Linking digital transformation and strategic partnership to partnership performance: the mediating role of service innovation

This research is intended to investigate the effect of digital transformation, strategic partnerships, and service innovation on partnership performance. The population in this study is made up of 95 organizations that are partners of the Ministry of Finance in receiving state revenues. The research is explanatory research with a quantitative approach that collects data by distributing questionnaires to 95 managers from different organizations. The data was analyzed using structural equation modelling and partial least squares with SmartPLS software. The results show that digital transformation has an insignificant effect on partnership performance, while the other variables, namely strategic partnership and service innovation, have a significant effect on partnership performance. However, with the mediating variable service innovation, the effect of both digital transformation and strategic partnership becomes significant. The results of this study suggest that organizations must apply digital transformation to service innovation to obtain the desired partnership performance. © 2023 by the authors. Licensee SSBFNET, Istanbul, Turkey. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license


Introduction
Partnership performance is part of organizational performance obtained as a result of partnering with other organizations (Choi et al., 2020).Partnership performance is a measurement and assessment of the actual achievements of partner management based on the programs and objectives of the agreed relationship (Yu & Shiu, 2014).Meanwhile, according to Kim & Shin (2019), partnership performance is related to increasing the operational efficiency of organizations establishing partnerships.Therefore, the discussion of partnership performance cannot be separated from the discussion of organizational performance.Departing from the matters above, the discussion regarding organizational performance in this research is a discussion of organizational performance, which is the result of partnerships (partnership performance).
Organizational performance is the organization's ability to access and handle various organizational resources to achieve its goals and objectives (Sangiorgi & Siboni, 2017).Organizational performance can continue to grow when the organization successfully implements alignment between performance measurement and the organization's business strategy (Ghosh et al., 2017).
Data from the Indonesian Ministry of Finance states that Indonesia's state revenue management partnership is still experiencing a number of problems.The partners (namely Collecting Agents for State Revenues) who collaborate in this partnership are still experiencing problems with cancellations and refunds of state revenues.From 2019 to 2022, there were 133 cancellation and refund transactions for state revenue transactions.The total state revenue transactions that were cancelled and returned were IDR the last four years were IDR 212,673,079,705.Meanwhile, the amount of service fees received by the Collecting Agent in the last four years was only IDR 1,480,857,422,000.The purpose of this study is to analyze the manner in which the performance of partnerships is affected by digital transformation, strategic alliances, and service innovation.95 entities that are partners of the Ministry of Finance in the process of collecting state money make up the population that is being studied in this particular study.Questionnaires were sent out to 95 managers working for a variety of firms in order to collect data for the research, which is an explanatory study using a quantitative methodology.
The information was evaluated with the help of the SmartPLS software, which utilized structural equation modeling and partial least squares.According to the findings, the impact of digital transformation on partnership performance is small.On the other hand, the other variables, including strategic partnership and service innovation, have a considerable impact on partners' ability to work together effectively.The influence of digital transformation and strategic partnership, on the other hand, increases in significance when the variable service innovation is included as a mediator.This study's findings indicate that in order for enterprises to achieve the necessary level of partnership performance, they need implement digital transformation in service innovation.This article is organized as follows.Theoretical analysis and research hypotheses are presented in Section 2. Section 3 describes the research design and model construction.Section 4 focuses on the empirical analysis of the data and discussion of the results and findings.Finally, conclusions, implications, limitations, and suggestions for future research are presented respectively in the last section.

Theoretical and Conceptual Background
The comparison between cancellation and return of state revenues to the amount of service fees received, respectively, is 28.0% and 14.4% of the nominal service fees.This value has the potential to disrupt the performance of Collecting Agents, especially the performance of partnerships originating from managing state revenues.Research regarding the relationship between digital transformation and strategic partnerships on partnership performance has not yet been empirically discussed.The researcher himself has not found any empirical research articles related to this topic, so the results of this research can be of added value in adding references related to this topic.In addition, a number of researchers state that partnership performance as organizational performance obtained from partnerships is influenced by digital transformation (Almujaini et al., 2021;Kitsios et al., 2019a;Mitroulis & Kitsios, 2019;Wu et al., 2021), strategic partnerships (Chen & Hsiao, 2008;Dongrin Ater et al., 2018;Ghouri et al., 2019;Yang et al., 2022), and innovation (Bustinza et al., 2019;Cinar et al., 2020;Migdadi, 2021;Zhang et al., 2019).
The implementation of digital transformation focuses on reshaping business models, improving customer experience, improving business operations and processes, digitizing products/services and increasing value creation and organizational performance (Chen et al., 2016;Kitsios et al., 2019b;Mitroulis et al., 2019).Organizations that are able to integrate digital technology into many aspects of operations will benefit from this transformation.When adopting advanced technology, organizations are able to improve the quality of products, services and ideas delivered to consumers and reduce time to market (Gao et al., 2022).Research conducted by Almujaini et al. (2021), Wang et al. (2020), andWu et al. (2021) show that digital transformation has a significant positive effect on organizational performance, while other research results state that digital transformation has no effect on organizational performance (AlMulhim, 2021;Hautala-Kankaanpää, 2022;Lee et al., 2022).
Apart from that, in the hope of achieving business goals, organizations will create strategic partnerships and maintain this form of partnership cooperation from time to time (Amrollahi & Rowlands, 2017).The creation of strategic partnerships can enable a complete influx of knowledge and expertise in areas that the company lacks (Dongrin Ater et al., 2018).Research conducted by (C. H. Chen & Hsiao, 2008;Tarigan & Siagian, 2021;Yang et al., 2022) show that strategic partnerships have a positive effect on organizational performance, while other research results state that strategic partnerships have a negative effect on organizational performance (Sukati et al., 2012).Furthermore, research conducted by Gu & Su (2018);and Saci & Jasimuddin (2018) stated that there is no relationship between strategic partnerships and organizational performance.
The absence of empirical research on digital transformation and strategic partnerships on partnership performance and the inconsistencies in the results of previous research have created a research gap regarding the influence of digital transformation and strategic partnerships on organizational performance.This research gap can give rise to a "research gap", so the author wants to close this research gap by including service innovation as a direct mediating variable in the relationship between digital transformation and strategic partnerships on organizational performance.This research attempts to analyze the influence of digital transformation and strategic partnerships on organizational performance in state revenue management partnerships in Indonesia.The objects of this research are organizations that are partners of the Ministry of Finance in receiving state revenues.

Empirical Review and Hypothesis Development Digital Transformation and Partnership Performance
Partnership performance is part of the organizational performance that an organization obtains as a result of partnering with other parties/organizations (Choi et al., 2020).Partnership performance is an assessment of organizational performance obtained as a result of partnering with other organizations based on agreed partnership programs and goals.Performance measurement systems are very important for organizations because they provide information about the quality of their operations within the organization, help in the development of strategic plans, and evaluate the achievement of organizational goals (Alrowwad et al., 2016).
Digital transformation is the transformation of business processes and organizational services, which aims to improve the performance of a unit based on digital technology through the integration of information and communication technology.Digital Transformation can improve short-term and long-term financial performance and strengthen the strategy formulation carried out by organizations (Wang et al., 2020;Wu et al., 2021).
Digital transformation enables enterprises to take full advantage of the potential of existing resources in current businesses while developing new digital products and businesses and supporting the long-term development of organizations by boosting their performance (Wang et al., 2020).Especially in digital transformation, where resources are more accessible, a high level of exploratory learning would leverage the positive effects of an organization's resources and thus contribute to organizational performance (Wu et al., 2021).. Resource Based View (RBV) theory states that superior company performance is caused by company-specific resources and skills that are rare and difficult for competing companies to imitate (J.B. Barney, 1986;Bharadwaj, 2000).In line with RBV theory, technology and digital capabilities are seen as resources that can support a company's achievement of competitive advantage.Thus, companies that are able to identify resource or capability characteristics that cannot be imitated by competitors will achieve sustainable competitive advantage (J.Barney, 1991).H1: Digital transformation has a significant positive effect on partnership performance

Strategic Partnership and Partnership Performance
A strategic partnership is a consensual cooperative relationship between an organization and its partners, either two or more organizations, within a certain period of time with a clear agenda of mutual interests that aims to achieve discrete and measurable goals.The creation of strategic partnerships can allow for a complete influx of knowledge and expertise in areas where the organization lacks (Dongrin Ater et al., 2018).Strategic partnerships will help in achieving cooperation goals and, at the same time, reduce competition and business risks between organizations.Reklitis et al. (2021) added that strong relationships between organizations and partners can increase profitability and market share.
In line with transaction cost theory, strategic partnerships are seen as a hybrid organizational form that can minimize transaction costs.Strategic partnerships enable companies to work with business partners who are well-known and trusted (Williamson, 1991).In other words, if a company cannot accommodate transaction costs in its hierarchy due to legal or economic factors, it is likely that the company will prefer to enter strategic partnerships to counter the threat of market forces (Burgers et al., 1993).Regarding state revenue management partnerships, certain companies will try to partner with the Ministry of Finance so that they can provide state revenue services to their customers.
Organizations that want to remain competitive in markets with high R&D intensity and quickly changing technologies need to have strong capabilities for innovation in both products and services.Partnerships provide distinct benefits compared to developing things in-house, such as reducing the company's size, the possibility of externalizing risks, and also sharing knowledge and information (Bustinza et al., 2019).This will contribute to performance.The quality of information businesses have and their willingness to share it with partners can have a positive impact on their profitability, as mentioned by Reklitis et al. (2021).The data collected can provide valuable insights to business strategists regarding the measurement of key metrics for assessing relationships, as well as inform the organization about potential benefits that can be gained from cultivating strong relationships with specific groups of business partners.Accordingly, the partnership offers strong cooperation, high degree of flexibility, and information sharing, all of which will contribute to an improvement in business performance, particularly in marketing strategies (Yang et al., 2022).Businesses can significantly improve their cost-effectiveness, customer service performance, performance, and flexibility performance by collaborating with other organizations to implement integration (Tarigan & Siagian, 2021).Service innovation is the use and/or development of new ideas or behaviour related to organizational services to both existing and new clients.Cinar et al. (2020) stated that activities that increase organizational innovation in an organization must be increased to increase performance.Innovation is a source of competitive advantage for organizations that can lead to increased performance (Almujaini et al., 2021).Digital transformation allows the creation of new ideas and communication between business partners, which leads to innovation (Nwankpa & Roumani, 2016).Bustinza et al. (2019) stated that strategic partnerships can improve organizational innovation and performance through access to new knowledge and complementary capabilities needed to transform innovations into commercial products and bring them successfully to market.In line with the above, Yang et al. (2022) state that strategic partnerships have a direct positive impact on information sharing, supply chain flexibility and organizational performance.
Innovation is a major factor in the organization's future success and is what propels an organization's improved output.Innovation is thought to be a key element of survival and growth (Cinar et al., 2020).Businesses that support innovation in new technologies or products achieve better performance outcomes.Performance benefits greatly from innovative behavior since it influences innovation output (Migdadi, 2021).Innovation plays a crucial role in enhancing firm productivity and performance, providing organizations with the ability to incorporate innovative and technological processes that are necessary for the efficient execution of operational tasks (Zhang et al., 2019).Furthermore, innovation is recognized as a fundamental tool for achieving organizational growth and profitability.
Digital transformation can help organizations reduce the cost of environmental information collection and analysis.This can help and encourage organizations to implement innovation (Feng et al., 2022).Digital transformation empower companies to combine machine learning, artificial intelligence, and software analytics with the data collected to create digital simulation models that can reduce costs, minimize investment risks, and increase business productivity (Ma et al., 2022).Digital transformation allows organizations to utilize the widespread digital connectivity between people, data, information, and knowledge.By embracing digital transformation, organizations can implement new practices and innovative initiatives in their business operations.This, in turn, facilitates the creation of fresh ideas and improved communication among business partners throughout the value chain.By leveraging the network effects produced by digital technologies or processes, organizations can enhance among partners visibility, knowledge sharing, and operational efficiency (Nwankpa & Roumani, 2016).
Innovation is crucial for success in today's dynamic world.Organizations understand the need to combine internal and external R&D by forming strategic partnership or acquiring technology ventures.To stay ahead of competitors, firms are shifting from internal to external organization of projects to accelerate product innovation and gain a competitive edge in the industry (Islam et al., 2018).Organizations can use partnerships to develop open innovation, leveraging internal and external knowledge flows to accelerate internal innovation and expand markets for external use of the innovation (de Oliveira Paula & da Silva, 2018).Partnerships are valuable for overcoming and managing growth and diversification paradoxes.They allow organizations to enhance their resources, innovate their products and services, and provide integrated solutions.Partnerships foster knowledge diffusion and innovation in product, process, organization, and marketing.They also mitigate opportunistic behaviors and promote knowledge transfer among partners (Caiazza & Stanton, 2016).Strategic partnerships can result in inter-firm learning, leading to the acquisition of various knowledge types that can impact a company's innovation direction (Ferreira et al., 2020).Organizations can maintain their traditional product identity by focusing on their unique resources and core competencies.These partnership also reduce risks by sharing research and development costs and improving firm performance (Bustinza et al., 2019).H3: Service innovation has a significant positive effect on partnership performance H4: Digital transformation has a significant positive effect on service innovation H5: Strategic partnerships have a significant positive effect on service innovation

The Mediating Role of Service Innovation
Having a command of digital technology and undergoing transformation can lead to reduced costs, enhanced operating efficiency, and greater success in innovation, ultimately resulting in improved performance for organizations, as suggested by Zhai et al. (2022).Alongside digital transformation, strategic partnerships can facilitate excellent innovation in organizational activities, thereby increasing efficiency and effectiveness while reducing operational costs, as noted by Tarigan & Siagian (2021).Organizations that exhibit more innovative behavior are more likely to cater to the needs and preferences of their customers, ultimately leading to better performance (Zhang et al., 2019).Thus, based on this research, the relationship between digital transformation and strategic partnerships on partnership performance can be mediated by service innovation.H6: Service innovation mediates the effect of digital transformation on partnership performance H7: Service innovation mediates the effect of strategic partnerships on partnership performance

Research and Methodology
This study uses an explanatory research approach to test the theory objectively by examining the relationship between each variable using statistical procedures using a quantitative approach.The population in this study were 95 organizations related to the management of state revenues of the Republic of Indonesia in partnership with the Directorate General of Treasury of the Ministry of Finance of the Republic of Indonesia until 2022.
This study used a saturated sample, another name for using the entire study population as a sample (Sekaran & Bougie, 2017).Using a questionnaire that was personally distributed to middle-level managers for sampling.The Likert scale in the submitted questionnaire is used to measure how much each respondent weighs on a predetermined scale.

Respondent Characteristics
The Indonesian state revenue system consists of certain business processes to produce accurate state revenue data.In line with this, the Ministry of Finance of the Republic of Indonesia has developed and used a state revenue system which aims to collect state revenue in a digital and integrated manner.The State Revenue Module (Modul Penerimaan Negara/MPN) has become one of the main systems in the Ministry of Finance so that no less than 90% of state revenue transactions are deposited through MPN.Furthermore, the MPN business process is integrated with many parties.The parties integrated with MPN are billers, The Special Revenue State Treasury Services Office, The State Treasury and Budget System (SPAN), The Collecting Agent, and, of course, taxpayers/depositors.In this study, there are several statements concerning the profile of respondents (Table 1), which include gender, age, educational background, working period, and job tenure.The data shows that the majority of respondents were 63.2% male (n = 60), while the rest were female.The respondents aged 40-49 years were 61.1% (n=58), educational background is bachelor of 67.4% (n=64), have worked for 16 -20 years were 34.7% (n= 33), and job tenure majority respondents were for 1-5 years were 70.5% (n=67).

Descriptive Statistic and Correlation
In this study, the variables Digital Transformation, Strategic Partnership, Service Innovation, and Partnership Performance were used.The results of this study can be found in Table 2, along with the average value of the respondent's response and the standard deviation of each variable.The correlation value of each variable is also shown.Indicates a strong relationship between variables.

Measurement Model Analysis
To test the data quality in this study using convergent and discriminant validity following the advice of Ghozali & Latan (2015) states that for the initial research development scale, a value between 0.50 to 0.60 is a value that is considered sufficient.In more detail, the results of the validity and reliability tests can be seen in Table 3 below.
Table 4 shows the results of the convergent validity test by looking at the loading factor value of each indicator on the four variables with a value greater than 0.70 (Ghozali & Latan, 2015).Furthermore, the validity test with discriminant validity can be seen in the Average Variance Extracted (AVE) root value by comparing the coefficient value on each variable with the correlation value on each variable relationship in the research model, and each root AVE value is greater than 0.50.As a result, it is possible to conclude that the items used in this study are reliable.After the data have been checked for accuracy, Cronbach's alpha and composite reliability values are used to test the data's reliability.4 displays the results of the reliability test.It can be concluded that the data used in this study is reliable because each variable has a Cronbach's alpha value and composite reliability greater than 0.7 so that the items used in this study are reliable.

Structural Model Analysis
The structural model is a model that describes the causal relationship between latent variables that is built based on the substance of the theory (Ghozali & Latan, 2015).The PLS structural model was validated by determining R 2 and the path coefficient by comparing the t-statistics with the t-table on the Smart-PLS output.First, examine the direct impact of digital transformation and strategic partnership on partnership performance.Then, there's the direct impact of digital transformation and strategic partnership on service innovation, as well as testing the impact of service innovation on partnership performance.
We conducted a test to directly examine the relationship between the dimensions, which had already been confirmed to have related influences through bootstrapping with 5,000 replications.In order for the direct effect test criteria to be considered significant, the tstatistic value must be higher than the critical t-value of 1.65 and the p-value must be lower than 0.05 (at a 5% significance level).
The results of the influence of digital transformation on partnership performance are insignificant (β = 0.091, t = 0.998, p>0.05).In addition, strategic partnership on partnership performance also has a positive and significant effect (β = 0.251, t = 1.732, p<0.05).Furthermore, the effect of digital transformation on service innovation is positive and significant (β = 0.334, t = 2.582, p<0.05), and strategic partnership on service innovation shows a positive and significant effect (β = 0.511, t = 3.947, p<0.05), as well as service innovation on partnership performance has a positive and significant effect (β = 0.599, t = 4.046, p<0.05).Based on this explanation, it can be obtained that the direct testing hypothesis, namely H1, is rejected while H2, H3, H4, and H5 are accepted.The results of structural model testing are presented along with the t-statistic value of each hypothesis In Figure 1 below.The results of indirect tests or the mediating role of service innovation variables between the relationship between digital transformation and partnership performance have a positive and significant effect (β = 0.200, t = 2.341, p < 0.05) and service innovation also successfully mediates strategic partnership on partnership performance which shows positive and significant results (β= 0.306, t = 2.805, p < 0.05).It can be concluded that Hypothesis 6 and Hypothesis 7 in the study are accepted.It can be interpreted that the service innovation is a complete mediation of digital transformation on partnership performance and is a partial mediation of strategic partnership on partnership performance.The overall structural model PLS is validated by calculating the R 2 and path coefficient.The variable partnership performance has an R square of 0.792.This figure shows that independent variables such as digital transformation, strategic partnership, and service innovation can influence partnership performance by up to 79.2%.In addition, the Goodness of Fit (GoF) value is 0.639.It can be concluded that the structural model of this study has large GoF predictive properties in general (Ghozali & Latan, 2015).This means that the model is very good at explaining empirical data.
Digital transformation does not have a significant effect on partnership performance.Digital transformation is an essential asset because it cannot have a positive impact on performance by itself.2022), which states that digital transformation is a basic resource that does not independently influence performance positively.In addition to digital transformation, other resources are required to ensure that digital transformation has a positive impact on partnership performance.
Strategic partnerships have a significant positive effect on partnership performance.These results indicate that every increase in the level of strategic partnerships owned by an organization is able to improve organizational performance that comes from partnership collaboration.This is because the strategic partnership components owned by an organization have a strong relationship with organizational performance originating from partnerships, such as partner quality, cooperation, and partnership evaluation.The relationship between strategic partnerships and partnership performance as a result of this research conceptually supports the literature and several previous studies, which explain that there is a positive and significant correlation between strategic partnerships and partnership performance as organizational performance that comes from partnerships (Bustinza et al., 2019;Reklitis et al., 2021;Tarigan & Siagian, 2021;and Yang et al., 2022).Based on the findings of the analysis above, it can be concluded that research exists demonstrating the significant impact that strategic partnerships have on partnership performance.
Service innovation has a significant positive effect on partnership performance.State Revenue Collecting Agents are able to develop new ideas or behaviour related to organizational services both to existing clients and new clients.The ability to innovate services ultimately improves partnership performance.The results of this research conceptually support the literature and several previous studies, which explain that there is a positive and significant correlation between service innovation and partnership performance, namely Cinar et al. (2020), Migdadi (2021), andZhang et al. (2019).Based on the findings of the above analysis, it can be concluded that research exists demonstrating the significant impact that service innovation has on partnership performance.
Digital transformation has a significant positive effect on service innovation.Digital transformation is a supporting aspect in increasing innovation capabilities, especially service innovation, which will ultimately become an organizational advantage.The results of this research conceptually support the literature and several previous studies, which explain that there is a positive and significant correlation between digital transformation and service innovation, namely Feng et al. (2022), Ma et al. (2022), and Nwankpa & Roumani (2016).Based on the findings of the analysis above, it can be concluded that research exists demonstrating the significant impact that digital transformation has on service innovation.
Strategic partnerships have a significant positive effect on service innovation.Strategic partnerships allow State Revenue Collecting Agents to minimize transaction costs that must be incurred in innovating.The results of this research conceptually support the literature and several previous studies, which explain that there is a positive and significant correlation between digital transformation and service innovation, namely Bustinza et al. (2019), Caiazza & Stanton (2016), de Oliveira Paula & da Silva (2018), Ferreira et al. (2020), andIslam et al. (2018).Based on the findings of the analysis above, it can be concluded that research exists demonstrating the significant impact that strategic partnership has on service innovation.
The performance of the Collecting Agent partnership in State Revenue will increase if digital transformation is applied to the Collecting Agent service innovation.Digital transformation has no significant effect on partnership performance, while service innovation has a significant positive effect on partnership performance, so it can be said that service innovation plays the role of a complete mediator in this research.These results illustrate that digital transformation can influence the performance of partnerships in state revenue-collecting agents when applied to service innovation.By implementing digital transformation in service innovation activities, the State Revenue Collecting Agent will be able to improve the capabilities of its information systems and be able to collect large amounts of data from various sources.This is an advantage that can be used to support the service innovation process, which will ultimately improve partnership performance.In conclusion, increasing partnership performance must be balanced with the use of digital technology applied to the organization's service innovation strategy.The results of this study back up the findings of research conducted by Feng et al. (2022), Ma et al. (2022), andNwankpa &Roumani (2016) found that digital transformation had a positive and significant effect on service innovation and also research conducted by Cinar et al. (2020), Migdadi (2021), andZhang et al. (2019) suggest that service innovation has a positive and significant effect on partnership performance as a part of organizational performance.
Strategic partnerships can enhance the service innovation of Collecting Agent, leading to an improvement in the performance of the Collecting Agent partnership.Strategic partnerships and service innovation were found to have a significant effect on partnership performance, so it can be said that service innovation plays a role as a partial mediator in this research.These results illustrate that strategic partnerships, with or without service innovation, can influence the partnership performance of state revenue-collecting agents.By implementing strategic partnerships in service innovation activities, the State Revenue Collecting Agent will be able to reduce costs for the service innovation activities carried out.This is in accordance with the transaction cost theory.Transaction cost theory states that strategic partnerships are a hybrid organizational form that can minimize transaction costs, especially if the organization can collaborate with well-known and trusted business partners (Williamson, 1991).The results of this study back up the findings of research conducted by Bustinza et al. (2019), Caiazza & Stanton (2016), de Oliveira Paula & da Silva (2018), Ferreira et al. (2020), andIslam et al. (2018) found that strategic partnerships have a positive and significant effect on service innovation and also research conducted by Cinar et al. (2020), Migdadi (2021), andZhang et al. (2019) indicate that service innovation has a positive and significant effect on partnership performance as a part of organizational performance.

Conclusions
The conclusion that can be drawn from research and discussion regarding the impact of digital transformation and strategic partnership on partnership performance with service innovation mediation is that these factors can enhance the Collecting Agent's partnership performance.
Even though digital transformation does not have a significant effect on partnership performance, the State Revenue Collecting Agent can align digital transformation strategies with other strategies to improve partnership performance.The research results show that service innovation supported by digital transformation will produce better innovation.This better innovation will later have an impact on improving partnership performance.On the other hand, strategic partnerships and service innovation have been proven to directly improve partnership performance.In addition, the influence of strategic partnerships on partnership performance will be higher with service innovation.Apart from directly influencing partnership performance, strategic partnerships also influence service innovation.Service innovation implemented using a strategic partnership scheme is able to produce better service innovation.This better innovation will ultimately impact partnership performance.
This study provides a theoretical contribution by bolstering previous theories and research, and it is hoped that these findings will serve as a resource for future studies.The limitations of this study are as follows: First, this research was only conducted on companies that collaborate in partnerships to manage state revenues of the Republic of Indonesia.Second, this research only examines digital transformation, strategic partnerships, service innovation, and partnership performance.Third, the population in this study is still small, with only 95 organizations.
Future research is expected to address the deficiencies in this study, and it is hoped that future research will expand research objects such as other variables and other partnership forms.

Figure 1 :
Figure 1: Conceptual Model of the Study; Source: Authors

H2:
Strategic partnerships have a significant positive effect on partnership performance Digital Transformation, Strategic Partnership, Service Innovation, and Partnership Performance

Figure 2 :
Figure 2: Conceptual Model of the Study; Source: Authors The data were analyzed using partial least squares structural equation modelling (SEM-PLS).PLS data analysis is used because the idea is to test the modified results of several research models to give a broad picture of the variables under investigation (Sekaran & Bougie, 2017).Three indicators of partnership performance from Choi et al. (2020), namely, attaining its key goals in joining a partnership, enhancing its competitiveness through the partnership, and learning essential technologies or capabilities through the partnership, have been used in this study.Three indicators of digital transformation, namely digital technology readiness from Jafari-Sadeghi et al. (2021), integration of business processes by using digital technologies from Ma et al. (2023), and implementation of digital transformation in business processes and services from Chu et al. (2019), and Nwankpa & Roumani (2016), have been used in this study.To measure strategic partnership, we used three indicators from Yang et al. (2022): partner quality, teamwork, and partnership evaluation.Lastly, we used two indicators to measure service innovation from Gomes et al. (2022) and Gupta & Sehgal (2015): newness of services and modifications of services.

Figure 1 :
Figure 1: Direct Effect Test Results ; Source: Processed Primary Data 2023

Table 2 :
Descriptive Statistic and Correlation

Table 4 :
Reliability Analysis

Table 5 :
Indirect Hypothesis Testing Wu et al. (2021)0)tion alone is not enough to influence the performance of partnerships with State Revenue Collecting Agents.State Revenue Collecting Agents need to align digital transformation with other variables to be able to significantly influence partnership performance.The results of this research imply that to improve partnership performance, State Revenue Collecting Agents need to study strategies based on digital technology that are appropriate to the state revenue context in order to provide expected performance results, improve the quality of products, services, ideas, and reduce time to market.The results of this research do not support research conducted byWang et al. (2020)andWu et al. (2021), which stated that digital transformation significantly influences partnership performance.The results of this research are in line with the results of research conducted by Hautala-Kankaanpää (