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Digital technologies, which have made significant progress in the last two decades, have paved the way for the emergence of many new-generation devices, platforms and applications. The increase in the use of these technologies has transformed many activities in daily life and significantly changed the business world. The concept of digital transformation, which has become a popular motto for many companies today, has improved the interaction between companies and consumers and changed how companies do business, making the transformation necessary. Digital transformation in businesses can be partial (such as establishing new departments or marketing channels) or major (such as changing the entire business model). In any case, digital transformation is a necessity of the current age. Human capital is vital in increasing the firm performance of companies and gaining a competitive advantage against their competitors. Today, one factor that can improve employees' task performance in digital economies is digital competencies. Therefore, having a certain level of digital literacy among employees is crucial for companies to achieve adequate performance in digitalization and beyond. From this perspective, this research aims to determine the effect of employees' digital literacy on their task performance and firm performance. Investigation of this topic in the paper is carried out in the following logical sequence: First of all, the research presents the conceptual framework for digital literacy, task performance, and firm performance. The results of studies in the literature are presented, and the hypothesis development process is based on the research results. The subsequent section provides information about the study's methodology and findings. Finally, the research concludes with the results and discussion section. Within the scope of the study, data were collected from 222 white-collar employees in Istanbul through online questionnaires. A convenience sampling technique was used to determine the sample. SPSS 25 and SPSS Process 2.13 package programs were used to analyse the data. The research results show a medium-level relationship between digital literacy and task performance, a mediumlevel relationship between digital literacy and firm performance, and a high and positive relationship between firm performance and task performance. According to the mediation analysis results, employees' digital literacy positively affects task performance and firm performance. In addition, it has been determined that task performance plays a mediating role in the effect of employees' digital literacy on firm performance. It appears that company managers should prioritize the focus of the «Reskilling Revolution Initiative», which emphasizes the transformation of employees' skills to attain sustainable competitive advantage and enable digital transformation. [ABSTRACT FROM AUTHOR]