The Role of Digital Leadership in Enhancing Organizational Performance in the Era of Digital Transformation

Abstract

The accelerating pace of digital transformation has compelled organizations to reassess how leadership influences performance in technology-driven environments. Despite heavy investments in digital infrastructure, many firms particularly in developing economies struggle to achieve desired outcomes due to limited digital leadership capabilities. This study explores the relationship between digital leadership and organizational performance, emphasizing the mediating role of innovation and the moderating effects of digital culture and employee readiness. Using a descriptive–analytical research design, data were collected from 150 respondents representing both public and private organizations in Saudi Arabia undergoing digital transformation. Data were analyzed using SPSS through descriptive and inferential statistics, including regression analysis. Results revealed that digital leadership had a significant positive effect on organizational performance (β = 0.31, p < 0.001), while innovation partially mediated this relationship (β = 0.24, p < 0.001). Digital culture (β = 0.18, p = 0.001) and employee readiness (β = 0.20, p < 0.001) significantly moderated the effect of leadership on performance, increasing the model’s explanatory power to R² = 0.572. The findings confirm that visionary, agile, and data-driven leadership directly enhances both financial and non-financial performance indicators, including efficiency, innovation, and employee engagement. The study recommends that organizations integrate digital leadership development into strategic planning by investing in continuous learning, innovation-driven culture, and employee capability building to sustain competitiveness in the digital era.