Exploring the Interplay Between Digital Technology, Transformational Leadership and Agility for Enhancing Organisational Performance

The volatility in the business environment requires innovation, and to keep up with technological advancements, leaders must determine whether to encourage organizational transformation into digitalization. Therefore, the study aims to explore and bridge the existing gaps by integrating the relationship between digital technology, transformational leadership, and agility association to enhance organizational performance. The authors employed a quantitative approach, utilizing the structural equation model with Partial Least Squares, to evaluate the hypotheses by administering a questionnaire to 207 respondents in Indonesia from August 2022 to November 2022. The study period choice is justified by recognizing the impact of the COVID-19 outbreak on how individuals perceive aspects like digital technology adoption, leadership, and agility. Indonesia's dynamic economy and diverse industries with unique socio-cultural characteristics make it an ideal setting to explore how digital technology, transformational leadership, and agility impact organizational performance. This study demonstrated that digital technology positively influenced the agility and performance of an organization, respectively. Subsequently, the authors found that transformational leadership positively influenced digital technology, agility, and organizational performance. In addition, this study disclosed that agility positively influenced organizational performance. Further, our investigation discovered the mediating role of agility in the correlation between digital technology and organizational performance and between transformational leadership and organizational performance. Finally, digital technology was able to act as the mediator in the correlation between transformational leadership and agility, as well as between transformational leadership and organizational performance. This study brings practical implications for leaders by investing in digital technology and fostering transformational leadership, which could make an organization more agile, innovative, competitive, and better equipped to navigate volatility in the business environment. This study also emphasizes the need to increase the number of subjects related to technology in academics to ensure a better understanding of the role of digitalization because today's life heavily depends on technology. The study develops a novel perspective for subsequent studies on the interplay of digital technology and transformational leadership on agility and organizational performance.