📈 economics

When Does Technology Readiness Translate into Digital Transformation? The Roles of Organizational Agility and Digital Transformational Leadership in the Indonesian Navy

This study of 977 Indonesian Navy personnel reveals that while technology readiness fosters digital transformation through organizational agility, the strength of these relationships is significantly shaped by digital transformational leadership, which acts as a critical moderator that enhances capability development despite a complex direct effect.

Original authors: Siswanto Siswanto, Ian Firstian Aldhi, Bambang Tjahjadi, Fendy Suhariadi, Noor Fareen Abdul Rahim, Ansar Abbas

Published 2026-10-29

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CC BY 4.0

Original authors: Siswanto Siswanto, Ian Firstian Aldhi, Bambang Tjahjadi, Fendy Suhariadi, Noor Fareen Abdul Rahim, Ansar Abbas

Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). ✨ This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer

In the modern world, organizations often face a paradox: they invest heavily in new computers, software, and data systems, yet their daily work remains slow, disconnected, and stuck in old habits. This gap between having the tools and actually using them to change how work gets done is the central puzzle of digital transformation. Researchers in this field distinguish between three key ideas. First is "readiness," which simply means an organization has the necessary technology and the staff knows how to use it. Second is "agility," the ability of a group to notice when things need to change and to adjust their workflow quickly without breaking down. Third is "transformation," the deep, lasting shift where digital tools become woven into the very fabric of how the organization operates, changing decisions and routines for the better. The critical question is not just whether an organization has the tools, but what specific conditions allow those tools to move from a shelf of unused potential into a engine of real change.

A team of researchers from Indonesia and Malaysia set out to solve this puzzle by looking inside the Indonesian Navy. They were interested in a specific problem: why do some naval units with excellent technology and skilled personnel still struggle to modernize their operations, while others seem to thrive? To find the answer, they surveyed 977 naval personnel across the country. These were not just random sailors; the group included mostly commissioned officers with long careers in the military, though many had served in their current specific units for only a few years. The researchers asked these individuals to evaluate their own units, focusing on how ready they felt with their technology, how flexible and quick they were to adapt to new demands, how much their leadership encouraged digital change, and how much their work had actually transformed.

The study revealed that simply having the technology was not enough to guarantee a successful transformation. While having the right tools and skills did help units become more agile—meaning they could spot problems and adjust faster—this readiness only led to a small, direct improvement in overall digital transformation on its own. The real story lay in the middle ground. The researchers found that technology readiness only translated into deep, lasting change when it was paired with high levels of organizational agility. In other words, having the tools allowed the navy units to be flexible, and it was this flexibility that drove the actual transformation.

However, the most significant discovery was the role of leadership. The study showed that the strength of these connections depended entirely on the quality of "digital transformational leadership." This is not just about a commander giving orders; it is about leaders who clearly communicate a vision for digital change, encourage their staff to question old ways of doing things, and support the collective effort to learn and adapt. When leadership was strong, the link between having technology and being agile became much stronger. Furthermore, strong leadership ensured that when a unit was agile, that agility actually resulted in a successful transformation. Without this supportive leadership, even a unit that was ready and flexible might make small, temporary adjustments that never stuck or became part of the permanent way of working.

Interestingly, the data also showed a complex nuance about leadership. While strong leadership helped turn agility into transformation, the study found that leadership alone, without the context of agility, did not automatically lead to better results. In fact, the data suggested that when leadership pushed hard for digital change without the unit having the capacity to adapt, it did not necessarily lead to success. This implies that a leader cannot simply command a transformation into existence; they must instead create the conditions where their team's flexibility and their existing technology can work together. The research suggests that for the Indonesian Navy, and likely for other large organizations, the path forward is not just buying more software or training more staff. Instead, the focus must be on cultivating leaders who can guide their teams to use their existing resources flexibly, ensuring that the ability to adapt is consistently directed toward meaningful, lasting changes in how the organization functions.

Technical Summary: When Does Technology Readiness Translate into Digital Transformation?

Problem Statement
The study addresses a critical gap in defense and public-sector literature: the insufficient understanding of how technological preparedness translates into substantive organizational change. While the Indonesian Navy, like many defense institutions, has invested in digital infrastructure (e.g., Trisula, E-Library, Dasal), the mere presence of technology does not guarantee integrated organizational transformation. The core problem is distinguishing between the availability of technological resources and their adaptive use in revised working practices. The paper seeks to explain the organizational processes and leadership conditions that convert "readiness" into "digital transformation," specifically within the constrained environment of a naval organization characterized by command accountability and information security.

Methodology

Design: A cross-sectional quantitative survey utilizing Partial Least Squares Structural Equation Modeling (PLS-SEM).
Sample: 977 Indonesian Navy personnel recruited via convenience sampling. The sample is predominantly male (92.22%), commissioned officers (79.12%), and personnel with extensive military service (>20 years), though tenure in current units is often shorter.
Unit of Analysis: Individual respondents assessed the conditions of their specific naval units. The analysis was conducted at the individual level, treating the naval unit as the organizational referent.
Constructs & Measures:
- Organizational Technology Readiness (OTR): 3 indicators (access, knowledge, skills).
- Organizational Agility (OA): 5 indicators (implementation, reconfiguration, strategic adjustment, etc.).
- Digital Transformation (DT): 5 indicators (process digitalization, data collection, task improvement).
- Digital Transformational Leadership (DTL): 6 indicators (vision, encouragement, shared goals).
Analysis: The study employed 5,000 bootstrap samples to test path coefficients, mediation, and moderation. Validity was assessed via Cronbach's alpha, Composite Reliability, Average Variance Extracted (AVE), Fornell-Larcker criterion, and HTMT. Predictive relevance was tested using blindfolding ( $Q^2$ ) and PLSpredict.

Key Results
The structural model explained 57.3% of the variance in Organizational Agility and 47.9% of the variance in Digital Transformation.

Direct Effects:
- OTR positively influences OA ( $\beta = 0.308, p < 0.001$ ).
- OTR positively influences DT directly, but the effect is small ( $\beta = 0.088, p < 0.001$ ; $f^2 = 0.012$ ).
- OA positively influences DT ( $\beta = 0.234, p < 0.001$ ).
Mediation:
- OA partially mediates the relationship between OTR and DT at the mean level of leadership (Indirect $\beta = 0.072, p < 0.001$ ).
Moderation (DTL):
- DTL positively moderates the OTR $\rightarrow$ OA relationship ( $\beta = 0.272, p < 0.001$ ). Higher leadership strengthens the conversion of readiness into agility.
- DTL positively moderates the OA $\rightarrow$ DT relationship ( $\beta = 0.443, p < 0.001$ ). Higher leadership strengthens the conversion of agility into transformation.
- Notable Finding: The conditional direct association of DTL with DT is negative ( $\beta = -0.554, p < 0.001$ ). This indicates that at the reference level of agility, stronger leadership advocacy does not linearly equate to greater realized transformation; the effect is contingent on the interaction with agility.
Predictive Performance: The model demonstrated predictive relevance ( $Q^2 > 0$ ) and lower root mean squared prediction errors (RMSE) compared to a linear model benchmark for all endogenous indicators.

Key Contributions

Conceptual Distinction: The study clarifies that technological readiness (resource possession) and digital transformation (organizational change) are distinct concepts. It posits that readiness alone is insufficient; the "adaptive use" of resources via agility is the necessary bridge.
Differentiated Leadership Roles: Unlike studies treating leadership solely as a direct antecedent, this paper identifies DTL as a boundary condition that shapes two distinct mechanisms: (a) the mobilization of readiness into agility, and (b) the consolidation of agility into transformation.
Contextual Application: The research extends dynamic capabilities theory to a naval defense context, demonstrating how capability-based explanations operate under strict command accountability and information security constraints.

Significance and Claims
The paper claims to advance a "contingent explanation" of digital transformation. It argues that technological preparedness becomes consequential only when supported by organizational agility and specific leadership conditions.

Theoretical Significance: It refines Dynamic Capabilities Theory by distinguishing the resource foundation (OTR), the adaptive capability (OA), and the transformation outcome (DT), showing that leadership conditions the relationships between these elements rather than acting as a simple additive predictor.
Practical Significance: For Navy management, the findings suggest that investment in infrastructure and skills must be coordinated with changes in workflows and leadership support. The small direct effect of readiness on transformation implies that simply acquiring technology yields limited returns without the adaptive mechanisms (agility) and leadership alignment to integrate those technologies into daily operations.
Modesty of Claims: The authors explicitly state that the cross-sectional, perceptual nature of the data supports conditional associations but does not establish causal effects. They caution against interpreting the negative leadership coefficient as a recommendation to reduce leadership support, noting it may reflect a mismatch between advocacy and implementation capacity or a response to lagging transformation. The study calls for longitudinal research to verify temporal ordering and causal mechanisms.

Technical Summary: When Does Technology Readiness Translate into Digital Transformation?

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