Leadership as a Capability Builder: The Mediating Role of Organizational Digital Readiness in Digital Strategy Adoption
Downloads
Public organizations increasingly commit to digital agendas yet routinely fall short of turning that commitment into adopted strategy. This paper asks why—and points specifically to what happens between leadership intent and strategic digital action. Using dynamic capabilities theory as the theoretical lens, we argue that transformational leadership works not by directly producing digital strategy adoption but by first cultivating organizational digital readiness, which in turn enables adoption. Survey responses from 164 managers and employees across Iraqi public institutions were analysed through regression-based path analysis with bias-corrected bootstrapping (5,000 resamples). The results support this view clearly: leadership predicts readiness (a = 0.42, p < .001), readiness predicts adoption controlling for leadership (b = 0.60, p < .001), and the indirect effect through readiness (0.25; 95% CI [0.147, 0.373]) accounts for roughly 40% of the total leadership-to-adoption effect. Critically, a competing test of moderation—in which readiness was specified as a boundary condition rather than a channel—yielded a non-significant interaction term (p = .89), providing no empirical support for the moderating specification in the present sample. These findings provide evidence that, in the present sample, readiness functions primarily as a mediator rather than a moderator of the leadership–adoption relationship. Practically, they suggest that investment in infrastructure, digital skills, and change-accepting culture is not a precondition for leadership to matter; it is, rather, the very mechanism through which leadership produces results.
B. U. Adie, P. Adjei-Bamfo, and C. Baah, "Digital leadership in the public sector: A scoping review and outlook," International Review of Public Administration, vol. 29, no. 1, pp. 1–23, 2024.
L. G. de M. Santos, "Dynamic capabilities in the public sector: Research agenda in the context of digital transformation," JeDEM – eJournal of eDemocracy and Open Government, vol. 16, no. 1, 2024.
G. Vial, "Understanding digital transformation: A review and a research agenda," Journal of Strategic Information Systems, vol. 28, no. 2, pp. 118–144, 2019.
N. Omrani, "Drivers of digital transformation in SMEs," IEEE Transactions on Engineering Management, vol. 71, pp. 5030–5043, 2024.
B. Trenerry, "Preparing workplaces for digital transformation: An integrative review and framework of multi-level factors," Frontiers in Psychology, vol. 12, art. 620766, 2021.
B. K. AlNuaimi, S. K. Singh, S. Ren, P. Budhwar, and D. Vorobyev, "Mastering digital transformation: The nexus between leadership, agility, and digital strategy," Journal of Business Research, vol. 145, pp. 636–648, 2022.
A. Bunjak, M. Cerne, and A. Popovic, "Context is key: The joint roles of transformational and shared leadership and management innovation in predicting employee IT innovation adoption," International Journal of Information Management, vol. 66, art. 102516, 2022.
Z. Chen, "Research on the impact of digital transformational leadership on digital innovation performance," Scientific Reports, vol. 16, 2026.
B. Ly, "The interplay of digital transformational leadership, organizational agility, and digital transformation," Journal of the Knowledge Economy, vol. 15, pp. 1–23, 2023.
K. S. R. Warner and M. Wäger, "Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal," Long Range Planning, vol. 52, no. 3, pp. 326–349, 2019.
D. Montasser, A. Hamdan, and A. Al-Sartawi, "The mediating effect of IT-enabled dynamic capabilities and organizational readiness on the relationship between transformational leadership and digital business model innovation," SAGE Open, vol. 13, no. 4, 2023.
S. Lokuge, D. Sedera, V. Grover, and D. Xu, "Organizational readiness for digital innovation: Development and empirical calibration of a construct," Information & Management, vol. 56, no. 3, pp. 445–461, 2019.
F. Michelotto, "Organizational digital transformation readiness: An exploratory investigation," Journal of Theoretical and Applied Electronic Commerce Research, vol. 19, no. 2, 2024.
M. Ekhsan, "Strategic human resource capabilities for digital transformation: Linking talent, leadership, competence and readiness to technology adoption," SA Journal of Human Resource Management, vol. 24, 2026.
A. B. C. Tan, D. H. van Dun, and C. P. M. Wilderom, "Innovative work behavior in Singapore evoked by transformational leaders through innovation support and readiness," Creativity and Innovation Management, vol. 30, no. 4, pp. 697–712, 2021.
I. F. Aldhi, "Bridging digital gaps in smart city governance: The mediating role of managerial digital readiness and the moderating role of digital leadership," Smart Cities, vol. 8, no. 2, 2025.
K. M. Eisenhardt and J. A. Martin, "Dynamic capabilities: What are they?" Strategic Management Journal, vol. 21, no. 10–11, pp. 1105–1121, 2000.
D. J. Teece, "Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, vol. 28, no. 13, pp. 1319–1350, 2007.
E. H. M. Alsuwaidi, "A conceptual framework of digital transformation and business model innovation in the UAE public sector: A dynamic-capabilities perspective," International Journal of Academic Research in Business and Social Sciences, vol. 15, no. 1, 2025.
T. Atobishi, "How do digital capabilities affect organizational performance in the public sector? The mediating role of organizational agility," Administrative Sciences, vol. 14, no. 2, 2024.
G. Ongena, "Digital maturity and performance of public organizations: The mediating role of dynamic capabilities," International Journal of Public Sector Management, 2026.
J. Xiao, "How digital transformation improves government performance: The mediating role of partnering agility," IEEE Access, vol. 11, 2023.
B. J. Avolio and B. M. Bass, Multifactor Leadership Questionnaire: Manual and Sampler Set, 3rd ed. Menlo Park, CA: Mind Garden, 2004.
B. M. Bass, Leadership and Performance Beyond Expectations. New York, NY: Free Press, 1985.
S. A. Carless, A. J. Wearing, and L. Mann, "A short measure of transformational leadership," Journal of Business and Psychology, vol. 14, no. 3, pp. 389–405, 2000.
H. K. Alhitmi, "Marketing from leadership to innovation: A mediated moderation model of how transformational leadership impacts employees' innovative behaviour," Sustainability, vol. 15, no. 22, 2023.
A. Amankwaa, M. A. Gyensare, and P. Susomrith, "Transformational leadership with innovative behaviour," Leadership & Organization Development Journal, vol. 40, no. 4, pp. 402–420, 2019.
K. Jun and J. Lee, "Transformational leadership and followers' innovative behavior: Roles of commitment to change and organizational support for creativity," Behavioral Sciences, vol. 13, no. 4, art. 320, 2023.
H. Li, "Influence of transformational leadership on employees' innovative work behavior in sustainable organizations," Sustainability, vol. 11, no. 6, art. 1594, 2019.
W. Makumbe, "Transformational leadership and innovation in the manufacturing sector: A moderation-mediation mechanism of organisational culture and knowledge sharing," Journal of Law and Sustainable Development, vol. 12, no. 1, 2024.
G. H. T. Vu, "Transformational leadership and innovative work behaviors: The mediating effects of psychological empowerment and work engagement," SAGE Open, vol. 15, no. 1, 2025.
J. Zhu, "Transformational leadership, organizational innovation, and ESG performance: Evidence from SMEs in China," Sustainability, vol. 15, no. 7, art. 5756, 2023.
S. K. Singh, M. Del Giudice, R. Chierici, and D. Graziano, "Green innovation and environmental performance: The role of green transformational leadership and green human resource management," Technological Forecasting and Social Change, vol. 150, art. 119762, 2020.
C. G. Machado, "Digital organisational readiness: Experiences from manufacturing companies," Journal of Manufacturing Technology Management, vol. 32, no. 9, pp. 167–182, 2021.
M. Höyng and A. Lau, "Being ready for digital transformation: How to enhance employees' intentional digital readiness," Computers in Human Behavior Reports, vol. 11, art. 100314, 2023.
J. Su, "How market pressures and organizational readiness drive digital marketing adoption strategies' evolution in SMEs," Technological Forecasting and Social Change, vol. 193, art. 122655, 2023.
A. Veseli, "Perceptions of organizational change readiness for sustainable digital transformation: Insights from LMS projects in higher education," Sustainability, vol. 17, no. 3, 2025.
K. Wang, "Digital transformation and organizational readiness: Evidence from Chinese construction SMEs with a dynamic managerial capabilities lens," Engineering, Construction and Architectural Management, 2025.
M. Miller, "Dynamic capabilities in the public sector: A systematic literature review," International Journal of Public Sector Management, 2025.
A. S. S. Almashekhi, "Analyzing the mediating role of organizational readiness on Industry 4.0 capabilities and digital transformation strategy," International Review of Management and Marketing, vol. 16, no. 1, 2026.
S. Starke, "Sustained learning as a dynamic capability for digital transformation: A multilevel quantitative study on workforce readiness and digital services in healthcare," Sustainability, vol. 17, no. 6, 2025.
G. Adel, "Dynamic capabilities as an intermediary mechanism between digital transformation and institutional sustainability: An applied study at Algeria Telecom," Journal of Ecohumanism, vol. 5, no. 1, 2026.
R. Hanum, "Dynamic capabilities and digital transformation performance: The role of organizational agility in the public sector," International Journal of Latest Technology in Engineering, Management & Applied Science, 2026.
E. Z. Zam, "Digital leadership and employee performance in public sector organizations: An investigation of organizational learning, dynamic capability and digital capability as mediation," Multidisciplinary Science Journal, vol. 5, no. 1, 2025.
J. F. Hair, W. C. Black, B. J. Babin, and R. E. Anderson, Multivariate Data Analysis, 8th ed. Andover: Cengage Learning, 2019.
P. M. Podsakoff, S. B. MacKenzie, J.-Y. Lee, and N. P. Podsakoff, "Common method biases in behavioral research," Journal of Applied Psychology, vol. 88, no. 5, pp. 879–903, 2003.
N. Kock, "Common method bias in PLS-SEM: A full collinearity assessment approach," International Journal of e-Collaboration, vol. 11, no. 4, pp. 1–10, 2015.
C. Fornell and D. F. Larcker, "Evaluating structural equation models with unobservable variables and measurement error," Journal of Marketing Research, vol. 18, no. 1, pp. 39–50, 1981.
J. Henseler, C. M. Ringle, and M. Sarstedt, "A new criterion for assessing discriminant validity in variance-based structural equation modeling," Journal of the Academy of Marketing Science, vol. 43, no. 1, pp. 115–135, 2015.
A. F. Hayes, Introduction to Mediation, Moderation, and Conditional Process Analysis, 2nd ed. New York, NY: Guilford Press, 2018.
A. M. Schoemann, A. J. Boulton, and S. D. Short, "Determining power and sample size for simple and complex mediation models," Social Psychological and Personality Science, vol. 8, no. 4, pp. 379–386, 2017.
J. Pfeffer and G. R. Salancik, The External Control of Organizations: A Resource Dependence Perspective. New York, NY: Harper & Row, 1978.
P. J. DiMaggio and W. W. Powell, "The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields," American Sociological Review, vol. 48, no. 2, pp. 147–160, 1983.
R. Dubey, "Dynamic digital capabilities and supply chain resilience: The role of government effectiveness," International Journal of Production Economics, vol. 258, art. 108790, 2023.
S. Subramaniam, "Personality trait and employee performance in digital transformation: The mediating effect of employee dynamic capability," Cogent Business & Management, vol. 12, no. 1, 2025.
2.png)