International Journal of Modern Engineering and Management

Digital Transformation Strategy, Organisational Agility, and Firm Performance: A Moderated Mediation Analysis Across Indian Service and Manufacturing Sectors

Author(s):

Kavitha Raghunathan, Sanjay Krishnamurthy, Leena Thomas

Affiliation: Department of Information Systems, Indian Institute of Management Indore, Indore, Madhya Pradesh, India School of Management, National Institute of Technology Surathkal, Mangaluru, Karnataka, India Faculty of Commerce and Management, University of Rajasthan, Jaipur, Rajasthan, India

Page No: 28-34-

Volume issue & Publishing Year: Volume 3, Issue 6, 2026/06/05

Journal: International Journal of Modern Engineering and Management | IJMEM

ISSN NO: 3048-8230

DOI:

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Abstract:

Digital transformation (DT) — the strategic, enterprise-wide integration of digital technologies to fundamentally alter products, processes, and business models — has emerged as a defining competitive imperative for Indian firms navigating post-pandemic economic restructuring and the Government of India's Digital India and Industry 4.0 initiatives. Despite broad recognition of DT's strategic importance, empirical evidence on the mechanisms through which DT strategy translates into measurable firm performance remains fragmented, with most studies conflating technology adoption intensity with transformation outcomes. Grounded in the Dynamic Capabilities View (DCV) and Resource-Based Theory (RBT), this study proposes and tests a moderated mediation model in which IT capability, organisational agility, and data-driven culture jointly mediate the DT strategy–performance relationship, with DT leadership quality as the boundary condition moderator. A cross-sectional survey of 586 senior managers and CXOs across 94 firms (BFSI, manufacturing, retail, healthcare, and logistics) in Madhya Pradesh, Karnataka, and Rajasthan was analysed using PLS-SEM with 5,000-sample bootstrapping. Results confirm that organisational agility (β = 0.41, p < 0.001) and data-driven culture (β = 0.50, p < 0.001) are stronger mediators than IT capability alone (β = 0.45, p < 0.001), and that DT leadership quality significantly moderates the agility–operational efficiency pathway (interaction β = 0.23, p < 0.01). Cloud computing and robotic process automation show the steepest five-year adoption curves, with large enterprises capturing substantially higher training and implementation ROI than SMEs. The DT value waterfall analysis reveals that process automation contributes the highest single-initiative performance gain (+22.6%), while change management costs (−8.3%) and integration overhead (−5.7%) represent the primary value-erosion levers. Implications for India's Ministry of Electronics and Information Technology (MeitY) Digital Transformation Framework and sector-level CIO strategy are discussed.

Keywords:

digital transformation, organisational agility, dynamic capabilities, PLS-SEM, IT capability, data-driven culture, DT leadership, India, Industry 4.0, moderated mediation

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