This paper investigates the methods by which firms take advantage of information and communication technologies (ICTs)to achieve transformation. The research results advance current knowledge on the mechanism of ICT-facilitated firm transformation. Based on the literature, we propose a conceptual framework that describes firm transformation occurs at three interrelated layers: 1)operation mode/technological capability layer, 2)open innovation layer, and 3)actor network layer. It argues a firm can leverage ICTs to practice open innovation and accordingly form a supportive actor network, which will help the firm build its capability and upgrade the operation mode. We further use this framework to analyse cases of non-farm rural enterprises (REs)in a coastal region of China. The case study demonstrates that, on the condition that the government has ensured the availability of ICTs infrastructure, a latecomer firm from a disadvantaged context such as a RE in China can take advantage of ICTs to transform itself and advance in the industry value chain mainly with its own indigenous efforts. Researchers can use our proposed framework as an analytical tool in future research on ICTs in firm transformation. The framework offers reference for firms to design their strategies for leveraging ICTs to promote the transformation.