The Mediating Role of Digital Transformation and Employee Engagement between Internal Service Control and Employee Performance in Chinese Department Stores in Xi'an

Abstract

This study examines the relationship between internal service control, digital transformation, employee engagement, and employee performance in Chinese department stores. Drawing on Job Demands–Resources theory and the Technology Acceptance Model, the study explains how structured internal management systems and information system-enabled digital initiatives influence employee outcomes in service-oriented retail organizations. A quantitative cross-sectional survey was conducted with internal employees from department stores in Xi’an, China, and the data were analyzed using partial least squares structural equation modeling (PLS-SEM) with WarpPLS version 8.0. The findings indicate that internal service control significantly improves employee performance and positively influences both digital transformation and employee engagement. Digital transformation and employee engagement also significantly enhance employee performance and partially mediate the relationship between internal service control and employee performance. From an information systems perspective, these results show that internal service control functions as an organizational governance mechanism that supports digital workflow integration, data-based coordination, information sharing, and system-enabled task execution. Digital transformation, including digital platforms, automated processes, cloud-based systems, and data-supported decision-making, serves as a technological pathway through which internal control improves operational efficiency. Employee engagement represents the psychological pathway through which supportive internal systems increase motivation, commitment, and work involvement. This study contributes to service management and information systems literature by integrating organizational control, digital capability, and employee behavior into a unified performance model. The findings offer practical implications for department store managers seeking to improve employee performance through coordinated internal systems, digital infrastructure, information quality, employee-centered transformation strategies, and decision support tools.