The Impact of Digital Transformational Leadership, Digitalization of HR practices and Organisational agility on Firm Performance
TL;DR
This study implies that digital leadership and HR systems are indeed essential for the performance of an organization, but what really matters is its agility to figure out the market changes and realign the resources as per the market demands & requirements.
Abstract
This research aims to explore the complex interrelations between Digital Transformational Leadership (DTL), Digitalization of HR Practices (DHRP), Organizational Agility (OA), and their effects on Firm Performance (FP). In modern business environment, where technological shifts are extremely intense and driven by the application of artificial intelligence, cloud computing, and automation technologies, businesses need to move beyond their traditional management systems to survive in dynamic environment and to achieve a competitive advantage. This study, which is based on a multi-theoretical approach, namely combining the Dynamic Capabilities Theory (DCT), Transformational Leadership Theory (TLT) and the Resource-Based View (RBV), identifies digital leadership as one of the most important drivers of change that in turn “sets” technological opportunities into the “sensing” and “seizing” processes. In this context the digitalization of human resources practices and the agility of the organization can be seen as the "reconfiguration" required for change. The method used in our research is quantitative research using descriptive, cross-sectional design. Structured questionnaire was used as a research instrument for data collection. This study was carried out with 394 research participants mainly from Gujarat from various industrial sectors of India. The research sample was predominantly from service sector (61.8%) and secondary sector (26.9%) which is a reliable sample to study a modern service and manufacturing economy. Data analysis used was Hierarchical Regression and Correlation Analysis. The results of the empirical study show that the research model was able to explain a significant portion of the total variance in organizational performance by explaining 85.12% of it (Adjusted R^2 = 0.8512). More importantly, all predictor variables, DTL, DHRP, and OA were found to be statistically significant (p < .001), thus showing their importance to organizational performance. Additionally, Organizational Agility was the most important factor in organizational performance with highest regression coefficient (beta = 0.503) and correlation (r = 0.9084). It therefore implies that digital leadership and HR systems are indeed essential for the performance of an organization, but what really matters is its agility to figure out the market changes and realign the resources as per the market demands & requirements. The research has significant practical implications for managers and offers a generic, industry independent guideline for digital transformation. Organizations are advised to think of HR technology as a tool to improve the organization and not as a means to eliminate repetitive tasks and let HR managers focus on value adding tasks like strategic workforce planning and talent management. Although the research is cross-sectional in design, it fills a gap in the research by empirically testing the combined effect of leadership, technology and agility on business success in the uncertain digital age.