Digital Leadership Fuels Firm Performance Indirectly Through Digital Transformation
Effective digital leadership, characterized by capabilities, experience, predictability, and vision, significantly enhances firm performance not directly, but by driving successful digital transformation initiatives.
Journal of Business and Socio-economic Development · 2023
Key Findings
- 01Digital leadership capabilities, experience, predictability, and vision do not directly impact firms' performance.
- 02Digital transformation acts as a mediator, indirectly influencing firms' financial performance through digital leadership.
- 03Green organizational culture, leader predictability, and leader vision positively influence digital transformation.
- 04Both digital transformation and green organizational culture positively influence firms' financial performance.
Application
Design takeaway
Designers and strategists should focus on building leadership capabilities that enable digital transformation, recognizing that this transformation is the primary driver of improved firm performance.
How to apply
When designing strategies for digital adoption or improvement, ensure that leadership development and digital transformation roadmaps are intrinsically linked and prioritized.
Project actions
- 01Clearly define what constitutes 'digital leadership' in your project context.
- 02Consider how your design solution might facilitate or be facilitated by digital transformation.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Investigates the mediating role of digital transformation.
- +Includes green organizational culture as a factor.
- +Uses a robust analytical method (SEM).
Limitations
It can be challenging to isolate the direct impact of leadership from other business factors. Data collection might be hindered by corporate reluctance to share sensitive information.
Reliability & validity
The study uses established scales and SEM, which are generally considered reliable and valid methods for this type of research. However, self-reported data can introduce common method bias.
Think critically
To what extent can digital transformation be achieved without strong digital leadership, and what are the potential consequences for firm performance?
Design Principles
"Invest in leadership for transformation, not just for direct impact."
This research underscores that the value of digital leadership is realized through its ability to foster and guide digital transformation. Organizations must focus on cultivating these leadership qualities to unlock the full potential of digital strategies and achieve tangible performance improvements.
What This Means for Your Design
Good leaders who understand digital technology help their companies change and become more successful, but it's the change itself (digital transformation) that makes the biggest difference to the company's money.
How to use in your project
- 1.Use this study to justify the importance of leadership and digital transformation in your design project's context.
- 2.Reference the indirect impact of leadership on performance via transformation to support your design rationale.
Add to My Project
Quick Cite
(2023). Unlocking the potential: the impact of digital leadership on firms' performance through digital transformation. Journal of Business and Socio-economic Development. https://doi.org/10.1108/jbsed-06-2023-0050 Retrieved from https://designdex.org/study/0bc3104e-f2b3-4608-818d-c0a76653e1ca/digital-leadership-fuels-firm-performance-indirectly-through-digital-transformation
Paragraph starter
This research highlights that effective digital leadership is crucial not for its direct impact on firm performance, but for its role in driving digital transformation, which in turn enhances financial outcomes. This suggests that design interventions aimed at improving business performance should focus on enabling and supporting digital transformation processes, recognizing the mediating influence of leadership.
Source
Journal of Business and Socio-economic Development
Unlocking the potential: the impact of digital leadership on firms' performance through digital transformation
journal · 2023
View sourceQuestions about this research
- What does the research say about digital leadership fuels firm performance indirectly through digital transformation?
- Designers and strategists should focus on building leadership capabilities that enable digital transformation, recognizing that this transformation is the primary driver of improved firm performance. Evidence: Journal of Business and Socio-economic Development (2023).
- Why does "Digital Leadership Fuels Firm Performance Indirectly Through Digital Transformation" matter for design?
- This research underscores that the value of digital leadership is realized through its ability to foster and guide digital transformation. Organizations must focus on cultivating these leadership qualities to unlock the full potential of digital strategies and achieve tangible performance improvements.
- How can designers apply this research?
- Designers and strategists should focus on building leadership capabilities that enable digital transformation, recognizing that this transformation is the primary driver of improved firm performance.
- What were the main findings?
- Digital leadership capabilities, experience, predictability, and vision do not directly impact firms' performance.. Digital transformation acts as a mediator, indirectly influencing firms' financial performance through digital leadership.. Green organizational culture, leader predictability, and leader vision positively influence digital transformation.. Both digital transformation and green organizational culture positively influence firms' financial performance.
- What research method was used?
- Quantitative research using structural equation modeling (SEM). with 164 participants.
- How strong is the evidence?
- Evidence strength is rated Strong effect, based on a 2023 journal from Journal of Business and Socio-economic Development.
- What should I do differently in my next project?
- When designing strategies for digital adoption or improvement, ensure that leadership development and digital transformation roadmaps are intrinsically linked and prioritized.
- What are the limitations?
- The study's scope was limited by the stages of digital transformation among Malaysian firms, with some entities showing caution in data disclosure and cooperation.
- Is there evidence that digital transformation affects design outcomes?
- The study found that while digital leadership qualities don't directly boost a company's financial results, they are crucial for enabling digital transformation, which in turn leads to better performance. A green organizational culture also supports this transformation and performance. This research underscores that th Source: Journal of Business and Socio-economic Development (2023).
- Where does this digital leadership research apply?
- Business and socio-economic development, focusing on firms undergoing digital transformation. It sits within innovation & design research on designdex.org.
Related research topics
digital transformation design research · evidence on digital transformation · does digital transformation improve design outcomes · digital leadership studies for designers · digital transformation and digital leadership findings · innovation & design research evidence