The role of institutions in the digital transformation of companies in transitional countries

Abstract

The digital transformation represents a crucial factor for the competitiveness of companies both at the local and regional, and especially at the global level. The aim of this paper is to assess the adequacy of the legislative framework in Bosnia and Herzegovina (BiH) and to compare the level of digitalization in BiH with other countries in the region. In measuring the level of digitalization, the paper utilizes the DESI index, which assesses four key areas: connectivity, human capital, integration of digital technologies by the business sector, and digital public services. The author provides an overview of the literature on the impact of institutions on digital transformation in transitional countries, as well as a critical review of current and future trends on this topic. BiH has an outdated and underdeveloped legislative framework concerning the implementation of digitalization at both the systemic and company levels, which is not aligned with modern trends. Consequently, BiH ranks among the lowest countries in Europe in terms of the degree of digital transformation compared to other countries in the Western Balkans. While the legislative framework is not the sole cause of BiH's low level of digital transformation, it represents one of the significant factors. This paper also provides recommendations to policymakers and managers on the possibilities and importance of digital transformation for companies, thus making certain contributions to the field.