Nexus among Digital Leadership, Digital Transformation, and Digital Innovation for Sustainable Financial Performance: Revealing the Influence of Environmental Dynamism

Abstract

In the era of digitalization, the role of IT firms and the capabilities of digital leadership for driving digital transformation and managing environmental dynamism for the proliferation of digital innovation and organizational performance for sustainability are still scant, producing a knowledge gap. To fill this gap, this study aims to investigate the role of digital leadership in enhancing organizational performance, with the mediating impact of digital transformation and digital innovation, and the moderating role of environmental dynamism in the relationship between digital transformation and innovation. To investigate the conceptual model, we used survey data of 416 responses from small, medium, and large IT organizations in Bangladesh and deployed the AMOS 24 package software for the analysis of structural equation modeling (SEM). The results showed that digital leadership has a significant impact on digital transformation, digital innovation, and organizational performance. Digital innovation partially mediates the relationship between digital leadership and organizational performance. Although environmental dynamism has no significant effect in relation to digital leadership and innovation, it has an indirect influence on the structural model. The results from before and after moderation proved that environmental dynamism might not have a significant moderating effect on relationships, but it has significant power to change other interrelationships and hamper organizational sustainability.