Digital Transformation and Long-Term Financial Sustainability: The Role of Strategic Agility

Abstract

The current research investigated the impact of digital transformation on long run financial sustainability, mediated through strategic agility, as per the Dynamic Capabilities Theory (DCT). A quantitative, explanatory, cross-sectional design was used and the data were gathered from 320 managerial respondents of manufacturing, banking, telecommunications, healthcare, information technology, and service companies who had implemented digital transformation projects within the last five years. The questionnaire was designed after expert review and a pilot study of 35 participants and used a structured questionnaire based on multi-item scales validated internationally. The proposed relationships were examined by Covariance-Based Structural Equation Modeling (CB-SEM) using AMOS 29 software, confirmatory factor analysis was used to test the measurement model, and bias-corrected bootstrapping was used to test mediation. The reliability and convergent and discriminant validity of the measurement model were satisfactory and the fit indices of the structural model were acceptable. Digital transformation was identified as a significant and positive predictor of long-term financial sustainability and strategic agility was a partial mediator. The results show that having a high level of digital capability is not enough to achieve sustainable financial success without at the same time developing the responsiveness and adaptive decision-making that lies behind strategic agility. Beyond its empirical linkages between digital sensing, seizing, and reconfiguring capacities and sustainable financial outcomes via an agility-based pathway, the study contributes to the Dynamic Capabilities Theory, and provides practical insights for managers wanting to turn digital investments into sustained financial resilience.