Digital Transformation, Strategic Agility, and Sustainable Competitive Advantage

Abstract

The multi-source organizational-level research design was used in this study to explore the mediating role of strategic agility in the relationship between digital transformation and sustainable competitive advantage. In contrast to employee-level studies, the unit of analysis was the organisation and data was gathered from managers and business professionals who have an intimate knowledge of their organisation's digital strategy in technology-intensive and service-oriented industries. The organizations were qualified using purposive organizational sampling and the data were gathered from various managerial positions to avoid single respondent bias, thus a total of 185 organizations were selected. Digital transformation was evaluated based on digital technology, digital processes, data-driven decision making and business model transformations. Strategic agility was evaluated by the organization's responsiveness to market changes, quick response time to actions, ability to reconfigure resources, and capture of opportunities. Sustainable competitive advantage was assessed using the measures reflecting quality of long-term performance, market position, innovation, and difficulty for competitors to imitate organizational capabilities. The data were then analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM), which was then tested using indicator reliability in the measurement model, composite reliability, convergent validity, and discriminant validity value, while the structural model was tested using path coefficients, bootstrapping, effect sizes, and predictive relevance value. The outcomes suggested that digital transformation has a positive and significant relationship with strategic agility and sustainable competitive advantage, and strategic agility significantly mediated the relationship between digital transformation and sustainable competitive advantage, which is consistent with the partial mediation model.