Digital leadership and organizational performance in industry 4.0: a conditional process model of digital transformation capability and innovative work behavior

Abstract

Despite increasing scholarly attention to digital transformation, limited research has examined how digital leadership translates into organizational performance through employee behavioral mechanisms and organizational capabilities. Addressing this gap, the present study investigates the direct and indirect effects of digital leadership on organizational performance through innovative work behavior and examines the moderating role of digital transformation capability in Industry 4.0 manufacturing organizations. A time-lagged survey design was employed to collect data from 400 employees working in manufacturing organizations located in Gujarat and Pune, India. Data were analyzed using Partial Least Squares Structure Equation Modelling (PLS-SEM) to test the proposed relationships, mediation, and moderation effects. The findings reveal that digital leadership positively influences both innovative work behavior and organizational performance. Innovative work behavior significantly enhances organizational performance and partially mediates the relationship between digital leadership and organizational performance. Furthermore, digital transformation capability strengthens the positive effect of digital leadership on organizational performance. However, the moderated mediation effect was not supported. This study advances the digital leadership literature by integrating Social Exchange Theory and Dynamic Capabilities Theory within a multilevel framework. It contributes to existing knowledge by identifying innovative work behavior as a key behavioral mechanism and digital transformation capability as an important contextual enabler through which digital leadership enhances organizational performance in Industry 4.0 manufacturing environments.