DRIVING SUSTAINABLE BUSINESS PERFORMANCE THROUGH DIGITAL LEADERSHIP: THE MEDIATING ROLE OF DIGITAL WORKFORCE CAPABILITIES IN PAKISTANI SMES

Abstract

The study investigates digital leadership i.e., capabilities, experiences, predictability and vision as the drivers of sustainable business performance in SMEs of Pakistan through digital workforce capabilities. Based on the concept of dynamic capabilities, digital leaders are defined as managerial actors who detect technologic opportunities, trigger reactions, and restructure employee skill sets and routines in order to generate economic, social and environmental value. A cross sectional design was used. A questionnaire was used to obtain data using a physically administered approach from 523 SMEs managers using convenience sampling. Partial least squares structural equation modeling (PLS-SEM) was used to test the measurement and structural models. There was a positive relationship between each of the digital leadership dimensions (i.e., capabilities, experiences, predictability and vision) and sustainable business performance, and there was a positive relationship between the digital workforce capabilities and sustainable business performance. The influence of sustainable performance was also mediated by digital workforce capabilities, for all four dimensions of leadership. The study adds by combining the four aspects of leadership capabilities, experience, predictability and vision in one SME model with the digital capability and the outcomes of sustainable workforce level. In essence, it demonstrates to Pakistani SME owners and managers that investing in technology yields better sustainability results when leadership is translated to skills, confidence, work together, and digitally enabled routines among employees. The results put workforce capability at the center of the operational connection between digital leadership and long-term performance.