Examining the Mediating Effect of IT Capabilities on the Relationship Between Managerial Capabilities and Firm’s Efficiency

Abstract

Digital transformation helps organizations to implement technologies and best practices for agile business models that can respond quickly to the continuous change in market trends, customer expectations, and competitors' strategies. The digital business strategy is considered the blueprint that can lead to digital transformation if it is planned and implemented successfully. Therefore, this research aims to analyze the mediating effect of digital IT capabilities on the relationship between managerial capabilities as one of the main dimensions of a digital business strategy and the firm’s efficiency. The Egyptian Oil and Gas Sector case was considered specifically in this research through managers working in Joint Venture and Investment Law Companies. The research uses quantitative methodology; the sample size is 380 while the analyzed valid responses are 399 out of 418 received responses accumulated using a survey questionnaire that is distributed to managers. Structural equation modeling (SEM) is the adopted statistical analysis technique, where the measurement model assessment proved the reliability and validity of the measurement instrument, in addition to the goodness of the proposed model. SEM path analysis findings reveal that the full mediation effect of the digital IT capabilities between the digital business strategy and the firm’s efficiency has been proven through the mediation analysis as the major research finding. Therefore, the research concludes that digital IT capabilities are expected to mediate the impact of managerial capabilities on the firm’s efficiency in the case of the Egyptian Oil and Gas sector. Therefore, the research provided some theoretical and practical recommendations or implications that represent real applications of the conclusion and findings to real life.