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Article

The Strategic Role of Digital Transformation: Leveraging Digital Leadership to Enhance Employee Performance and Organizational Commitment in the Digital Era

by
Guanming Qiao
,
Yannan Li
* and
Ahreum Hong
*
Graduate School of Technology Management, KyungHee University, Yongin 17104, Republic of Korea
*
Authors to whom correspondence should be addressed.
Systems 2024, 12(11), 457; https://doi.org/10.3390/systems12110457
Submission received: 11 October 2024 / Revised: 27 October 2024 / Accepted: 29 October 2024 / Published: 30 October 2024
(This article belongs to the Special Issue Strategic Management in Digital Transformation Era)
Browse Figure
Versions Notes

Abstract

:
Given the rapid advancements in the digital transformation era, digital leadership has become essential for enhancing employee performance and organizational commitment. This study specifically examines the mediating role of digital transformation in the relationship between digital leadership, employee performance, and organizational commitment, drawing on data collected between June and August 2024 from 579 participants across diverse industries. The findings demonstrate that digital leadership significantly enhances employee outcomes by driving digital transformation, which serves as a crucial intermediary that amplifies the positive effects of leadership. This research underscores the importance of aligning leadership strategies with digital transformation initiatives, especially in the DT-driven business landscape, to promote sustainable growth and maintain a competitive edge. By highlighting the combined influence of leadership and digital transformation on employee performance and organizational commitment, this study provides valuable insights for organizations addressing the complexities of digital change. It also emphasizes the pivotal role of leadership in fostering innovation and organizational resilience in the digital transformation era.

1. Introduction

In the digital transformation era, the application of artificial intelligence (AI) plays a critical role in boosting organizational efficiency and innovation capabilities [1]. The realization that AI-driven decision-making is indispensable in today’s fast-paced and highly competitive market has significantly raised interest in industrial machine learning applications [2]. Digital leadership (DL) significantly influences AI implementation, as leaders with strong digital skills can strategically guide the integration of AI into business operations [3]. Leaders who are proficient in digital technologies can drive the integration of sustainable practices by leveraging data analytics, the Internet of Things (IOT), and AI effectively to not only bring about business innovations but also continuously advance organizational sustainability and competitiveness [4].
Digital transformation (DT), an organization-wide effort aimed at improving processes for all stakeholders through the adoption of digital technologies, is no longer just a trend but a necessity in the context of the Fourth Industrial Revolution [5]. The increasing interest in digital transformation, reflected in the doubling of related publications over the past decade, highlights its growing urgency and its elevation as a top priority in business strategies [6]. Digital transformation, mainly driven by leaders’ perspectives on digitalization, is essential for organizations across all sectors as it reshapes stakeholder relationships, workflows, and value-creation processes. This makes leadership a critical factor in successful technological change [7]. In today’s fast-paced digital transformation, digital leadership is critical, requiring leaders to adapt to technological changes while possessing skills in change management, communication, and strategic decision-making, as emphasized in both the academic and professional literature [8].
Additionally, organizations increasingly seek technology-based management systems to achieve sustainable organizational performance. For companies, digital technologies can boost operational efficiency, facilitate business model innovations like digital servitization, and support digital transformation (DT) stages that vary in maturity, each requiring tailored strategies for resources, structure, and growth, especially for firms that are still in the early phases [9]. In this context, digital leadership in organizations with comprehensive IT skills is a prerequisite for sustainable management [10]. Performance is another crucial factor for any company that must be maintained optimally. Performance refers to measurable behaviors or outcomes, while employee performance refers to an employee’s ability, skill mastery, and output in fulfilling work tasks and responsibilities. Although leadership roles are intricately linked to employee success, other factors can also influence employee performance. These factors may stem from the company, the employees, or external sources [11].
Leaders in the digital age must inspire innovation and improve employee performance. Research shows that leaders with digital capabilities positively influence employees’ innovative behaviors by not only directing but also motivating and supporting their subordinates [12]. Organizational commitment, defined as the degree to which employees identify with and commit to the organization’s goals and values, is fostered by effective leaders who inspire greater contribution, as employees who feel connected to and supported by their leaders are more likely to be engaged and experience a sense of belonging and purpose within the company [13]. Effective leaders motivate and encourage employees to work toward common goals, with a strong sense of corporate responsibility enhancing effort, productivity, and loyalty; however, there is an urgent need to better understand the relationship between leadership and organizational commitment, as well as how these two factors interact and influence one another [14].
This paper aims to deepen the understanding of how digital leadership influences employee performance and organizational commitment, particularly in the digital transformation era. By examining the mediating role of digital transformation, this study explores how digital leadership shapes these outcomes in a DT-driven environment. Understanding the conditions under which digital leadership impacts employee performance and organizational commitment is crucial for providing applicable insights across various contexts, highlighting the growing importance of effective leadership in navigating digital transformation within organizations.

2. Literature Review

2.1. Digital Leadership

Digital leaders are those capable of crafting a clear and meaningful vision for digital processes and executing strategies accordingly. Digital leadership shares many traits with general leadership and is multidimensional, encompassing elements of transformational, transactional, and authentic leadership [15]. It involves blending a leader’s culture and capabilities to utilize digital technologies to create organizational value and successfully implement the digital strategies of the enterprise and its business ecosystem [16]. As Doyel and other authors have highlighted, digital leadership empowers employees by preserving their autonomy and creating freedom when necessary. Employees are expected to participate in crucial decision-making processes. Furthermore, digital leadership makes individual team performance more transparent and introduces more results-oriented compensation structures [17]. Digital leadership is a process of social transformation mediated by advanced information technologies, influencing individual, group, and organizational rituals, attitudes, emotions, thoughts, and behaviors. Digital leaders are visionary and transformative, capable of uniting an organization’s ideas and goals and establishing new opportunities through partnerships, joint ventures, or outsourcing. Borins (2010) studied digital leadership from a political perspective and concluded that digital leaders are an amalgamation of channel selection in virtual environments [18]. Digital leadership is a crucial part of driving organizations toward better digital capabilities. Leadership styles in the digital age have evolved to include the following characteristics: (1) creativity, (2) deep knowledge, (3) strong networking and collaboration, and (4) loyalty through vision [19]. Increasingly, scholars have recognized the importance of leadership in facilitating sustainable digital transformation. Implementing digital technologies significantly enhances the potential to achieve sustainable digital transformation, reshaping how environmental knowledge is gathered and disseminated [20].
In the context of digital transformation, digital leaders play a pivotal role in guiding organizations through appropriate transformations. They are responsible for aligning technological projects with overall business goals and motivating employees to adopt digital innovations [21]. The importance of digital leadership is underscored by its function in leading companies toward digital maturity. Leaders with a digital transformation mindset, also known as digital leaders, can establish collaborative, networked organizations and identify digital capabilities [22]. Digital leadership, a fusion of transformational leadership and digital technologies, is essential for creating a favorable digital environment and fostering strategic consensus across organizations, enabling them to effectively utilize digital technologies and remain competitive in the global market [23]. Digital leadership is essential for managing change, influencing employee performance, and ensuring overall corporate success. By linking organizational-level elements (e.g., DT capabilities) with individual-level factors (e.g., employee commitment to the organization), digital leadership bridges the gap between DT capabilities and organizational commitment. These influences may affect DT values, as DT provides broader opportunities for employees, influencing their attitudes and behaviors and ultimately impacting organizational commitment [24]. Digital leadership is crucial for the survival of enterprises in the new digital era, as it adapts and transforms company strategies, positively influencing organizational capabilities and fostering innovative work behaviors [25].
Digital transformation is conceptually described as a process aimed at triggering significant changes in the performance of entities by integrating information, computing, communication, and connectivity technologies. Companies that adopt digital technologies become more competitive as these technologies enhance productivity, value creation, and social welfare [26]. Digital transformation encompasses implementing advanced technologies such as artificial intelligence, cloud computing, the IoT, and data analytics. These technologies are introduced to enhance business processes, improve decision-making, and promote more flexible and responsive organizational structures [27]. DT’s objectives and transformative characteristics, as are the constraints within DT frameworks, are essential. Digital innovation is leveraging digital technologies to redefine business value, leading to changes in work practices and the emergence of new organizational identities. As a subset of information technology, digital technology drives value creation and is a catalyst for changing business models [24]. Digital transformation is a progressive process, starting with the adoption and use of digital technologies and evolving into an overall organizational transformation. For a successful digital transformation, it is crucial to focus on reshaping the customer value proposition. Digital technologies play a key role in this, enabling organizations to transform operations and achieve greater engagement and collaboration with customers [28].

2.2. Digital Leadership (DL) and Digital Transformation (DT)

Digital transformation (DT) is the strategic application of advanced digital technologies to drive core business growth. In the digital era, technologies such as social media, big data, the Internet of Services, cloud computing, digital twins, artificial intelligence (AI), and the Internet of Things (IoT) have fundamentally transformed the industrial economy [29]. Both emerging and traditional industries are striving to gain sustainable competitive advantages through DT. In this context, the role of effective digital leadership is paramount in shaping the future of companies’ digital development [30].
The term “digital leadership” serves as a comprehensive framework to explore the intricate relationship between advanced digitalization and business transformation, shedding light on the opportunities and challenges of the rapidly evolving digital world [31]. The foundation of successful digital transformation lies in the strong support of the company’s top management and the seamless integration of the DT process into the company’s strategy. Organizations have come to realize the critical role of senior management in systematically evaluating the overall state of DT within their business and setting guidelines for achieving digital maturity. A successful DT process hinges on the backing of senior management. In the digital age, the role of managers has shifted from controlling to guiding, engaging, and listening. Digital leaders are tasked with devising and executing strategies, inspiring employees to partake in DT activities, and ensuring the effective and efficient use of digital tools across all business sectors [28].
Modern leaders must possess the skills and commitment to ensure the success of DT. “Digital leadership means involving all organization members in the digital process and recognizing and developing the skills and capabilities needed to implement digitalization” [32]. Leaders are crucial in ensuring and accelerating the transition to the digital age. They can support organizational success in the digital era by taking three key actions: (1) monitoring emerging technology trends, (2) setting digital transformation trends and strategic initiatives, and (3) guiding teams through precise and efficient transitions. Additionally, leaders with a DT perspective can create collaborative networks and develop organizational digital capabilities [33].
H1. 
Digital leadership (DL) is positively related to digital transformation (DT).

2.3. Digital Transformation (DT) and Organizational Commitment (OC)

Organizational commitment (OC) refers to the extent to which employees feel trusted, align with the organization’s goals, and exhibit a willingness to stay within the organization. It reflects an employee’s engagement with the organization and its identification with its values and objectives [34]. Organizational commitment is a “psychological state” that characterizes the relationship between employees and the organization and influences decisions regarding whether to remain with or leave the organization. According to experts, organizational commitment consists of three components: (1) a strong belief in and acceptance of the organization’s values and goals, (2) a willingness to make significant efforts on behalf of the organization, and (3) a strong desire to remain part of the organization [35]. Organizational commitment goes beyond mere loyalty; it involves a determination to contribute toward achieving organizational goals. It represents the dedication to ensuring the realization of organizational objectives and is often perceived as a form of loyalty between an individual and the organization [36]. Organizational commitment can be interpreted as emotional attachment, personal identification, and engagement with the organization, as well as the desire to maintain membership. Commitment not only influences employee turnover but also the extent to which employees are willing to sacrifice for the organization [37]. Organizational commitment is more than a concept—it is a key driver of an organization’s success. It solidifies the core values of an organization and can be viewed as the loyalty employees demonstrate toward the institution and the sustainable achievement of its goals. Without employee commitment to improving the organization, even the best goals, strategies, and support would be in vain [38].
In the development of modern enterprises, digital transformation serves as both a crucial driver of growth and sustainable development and a critical factor in fostering employees’ commitment to the organization, which has been a consistent focal point for researchers analyzing the relationship between corporate performance and employee engagement [39]. Digital transformation (DT) has become a significant focus in academic and practitioner dialogues due to its strategic impact on industries, yet the existing literature lacks a comprehensive perspective on the complex connections between DT and organizational change, necessitating a broader comparison with innovation studies [40]. Higher levels of employee engagement led to improved performance and a stronger organizational commitment, where employees align with the company’s goals and express a desire to remain part of the organization [41]. In digital transformation, creating value from digital technologies requires the deliberate integration of physical, technical, and social systems, with organizational culture playing a key role in fostering total commitment and embedding technological advancements into strategic frameworks [42].
H2. 
Digital transformation (DT) is positively related to organizational commitment.

2.4. Digital Transformation (DT) and Employee Performance (EP)

Employee performance refers to an individual’s work success in fulfilling duties, measured against agreed-upon standards, goals, or criteria and influenced by output quality and quantity, work cycle, attendance, and cooperative attitude [43]. It is the behavior employees demonstrate while completing tasks and refers to the achievements each employee attains according to the organization’s expectations and requirements [44]. Employee performance is the outcome of employees’ capabilities, efforts, and perceptions of tasks, contributing to the organization’s productivity by improving task efficiency and effectiveness [45]. In organizations, employee performance is typically measured by factors such as effectiveness, efficiency, quality, innovation, creativity, commitment, satisfaction, cohesion, flexibility, customer relations, communication, and effort toward organizational goals [46]. Since employee performance is directly related to organizational productivity and success and is often correlated with employee productivity and dedication, digital transformation plays a crucial role in enhancing this performance by improving efficiency and fostering a more productive work environment [47,48]. For centuries, many organizations have implemented employee performance evaluations. While there are debates surrounding performance appraisal systems, they are generally regarded as an integral part of organizational life [49]. Digital technologies are unprecedentedly transforming the global economy, enabling companies to outpace competitors and address sustainable development challenges [50]. Digital transformation (DT) significantly impacts employee performance by automating repetitive tasks and streamlining processes with digital tools, allowing employees to focus on higher-value tasks and achieve productivity gains through improved efficiency [51]. Digital technologies make work easier and faster, reducing errors, simplifying corrections, optimizing data storage, and making information readily accessible, all of which improve employee productivity and increase their passion for work through the use of advanced technologies [52]. Employee performance is a cornerstone of corporate success, as it provides the creativity, ideas, and labor needed to achieve corporate goals; therefore, maximizing productivity requires organizations to enhance employee performance by actively engaging and fostering motivation and job satisfaction [34]. A successful digital transformation requires both organizational and employee readiness, with adaptation and transformation being key factors for success [53]. When organizations adopt digital transformation as a unique operational paradigm, employees are better prepared to adapt, leading to improved outcomes and performance, while digital transformation plays a pivotal role in enhancing overall effectiveness and efficiency [54].
H3. 
Digital transformation (DT) is positively related to employee performance.

2.5. Digital Leadership (DL) and Organizational Commitment (OC)

Organizational commitment, defined as a strong psychological attachment to an organization driven by internal motivations or external normative pressures, is cultivated among virtual team members by team leaders [55]. Leaders with higher levels of trust enable subordinates to perform tasks without doubt toward the leaders or the organization, thereby enhancing organizational commitment [56]. Members with high organizational commitment feel connected to and identify with the organization, making them more motivated and willing to put in the effort to achieve its goals and contribute to its objectives [38]. Digital leadership has a substantial effect on organizational commitment. It fosters a sense of belonging and loyalty by leveraging digital tools to enhance communication, collaboration, and transparency within the organization [57]. By creating a digitally enabled environment that aligns with the organization’s goals and values, digital leadership helps employees feel more connected and committed, strengthening their psychological attachment to the organization and boosting their long-term commitment [58]. Weber, Büttgen, and Bartsch (2022) conducted a study titled “How to Take Employees on the Digital Transformation Journey: An Experimental Study on Complementary Leadership Behaviors in Managing Organizational Change”. Utilizing an experimental approach, this research found that digital leadership significantly enhances employee support for organizational change and is positively associated with organizational commitment among employees [59].
H4. 
Digital leadership (DL) is positively related to organizational commitment.

2.6. Digital Leadership (DL) and Employee Performance (EP)

Organizations require strong leadership styles to motivate employee performance, making it crucial to identify the leadership style that best inspires performance [60]. Leaders must be able to mobilize and motivate employees to achieve satisfactory results and exceed set objectives. Leadership support plays a pivotal role in motivating employees to perform at higher levels, directly influencing their performance [34]. A company’s success is often determined by its leadership, as effective leaders significantly influence organizational progress and enhance employee performance by earning trust, admiration, loyalty, and respect, motivating employees to exceed expectations [61].
Digital leadership is essential in improving employee performance by leading through digital examples, fostering an innovation culture, encouraging collaboration, providing access to digital resources, offering feedback, and monitoring performance. Through the effective adoption of digital technologies, digital leaders can inspire employees, increase productivity, and create an innovative work environment [62]. Digital leadership, which combines transformational leadership with technology, leverages a company’s digital resources to advance organizational and personal goals. Critical traits such as strategic thinking, adaptability, resilience, and openness to new ideas enable digital leaders to influence organizational performance and achieve sustainable success in the era of digitalization and transformation [25].
H5. 
Digital leadership (DL) is positively related to employee performance.

2.7. The Mediating Role of Digital Transformation (DT)

Digital transformation, deeply rooted in digitalization, has become integral across various sectors, establishing itself as a focal area for academic and business research [63]. At its core, digital transformation is innovating production methods and processes through digital technologies. The extent of digital transformation within organizations is heavily influenced by managers’ cognitive abilities and strategic decisions, which underscores the importance of proactive recognition from leadership teams. These strategic decisions not only define an organization’s trajectory but also drive corporate innovation. Importantly, digital transformation significantly enhances overall performance, a key benefit for organizations [64].
Saranya, P.C., and Vasantha’s study indicates that digital transformation mediates the relationship between digital leadership and organizational commitment, showing that leaders with digital thinking can effectively drive organizational change, thereby enhancing employees’ sense of belonging and loyalty [65]. Braojos, Weritz, and Matute (2024) support this view, showing that digital transformation can significantly boost organizational commitment by fostering a heightened sense of pride and belonging when guided by effective digital leadership. Their study emphasizes the synergistic impact of digital leadership, digital transformation capabilities, and a continuous learning environment, which are essential to building strong organizational commitment [24].
H6. 
Digital transformation (DT) mediates the relationship between digital leadership (DL) and organizational commitment.
Studies indicate that leadership established by managers is a crucial factor influencing employee performance, fostering integration, boosting morale, and maximizing motivation as leaders propel subordinates toward desired goals and encourage the development of abilities and skills for optimal results [66]. Research by Shwedeh [51] adds that while organizational digital transformation may not directly impact employee productivity, it positively influences organizational commitment to digital transformation and job satisfaction, significantly affecting employee productivity.
Further research highlights that digital transformation, driven by effective digital leadership, mediates the relationship between digital leadership and employee performance by optimizing work processes and improving employee efficiency and output quality [54]. Digital tools and processes implemented through digital transformation can significantly boost productivity and innovation capabilities, underscoring digital transformation’s role as a crucial mediator in enhancing employee performance [67].
H7. 
Digital transformation (DT) mediates the relationship between digital leadership (DL) and employee performance.
Based on the above theoretical foundation and hypothesis, our research model is depicted in Figure 1.

3. Methodology

3.1. Sample and Data Collection

This study aims to empirically assess the relationship between digital leadership, employee performance, and organizational commitment across various industries, including manufacturing, services, finance, IT, and others. To thoroughly test the effects of digital leadership on employee performance and organizational commitment within enterprises, we employed a comprehensive data collection approach, combining both online and offline surveys. The study includes 579 participants from the industries above, with data collected between June and August 2024. The objective drove the decision to use online and offline questionnaires to maximize response rates and ensure in-depth and accurate insights while accommodating respondents’ preferences and accessibility. Before data collection commenced, we thoroughly explained our research objectives to all participants, emphasizing their importance in promoting digital transformation within enterprises. These explanations were provided both orally and in written form, ensuring transparency and informed consent, which is crucial for adhering to ethical research practices. The companies involved in the sample were highly supportive, allowing their employees to complete the surveys during work hours. As a result, we retrieved 579 usable data points, with an effective response rate of 89.3%. Table 1 summarizes the sample demographics. As shown in Table 1, 58.4% of the respondents were female, 42.8% were under 40, and 68% held a bachelor’s degree or higher. Additionally, approximately 54.6% were from the manufacturing industry, and 64.9% had over ten years of experience in their current roles. Overall, the sample can be characterized as relatively young, highly educated, and with significant tenure in the manufacturing sector.

3.2. Measures

DL = digital leadership, which involves a prudent and flexible approach, guiding organizations through the challenges and opportunities of the digital age by effectively using digital technologies to achieve corporate success, foster innovation, and promote a dynamic and inclusive workplace culture [68,69]. It goes beyond merely managing technology, requiring leaders to envision how digital advancements can revolutionize operations, enhance customer engagement, and improve organizational performance. Digital leaders are responsible for aligning technological initiatives with business goals and motivating employees to adopt digital innovations [70]. We conceptualize digital leadership as behaviors rather than innate traits, characterized by deliberate actions such as adopting a change-ready mindset, acquiring digital literacy, and strategically utilizing technology to maintain a competitive edge. Therefore, our study focuses on the behaviors leaders must demonstrate to drive digital transformation successfully. In this study, digital leadership was measured using a 5-item scale adapted from previous research [25]. All items were measured using a 5-point Likert scale, which ranged from 1 (strongly disagree) to 5 (strongly agree). Sample items include “Digital leaders enhance employees’ awareness regarding the potential risks associated with information technologies” and “Digital leaders increase awareness of technologies that can optimize organizational processes”.
DT = digital transformation, which refers to fundamental changes in how organizations operate, strategize, and cultivate values, driven by integrating digital technologies across multiple business domains [71]. Digital transformation entails using digital technologies to develop new techniques and innovative business models, improve operational efficiency, and deliver value to stakeholders [72]. In this study, digital transformation was measured using a 5-item scale developed by [33]. All items were measured using a 5-point Likert scale, which ranged from 1 (very low extent) to 5 (very high extent). Sample items include “My organization seeks to apply digital technologies to expand its activities” and “My organization aims to leverage digital technology to enhance service quality”.
EP = employee performance, which refers to the behaviors displayed by employees when completing tasks or assignments [73], and it represents the output or results generated by employees within an organization [74]. In this study, employee performance was measured using a 6-item scale developed by [44], with responses recorded on a 5-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). Two sample items include “I receive valuable feedback from my superior regarding my job performance” and “I meet the official performance expectations required for my role”.
OC = organizational commitment, which is influenced by employees’ acceptance of organizational strategies and culture, their motivation to work, and their willingness to remain with the organization [75]. In this study, organizational commitment was measured using a 6-item scale adapted from [76], with responses recorded on a 5-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). Sample items include “I feel an emotional connection to this organization” and “This organization holds significant meaning for me”. Variables and items are presented in Table 2.
We conducted a confirmatory factor analysis (CFA) to assess the reliability and validity of our measurement model. Specifically, we performed a CFA on a four-factor structure to evaluate the reliability and validity of the perceptual constructs. The results of this analysis are summarized in Table 3. The model exhibits a satisfactory fit with the data, as indicated by the following fit indices: CMIN/DF = 3.437, p < 0.001, RMR = 0.023, GFI = 0.906, CFI = 0.967, NFI = 0.954, TLI = 0.961, IFI = 0.967, RFI = 0.946, and RMSEA = 0.065.
All factor loadings are highly significant (p < 0.001), and the composite reliabilities for all constructs—digital leadership (0.959), digital transformational (0.946), employee performance (0.939), and organizational commitment (0.945)—exceed the recommended threshold of 0.70, confirming the reliability of the measures. Additionally, the average variances extracted (AVE) for each construct are above the 0.50 benchmark, with digital leadership (0.822), digital transformational (0.778), employee performance (0.719), and organizational commitment (0.741) indicating adequate convergent validity.
To evaluate discriminant validity, we employed Fornell and Larcker’s (1981) procedure, comparing the shared variance between all possible pairs of constructs to ensure that it is lower than the AVE of each construct. This analysis further supports the measurement model’s discriminant validity.

3.3. Mean, Standard Deviations, and Correlations

The basic descriptive statistics and correlations of the variables are presented in Table 4. The results demonstrate significant correlations between these control variables and key independent and dependent variables. For example, gender is significantly correlated with age (r = 0.170, p < 0.05) and career length (r = 0.204, p < 0.05), while age is significantly correlated with career length (r = 0.738, p < 0.01). As anticipated, all independent variables exhibit significant correlations with their respective dependent variables. Specifically, digital leadership is significantly correlated with digital transformational (r = 0.808, p < 0.05), employee performance (r = 0.721, p < 0.05), and organizational commitment (r = 0.692, p < 0.05). Additionally, digital transformation significantly correlates with organizational commitment and employee performance (r = 0.763, p < 0.05; r = 0.782, p < 0.05, respectively). These correlations, which underscore the importance of your role in the subsequent hypothesis testing, provide a foundational basis for the research.

3.4. Hypothesis Testing

The structural model demonstrates a satisfactory fit, with CMIN/DF = 3.437, p < 0.001, RMR = 0.023, GFI = 0.906, CFI = 0.967, NFI = 0.954, TLI = 0.961, IFI = 0.967, RFI = 0.946, and RMSEA = 0.065. These fit indices confirm the model’s adequacy.
To assess the influence of digital leadership on digital transformation, employee performance, and organizational commitment among employees in Chinese enterprises, we conducted a regression analysis, with results presented in Table 5. The findings reveal that digital leadership positively and significantly impacts digital leadership (β = 0.752, t = 26.056, p < 0.001). Digital transformation has a positive and significant impact on organizational commitment (β = 0.633, t = 10.536, p < 0.001) and employee performance (β = 0.620, t = 11.160, p < 0.001), thereby providing strong support for Hypotheses 1, 2, and 3.
Our research further confirms the positive and significant impact of digital leadership on both organizational commitment (β = 0.131, t = 2.649, p < 0.001) and employee performance (β = 0.127, t = 2.819, p < 0.001). This confirmation of Hypotheses 4 and 5 serves to further validate our research findings.
To verify the mediating effect of digital transformation in the relationship between digital leadership, employee performance, and organizational commitment, the research model was analyzed, and the significance of the mediating effect was assessed using the bootstrapping method. Table 6 shows that digital leadership exerts a significant indirect effect on organizational commitment and employee performance via digital transformation (β = 547, p < 0.05; β = 0.591, p < 0.05). Moreover, the direct effects of digital leadership on employee performance and organizational commitment were insignificant. These findings confirm that digital transformation fully mediates the relationship between digital leadership and organizational commitment and between digital leadership and employee performance. thereby providing strong support for Hypotheses 6 and 7.

4. Discussion

4.1. Theoretical Implications

This study provides substantial theoretical and practical contributions by exploring the impact of digital leadership on digital transformation, employee performance, and organizational commitment within Chinese enterprises.
Hypothesis 1 underscores the pivotal role of digital leadership in driving digital transformation within organizations. Existing research has predominantly focused on digital transformation’s technical and strategic aspects [19,51], often overlooking leadership’s crucial role in facilitating this change. This study highlights that digital leadership acts as a catalyst for digital transformation by empowering employees and fostering an environment conducive to digital initiatives. This finding expands the existing body of knowledge by demonstrating that leadership is about setting direction and actively engaging and motivating employees to embrace technological change. This perspective has yet to be explored in prior literature.
Second, Hypotheses 2 and 3 examine the effects of digital transformation on organizational commitment and employee performance, complementing prior studies on the impact of organizational change driven by digital transformation on individual outcomes. The empirical findings of this research offer new theoretical support for integrating leadership and digital transformation in performance-related research. Specifically, it shows that digital transformation, facilitated by effective leadership, significantly enhances employee performance and organizational commitment [77,78], offering practical insights for leaders on how digital transformation can positively impact their workforce. This contribution is crucial as it bridges the gap between leadership practices and their tangible effects on employees’ job performance and commitment. It adds depth to the research on the relationship between digital transformation and employee outcomes.
Third, Hypotheses 4 and 5 validate digital leadership’s positive impact on organizational commitment and employee performance. Previous research has explored various leadership styles and their influence on employee performance and organizational commitment [76,79], but few studies have examined this within the context of digital transformation. This study reveals that digital leadership fosters digital initiatives and enhances employees’ sense of belonging and identification with the organization, thereby improving their organizational commitment. This finding enriches the theoretical framework linking leadership to employee emotional attachment and performance, particularly in a rapidly digitalizing environment, where leadership’s role in maintaining employee engagement and commitment becomes even more critical.
Finally, Hypotheses 6 and 7 confirm the mediating role of digital transformation in the relationship between digital leadership and employee performance and organizational commitment. This extends the research on how leadership drives digital transformation and indirectly influences organizational effectiveness [80]. By revealing that digital transformation mediates the relationship between leadership and critical employee outcomes, this study offers a more nuanced understanding of the leadership–transformation–performance linkage. This mediating role emphasizes that while leadership directly contributes to driving digital change, its ultimate influence on employee performance and commitment is exerted through the success of the digital transformation process itself [81,82]. This insight advances theoretical knowledge and offers a valuable perspective for future research to investigate further the complex dynamics between leadership, technological change, and organizational outcomes. Furthermore, our study underscores the significance of digital leadership in influencing organizational commitment within the digital transformation context. This finding further validates our model, which treats organizational commitment as an outcome influenced by both digital transformation and leadership factors. By concentrating on organizational commitment as an outcome, we are heeding recent calls in the literature to explore the ‘individual frontier’ in digital transformation research, providing valuable insights into how digital initiatives impact employee attitudes and behaviors.
In summary, this study advances the theoretical understanding of digital leadership by illuminating its central role in facilitating digital transformation, enhancing employee performance, and increasing organizational commitment. The integration of leadership, digital transformation, and employee outcomes provides a comprehensive framework for future research, highlighting the importance of leadership in shaping the success of digital initiatives and their impact on organizational effectiveness. Our study’s main findings underscore the unique and pivotal role of digital leadership, the significant effects of digital transformation on employee performance and organizational commitment, and the mediating role of digital transformation in the relationship between leadership and key employee outcomes.

4.2. Practical Implications

This study significantly advances the theoretical and practical understanding of digital leadership and its critical role in facilitating digital transformation, enhancing employee performance, and strengthening organizational commitment. By grounding our research in established leadership theories, such as Bass and Avolio’s transformational leadership theory [83] and Heifetz’s adaptive leadership theory [84], we provide a more robust framework for understanding how leadership behaviors drive organizational change in the digital era. Incorporating these theoretical perspectives enhances the depth of our findings and extends the relevance of leadership theory in digital transformation.
Rigorously examining the proposed hypotheses reveals how digital leadership is essential for setting the strategic direction for digital transformation and engaging and empowering employees to embrace technological change. Our findings broaden leadership theory by emphasizing leaders’ roles in fostering a culture of innovation, adaptability, and continuous learning, aligning with previous research by Fernandez and Jawadi (2015) on the enhancement of team performance in virtual environments [85], as well as Mihardjo et al. (2019), who highlighted digital leadership’s influence on business model innovation in Industry 4.0 [19]. Furthermore, by integrating elements of adaptive leadership theory, we demonstrate how digital leaders must continuously adapt their strategies to meet the challenges of technological advancements and changing organizational needs.
This study also underscores leadership’s importance in creating environments facilitating smoother transitions into digital processes. It explores the relationship between digital transformation, employee performance, and organizational commitment, offering insights into how digital initiatives affect employee outcomes. By treating organizational commitment as an outcome of digital transformation and digital leadership, our research contributes to the ongoing discussion of the “individual frontier” in digital transformation studies, providing a fresh perspective on how leadership impacts employee attitudes and behaviors.
Practically, this research offers actionable strategies for managers and leaders to develop digital leadership capabilities, which are crucial for guiding teams through the challenges of digital transformation. This directly impacts HR practices, as cultivating leaders who can effectively drive digital initiatives is essential for improving employee performance and organizational commitment. This study also confirms the mediating role of digital transformation in the relationship between digital leadership and critical employee outcomes, highlighting that while digital leadership is pivotal, its full impact is realized through the successful implementation of transformation processes.
By grounding our study in a synthesis of transformational and adaptive leadership theories and integrating insights from recent research on digital leadership [86], this research offers practical guidance for maximizing the benefits of digital transformation. Robust and adaptive leadership fosters a resilient workforce, increases productivity, and drives long-term growth in a highly competitive digital landscape. Ultimately, this study contributes to a more comprehensive understanding of leadership’s role in digital transformation, addressing both theoretical and practical implications.

4.3. Limitations and Future Research

Like most academic research, this study has several limitations that suggest directions for future research. The sample was drawn from Chinese manufacturing companies, limiting the generalizability of the findings to other industries and cultural contexts. Future studies should replicate this research across different sectors and countries to improve the broader applicability of the results. Additionally, the reliance on cross-sectional data restricts the ability to infer causal relationships between digital leadership, digital transformation, employee performance, and organizational commitment. Longitudinal studies are recommended to understand the dynamic interactions between these variables better. We also acknowledge the potential for common method variance (CMV) due to the use of self-reported data. Although Harman’s single-factor test indicated CMV is not a significant issue, future research should incorporate objective measures, such as supervisor ratings, to reduce potential bias. Furthermore, diverse samples and alternative analytical techniques should address biases from using the same sample for factor analysis and structural equation modeling. Lastly, expanding research to explore the role of AI and digital transformation across more industries, particularly ICT and technology-driven sectors, could provide deeper insights into how these advancements impact employee performance and organizational outcomes.

Author Contributions

Conceptualization, G.Q. and A.H.; Methodology, Y.L. and A.H.; Formal analysis, Y.L.; Resources, G.Q.; Data curation, Y.L.; Writing—original draft, G.Q.; Writing—review & editing, Y.L.; Supervision, A.H. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Data Availability Statement

Data are contained within the article.

Conflicts of Interest

The authors declare no conflict of interest.

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Systems 12 00457 g001
Figure 1. Research model.
Figure 1. Research model.
Systems 12 00457 g001
Table 1. Sample profile.
Table 1. Sample profile.
CategoriesN%
GenderMale24141.6
Female33858.4
Age<25559.5
26–307212.4
31–4012120.9
41–5016228.0
>5016929.2
EducationHigh school/Secondary school8214.2
College10317.8
Bachelor30652.8
Master and Doctor8815.2
Career<1 year305.2
1–3 years7012.1
3–5 years396.7
5–10 years6411.1
>10 years37664.9
IndustryManufacturing22454.6
Service102.4
Financial4611.2
IT174.1
Rest11327.6
SizeLarge enterprise19433.5
Medium-sized enterprise10518.1
Small enterprise10718.5
Rest17329.9
Table 2. Variables and items.
Table 2. Variables and items.
VariableItemsSource
DLDigital leaders enhance employees’ awareness regarding the potential risks associated with information technologies.
Digital leaders increase awareness of technologies that can optimize organizational processes.
Digital leaders collaborate with all stakeholders to establish the ethical standards needed for information technology practices.
Digital leaders help reduce resistance to innovations introduced by information technologies through informative efforts.
Digital leaders encourage employees to engage with the corporate vision by guiding them in the use of appropriate technological tools within the organization.		[25]
DTMy organization aims to digitalize as many processes as possible.
My organization gathers large amounts of data from multiple sources.
My organization seeks to apply digital technologies to expand its activities.
My organization aims to leverage digital technology to enhance service quality.
My organization is committed to promoting digital information sharing.		[33]
EPI am meaningfully recognized for doing my work well.
I get valuable feedback from my superior regarding my job performance.
I feel pleased when my work contributes to the organization’s success.
I like knowing that my efforts benefit not just myself, but also the organization.
I stay committed to overcoming challenges to finish tasks.
I meet the official performance expectations required for my role.		[44]
OCI would be very content to continue my entire career with this organization.
I truly feel that this organization’s challenges are my own.
I feel like I’m a part of the family in my organization.
I feel an emotional connection to this organization.
This organization holds significant meaning for me.
I have a strong sense of belonging to my organization.		[76]
Notes: DL = digital leadership, DT = digital transformation, EP = employee performance, and OC = organizational commitment.
Table 3. Results of confirmatory factor analysis.
Table 3. Results of confirmatory factor analysis.
VariablesEstimateS.E.C.R.AVECR
βB
DL50.9251.000 0.8220.959
DL40.9101.0410.02344.356
DL30.9231.0060.02639.075
DL20.9131.0650.02837.797
DL10.8620.9390.03129.860
DT10.8991.000 0.7780.946
DT20.8981.0960.03333.653
DT30.9051.0100.02934.322
DT40.8911.0700.03233.003
DT50.8130.9540.03526.977
EP10.8191.000 0.7190.939
EP20.8591.0690.03828.131
EP30.8410.9090.03724.403
EP40.8090.9330.04123.009
EP50.8751.0360.04025.933
EP60.8810.9830.03826.058
OC10.8281.000 0.7410.945
OC20.8091.0940.04723.384
OC30.9151.0740.03828.488
OC40.8811.1800.04426.735
OC50.8411.0580.04324.664
OC60.8851.1310.04823.393
Notes: Model summary: CMIN/DF = 3.437, p < 0.001, RMR = 0.023, GFI = 0.906, CFI = 0.967, NFI = 0.954, TLI = 0.961, IFI = 0.967, RFI = 0.946, and RMSEA = 0.065. N = 579. DL = digital leadership, DT = digital transformational, EP = employee performance, and OC = organizational commitment.
Table 4. Mean, standard deviations, and correlations.
Table 4. Mean, standard deviations, and correlations.
VariablesMeanS.D.GenderAgeCareerDTLSEPSDTSOCS
Gender1.580.4931
Age3.551.2860.170 **1
Career4.181.2790.204 **0.738 **1
DL4.13130.922410.0670.116 **0.173 **1
EP4.37770.718540.0550.134 **0.172 **0.721 **1
DT4.21040.829580.0420.094 *0.148 **0.808 **0.782 **1
OC4.19310.833200.092 *0.236 **0.305 **0.692 **0.789 **0.763 **1
Notes: N = 579; * p < 0.1, ** p < 0.05. DL = digital leadership, DT = digital transformational, EP = employee performance, and OC = organizational commitment.
Table 5. Test results of hypotheses 1 to 5.
Table 5. Test results of hypotheses 1 to 5.
Hypothesized PathEstimateS.E.C.R.P
H1. DL → DT 0.7520.02926.056***
H2. DT → OC0.6330.06010.536***
H3. DT → EP0.6200.05611.160***
H4. DL → OC0.1310.0492.649**
H5. DL → EP0.1270.0452.819**
Notes: Model summary: CMIN/DF = 3.437, p < 0.001, RMR = 0.023, GFI = 0.906, CFI = 0.967, NFI = 0.954, TLI = 0.961, IFI = 0.967, RFI = 0.946, and RMSEA = 0.065. N = 579; ** p < 0.05. *** p < 0.01, DL = digital leadership, DT = digital transformational, EP = employee performance, and OC = organizational commitment.
Table 6. Results of digital transformation mediating effect.
Table 6. Results of digital transformation mediating effect.
Hypothesized PathDirect EffectsIndirect EffectsTotal Effects
H6. DL → DT→ OC0.1580.574 **0.732 **
H7. DL → DT → EP0.1610.591 **0.752 ***
Notes: Model summary: CMIN/DF = 3.437, p < 0.001, RMR = 0.023, GFI = 0.906, CFI = 0.967, NFI = 0.954, TLI = 0.961, IFI = 0.967, RFI = 0.946, and RMSEA = 0.065. N = 579; ** p < 0.05. *** p < 0.01, DL = digital leadership, DT = digital transformational, EP = employee performance, and OC = organizational commitment.
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Qiao, G.; Li, Y.; Hong, A. The Strategic Role of Digital Transformation: Leveraging Digital Leadership to Enhance Employee Performance and Organizational Commitment in the Digital Era. Systems 2024, 12, 457. https://doi.org/10.3390/systems12110457

AMA Style

Qiao G, Li Y, Hong A. The Strategic Role of Digital Transformation: Leveraging Digital Leadership to Enhance Employee Performance and Organizational Commitment in the Digital Era. Systems. 2024; 12(11):457. https://doi.org/10.3390/systems12110457

Chicago/Turabian Style

Qiao, Guanming, Yannan Li, and Ahreum Hong. 2024. "The Strategic Role of Digital Transformation: Leveraging Digital Leadership to Enhance Employee Performance and Organizational Commitment in the Digital Era" Systems 12, no. 11: 457. https://doi.org/10.3390/systems12110457

APA Style

Qiao, G., Li, Y., & Hong, A. (2024). The Strategic Role of Digital Transformation: Leveraging Digital Leadership to Enhance Employee Performance and Organizational Commitment in the Digital Era. Systems, 12(11), 457. https://doi.org/10.3390/systems12110457

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