Assessing digital capability for twin transition and profitability: From firm and people perspectives with leadership support as moderator

Abstract

Digital capability encompasses the skills and attitudes that firms and employees need to thrive in the modern digital era. Digital capability of a firm involves the effective adoption and use of modern digital technologies such as Industry 4.0. From the individual perspective, digital capability is referred to as knowledge and skill sets of people which are essential to work in digitally enabled firms. Not many studies have been conducted to assess how digital capability can help in twin transition, that is, both at individual and firm levels, and how such digital capability can help in improving profitability for the firms. There is also a lack of studies exploring how firm leadership support can enhance digital capability to improve both organizational and employee performance. In this background, the aim of this study is to assess the role of digital capability for both firm and people perspectives with leadership support as moderator. With the support of resource-based view (RBV) and literature, a research model was prepared conceptually which was later validated using PLS-SEM technique considering 348 responses from employees of different types of industries. Based on the analysis of feedback from participants in India, this study has reached a specific conclusion. Consequently, the results suffer from external validity issues which have been considered as one of the critical limitations of this study. It has been demonstrated that impacts of digital competency could improve both people and firm performance enhancing the profitability of the firms. Such enhancement of profitability is facilitated by the impact of leadership support.