Digital Leadership and Innovation: How Organizational Mechanisms Drive Digital Transformation

Digital transformation represents a critical challenge for contemporary organizations, yet substantial variation persists in their ability to successfully implement digital initi-atives. This study examines whether digital leadership acts as a key enabling factor by shaping the organizational mechanisms through which transformation is realized. Drawing on leadership theory, innovation climate research, and the dynamic capabili-ties perspective, the study develops and tests a structural model linking Digital Vision Leadership, Innovation Climate, Digital Capability Development, Technology Integra-tion, and Digital Transformation Outcomes. Data from 2,901 respondents were ana-lyzed using structural equation modeling. The results show that Digital Vision Lead-ership significantly influences both Innovation Climate and Digital Capability Devel-opment, while Innovation Climate enables capability development and technology in-tegration. Technology Integration emerges as the primary driver of transformation outcomes, supported by additional direct effects of capabilities and innovation climate. Notably, the direct effect of Digital Capability Development on Technology Integration is not supported, indicating that capabilities require enabling organizational condi-tions to be effectively deployed. The findings demonstrate that digital transformation is not driven by capabilities or technology alone, but by a structured sequence of or-ganizational mechanisms in which leadership and innovation climate determine whether capabilities translate into technology integration. The study contributes by advancing a process-based model of digital transformation and clarifying why digital capabilities alone do not ensure successful technology implementation.