The Role of Digital Leadership in Driving Business Success: The Impact of Knowledge and Competence in Digital Transformation
This thesis shows how digital leadership drives employee performance, not through direct control, but by fostering engagement. The results highlight the importance of motivation and trust in digitally transforming organizations.
Topic
This thesis investigates the relationship between digital leadership, employee engagement, and individual work performance. As organizations undergo digital transformation, the competencies of digital leaders become increasingly critical for aligning teams, fostering innovation, and maintaining motivation in hybrid and distributed work environments. The study aims to empirically test whether employee engagement mediates the effect of digital leadership on perceived performance, offering evidence-based insights into leadership effectiveness in digital contexts.
Relevance
In a rapidly digitizing economy, many organizations lack clarity on how leadership should evolve to support sustainable performance. Traditional leadership models often fail to explain how to lead in technology-driven, decentralized, and fast-changing work environments. This research addresses that gap by quantifying how digital leadership competencies drive performance via engagement. The results are highly relevant for practitioners designing leadership development programmes, managing hybrid teams, or aiming to increase organizational resilience through more engaged, empowered employees.
Results
The analysis of 134 professionals across Swiss industries shows a statistically significant relationship between digital leadership and employee engagement. Notably, engagement fully mediates the effect of digital leadership on performance, with 73 % of the total effect explained by this indirect pathway. This implies that digital leaders do not drive outcomes through direct control, but by creating conditions that promote intrinsic motivation. The effect is powerful for non-management employees, highlighting the need for tailored leadership approaches across hierarchies.
Implications for Practitioners
- Develop digital leadership competencies in adaptability, vision, and digital communication.
- Promote employee engagement as a strategic performance lever in transformation initiatives.
- Tailor leadership styles for nonmanagement roles, where the impact of digital leadership is most pronounced.
- Monitor engagement levels to detect and address motivational gaps in hybrid work settings.
- Update performance systems to include leadership quality and engagement as key indicators of success.
Methods
The study used a quantitative cross-sectional design with survey data collected from Swiss employees across 12 industry sectors. Validated measurement instruments included the Digital Leadership Scale (DLS), Utrecht Work Engagement Scale (UWES), and Individual Work Performance Questionnaire (IWPQ). Hypotheses were tested using multiple regression and causal mediation analysis with 5’000 bootstraps in R. The mediation analysis revealed that employee engagement fully transmits the performance impact of digital leadership, underscoring its role as a key mechanism in digital transformation.