Final answer:
A digital firm is an organization where all key relationships are digitally conducted, reflecting modern shifts toward technology and globalization in business.
Step-by-step explanation:
A digital firm is one in which nearly all of the organization's significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. In the context of modern business practices, where technology and globalization have become central to business operations, digital firms leverage improved information and communication technologies to conduct business. This is increasingly important as markets become more competitive and global, allowing for businesses of various sizes to reach customers and engage in business-to-business interactions without geographical limitations.
Given the immense reliance on digital technologies in today's business environment, the question reflects the shift toward a digital economy, where successful firms often integrate digital processes into all aspects of their business. With the rising popularity of smartphones and the internet, customers have easy access to various services and the ability to engage with businesses in real-time, further emphasizing the significance of becoming a digital firm.