management, is
relevant in enhancing the relationship between digital capabilities and the effectiveness of digital
transformation
...
Theoretical and Practical Implications
Considering the purpose of this research, there is limited evidence in the literature on the
relationship between digital capabilities, digital citizenship, and digital transformation
...
In extending the
existing body of knowledge, our study has several theoretical implications
...

We have argued that digital capabilities and digital citizenship may enhance change management
and risk management related to digital transformation practices in companies
...

Since digitalization announced the beginning of numerous challenges that have an impact on
individuals’ professional and private life, being skilled in the domain of information and data
literacy and information security management can make employees more competent for digital
transformation
...
This study shows that these dimensions of digital
citizenship can play an important role in realizing the potential of digital capabilities for
implementing digital transformation
...

Since the readiness for digital transformation can be perceived differently, this research
contributes to developing a unique framework for effective digital transformation, highlighting
several factors that should be considered to extend the level of digital readiness
...

This study’s findings provide a solid foundation for identifying various practical implications
...
This may be accomplished via candidate selection, training, and compensation
system policies
...
For existing
employees, targeted training can contribute to the improvement of digital citizenship that will
meet the demands of digital transformation
...
Investments in the development of human capital
in the domain of digital transformation can enhance the efficiency of human capital [86] and
create the preconditions for value generation
...
Investments
in education that incorporate components of digital citizenship can generate a strong incentive
for businesses to undergo digital transformation
...
The
aforementioned practical implications should be viewed largely in light of the emerging economy
and the potential limitations of HR practice and education in Serbia, compared to developed
countries
...


Systems 2023, 11, 172

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7
...
First, a limitation stems from the
structure of the sample, which can be characterized as heterogeneous
...
Some traditional
industries continue to lack dramatic change pressure; therefore, incremental digital
transformation is likely to occur
...
Second, the study model does not
contain variables that are contextual to digital transformation
...
Third, the research was conducted in Serbia,
which is not among the leading countries in the development of modern technologies
...
This result proves the significant
progress of public administration in digital transformation, and implies that private companies are
also not lagging in this change
...
In this context,
the potential of conducting research with companies from a single industry or several industries
with comparable characteristics is underlined
...
If the prerequisites of homogeneity
and sample size are achieved, research that includes companies from different national settings
might be a significant step forward
...

8
...
By
reviewing the literature, the mentioned variables were identified in individual previous studies;
however, the model establishes relationships between variables that are not present in the
existing literature, to our knowledge, thus filling the existing research gap
...
This represents a research novelty
compared to previous studies, which can be an incentive for future research and improvement of
the model
...

The absence of a direct impact of digital capabilities on the risk management component is
compensated by the indirect impact of digital capabilities on risk management with the full
mediating effect of digital citizenship
...
As an
indirect conclusion derived from the preceding discussion, it becomes apparent that digital
transformation is essentially dependent on people, and that employee development plays an
important role
...
In this context, the results of this study provide
practical implications for digital transformation through the development of digital citizenship
...
Additionally, the mediating effect of digital
citizenship confirms its important role in the relationship between digital capabilities and digital
transformation
...
Although the sample meets the prerequisites

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required by the applied statistical method, it still remains relatively small and heterogeneous
...

Additionally, the heterogeneity and absence of a larger participation of small firms in the sample
does not give a complete insight into the applicability of the model in emerging economies
...

Author Contributions: Conceptualization, M
...
, K
...
, T
...
N
...
V
...
B
...
S
...
B
...
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