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Article

Sustainability and Organizational Performance in South Korea: The Effect of Digital Leadership on Digital Culture and Employees’ Digital Capabilities

1
School of Business Administration, Keimyung University, Daegu 42601, Republic of Korea
2
Department of Management Studies, University of Barisal, Barishal 8254, Bangladesh
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(3), 2027; https://doi.org/10.3390/su15032027
Submission received: 1 December 2022 / Revised: 11 January 2023 / Accepted: 17 January 2023 / Published: 20 January 2023

Abstract

:
In the era of digital transformation, organizations are making efforts towards sustainability. In particular, leadership is transforming into digital leadership according to changes in management environments, which are deeply related to organizational performance. In this study, we focus on organizational performance and sustainability management and clarify the role of digital culture and employees’ digital capabilities in perspectives on digital leadership. We collected data from 149 employees who work in South Korean organizations using a survey based on digital leadership, digital culture, employees’ digital capabilities, and organizational performance, and we tested our hypotheses using structural equation modeling. The results show that digital leadership has a positive direct and indirect effect on organizational performance. Moreover, digital culture and employees’ digital capabilities partially mediate the relationship between digital leadership and sustainable organizational performance in South Korea. This study contributes to leadership and resource-based view (RBV) research by providing evidence for the role of digital leadership in sustainable organizational performance. As leadership continues to extend alongside verification of the RBV theory, the crucial role of digital leadership is changing, and the role of employees’ digital capabilities in organizational performance in South Korea needs to be considered.

1. Introduction

Traditional business strategies and processes are shifting due to recent breakthroughs in digital technology and the growth of threads in digital transformation [1,2]. These changes are motivating organizations to update their resources to gain competitive advantages. The emergence of digital technology, as evidenced by artificial intelligence, blockchain technology, cloud computing, Big data, edge computing, and 5G, is driving a new wave of the economic and industrial revolution and is profoundly altering organizational management [3]. Kamalaldin et al. [4] stated that digital transformation is not limited to implementing more and better technologies in a rapidly changing digital world, as it includes efforts to align company culture, people, structure, and tasks. By 2022, 47% of businesses were projected to be technologically advanced, 20% of them intended to utilize digital leadership, and 53% of them planned to switch from old platforms to public cloud ones. However, many companies still have a long way to go before fully embracing digital transformation.
Similarly, 70% of digital executives have reported that their organizations are already experiencing increased customer satisfaction [5]. Organizations in South Korea are also improving and hiring new types of leadership, known as digital leadership, to deal with this new digital culture. Mihardjo et al. [6] defined digital leadership as a combination of transformational leadership and the use of technology. Furthermore, it is a combination of digital competence and culture used to drive change and take advantage of digital technology. Moreover, Amelda, Alamsjah, and Elidjen [7] explained that digital leadership is created by combining leadership and digital abilities to optimize the benefits of digital technology to improve business performance. Therefore, digital leadership combines transformational leadership and digital skills [8]. Digital leadership is essential for businesses to survive in the new digital era because it adapts and alters company strategies. Our modern digital culture gives importance to rapid change in organizational environments. Here, the use of digital culture indicates attempting to consider some of the most important and dramatic changes brought by the growing pervasiveness and importance of digital technologies. Therefore, in this study, we use the context of South Korean industry.
Numerous studies have been related to leadership and performance [4,8,9]. In the modern era, digital leadership positively affects organizational capabilities [10]. Moreover, Mohamed [11] concluded that digital leadership, digital training, and subjective well-being positively affect job motivation and that digital leadership affects innovative work behavior [12]. Furthermore, DL influences different performance outcomes. For instance, Mihardjo et al. [13] found that DL affects business model innovation and has an effect on digital maturity. Finally, Al-Husban et al. [14] noted that digital leadership has significant positive direct and indirect effects on organizational performance. However, Muniroh et al. [15] found that DL does not directly affect employee performance. Despite this, the effects of DL on organizational performance remain non-specific. Moreover, many authors have analyzed the effect of digital culture [9,16]. For example, senior executives in strategic positions have effects on corporate culture, as supported by ample research [9]. Top managers have a crucial yet challenging role in establishing a culture of innovation, the main challenge of which is translating it into a proper framework [16].
Furthermore, Deuze [17] defined digital culture as an emerging set of values, practices, and expectations regarding the way people (should) act and interact within a contemporary networked society. Moreover, Duerr et al. [18] described digital culture as fostering innovation and the creation of new knowledge, thus supporting the creation of new goods and services. However, Muniroh et al. [15] found that digital culture does not affect employee performance. Furthermore, digital transformation occurs through the use of computers, but organizations need to hire computer-skilled employees to enact digital change. Moreover, organizations must use this digital mindset as a strategic opportunity for investment and profit. A leader plays a crucial role in an organization because of his or her responsibility in choosing, preparing, training, and influencing one or more followers. Therefore, traditional business strategies and processes have shifted due to recent advancements in digital technologies and the emergence of threads in the digital sphere [1,2].
As indicated by previous studies, a research gap appears to exist regarding the effect of digital leadership on employees’ digital capabilities and culture. Erhan et al. [12] suggested that DL can be considered a core variable, and they examined different mediating variables in a different context of the future. Moreover, Khin and Ho [19] noted that future technological culture can be an important factor for innovation and that it can be tested. Investigating the above highlighted factors not covered in research would therefore be useful [20], such as aspects of digital culture [21,22]. In addition, a similar opinion suggested by Adie et al. [23] emphasizes the role of digital culture in organizations. El Sawy et al. [24] found a relationship between digital leadership and organizational capabilities with a decade of digitalization research. Moreover, Aramburu et al. [25] argued that digital capability is a crucial source of sustainable competitive advantages for SMEs. However, the role of employees’ digital capabilities on organizational performance still has a missing link. Therefore, we predict that DL, digital culture, and employees’ digital capabilities can influence organizational performance. To fill the above gaps, we designed a research model (Figure 1) in the South Korean context to measure the effect of DL on organizational performance with two mediating variables. Based on the above situation, the following questions were raised for this study:
Research Questions.
  • RQ1: What is the effect of digital leadership on organizational performance for sustainability in South Korea?
  • RQ2: What are the roles of digital culture in DL and performance for organizational sustainability?
  • RQ3: What is the role of employees’ digital capabilities in the relationship between DL and performance for organizational sustainability?
In this study, we aim to identify the relationship between digital leadership and organizational performance in order to reveal the mediating role of digital culture and employees’ digital capabilities. The structure of this study is as follows: Section 1 introduces the research background and motivations, Section 2 describes the theoretical background and hypotheses, Section 3 presents the research model and methodology, Section 4 describes the empirical results, and Section 5 includes the conclusions, discussions, limitations, and future research directions.

2. Literature Review and Hypotheses

2.1. The Effect of Digital Leadership on Organizational Performance

Digital leadership uses a company’s digital resources to promote its organizational and individual objectives [26,27]. Due to organizational digitalization and transformation, in this digital age, firms face uncertainty and the challenge of maintaining of sustainable growth. To address these issues and to aid firms in making necessary changes, digital leaders must possess specific competencies [28,29] that can foster better management and achieve sustainable organizational performance. Recent advancements in digital technology have greatly altered organizational and competitive landscapes and job positions in many businesses [5]. To manage digital organizations, an extension of transformational leadership theory has emerged as digital leadership, which can lead to a firm’s sustainable goals. The roles of employees, digital workplace culture, and technological advancements are just a few of the organizational aspects that must evolve. The transformation of these aspects affects organizational performance, as leaders are key influencers [30]; therefore, digital leadership is expected to have a greater positive impact on sustainable performance than that of transformational leadership. Empirical findings have shown that transformational leadership improves a company’s product innovativeness and employee performance [31], whereas digital leadership combines transformational leadership with technology [8]. Therefore, we expect digital leadership to both directly and indirectly affect organizational performance. Somerville [29] asserted that critical thinking, adaptability, resilience, and openness to new ideas and technologies are necessary traits of digital leaders. Therefore, digital leaders have a large impact because new skill sets are needed to effectively lead sustainable organizations in a dynamic digital environment. An excellent digital leader helps to define a digital business strategy, resulting in superior business performance. In addition, in companies with digital histories, executives are more likely to push digital transformation across the board, accelerating their companies’ performance [32] and achieving sustainable goals. Based on the preceding discussion, we argue that a significant positive relationship exists between DL and organizational performance, and we propose the following hypothesis:
H1. 
There is a positive relationship between digital leadership and organizational performance for sustainability in Korea.

2.2. The Effect of Digital Leadership on Digital Culture and Employees’ Digital Capabilities

As a result of digital evolution and transformation, organizations must deal with digital culture to achieve organizational stability. Adaptation to digital culture is impossible without digital leaders who are masters of strategic thinking and who use advancements in each wave of digital technology to forge new business prospects that benefit their customers [5]. Moreover, Oberer and Erkollar [30] stated that a leader can persuade others, thus supporting the building of a new digital culture to deal with the digital environment and leading to achieving sustainable goals. In this study, we mainly focus on the theory of the effect of leadership on resources on organizational performance. In addition, the mediating effect of employees’ digital capabilities and digital organizational culture is also covered based on the resource-based view (RBV) theory. The term “digital culture” refers to the way that the Internet and technology influence how people interact with one another. In society, it refers to how we act, think, and communicate. The reason behind this is to find the role of employees’ digital capabilities and digital organizational culture in sustainable digital environments. According to Hambrick and Mason’s upper echelons theory, digital leadership research is a subset of the more extensive study of leadership [33]. A digital leader is responsible for planning and carrying out a company’s plans and creating or assisting in modifying cultures, including forming digital cultures, to increase a company’s competitiveness. The authors of a previous study found that digital leaders influence employees’ innovative behaviors [12], leading to organizational performance for sustainability. Digital leadership combines digital competency with digital culture. Today’s digital leaders should adopt a global mindset, communicate with others, and be more inventive in fostering an innovative culture in their organizations.
Moreover, organizational culture is a set of shared fundamental beliefs that a group learns as it deals with external adaptations and internal integration issues. This digital culture has emergent characteristics with roots in both online and offline phenomena. It has connections to trends and developments that predate the World Wide Web. Senior executives are in a strategic position to influence corporate culture, which is supported by ample research [9]. In the era of technology, the digitalization of businesses seems to be a common factor and is supported by digital cultures such as AI, IoT, Big data, and cloud computing. According to Wan et al. [16], top managers have a crucial yet challenging role in establishing an innovation culture, i.e., a digital culture for the digital age. A digital leader is responsible for planning and carrying out a company’s plans and creating or assisting in modifying cultures, including forming digital cultures, to increase a company’s competitiveness. The authors of a previous study also found that digital leaders influence employees’ innovative behavior [12] and enhance organizational performance.
Furthermore, digital transformation occurs through the use of computers, but organizations needs to hire computer-skilled employees to run these computers. A competent digital leader properly materializes organizational assets, achieving a high level of performance and aiding digital business strategies [5]. Successful digital businesses have strong and developed leadership skills that envision and drive transformation [34], known as digital leadership, i.e., digital leaders allow businesses to more easily incorporate digital capabilities into developing their culture and competence [35]. Therefore, digital leaders can lead their followers to improve digital capabilities and, in turn, enhance organizational performance. Holding a formal position or being a manager is not necessary to be a leader [36]. From this perspective, we predict that DL also influences employees by enhancing their digital capabilities through organizational training and learning. As a result, digitally capable employees work together to achieve better performance and sustainable organizations. Based on the above context, we propose the following set of hypotheses:
H2. 
There is a positive relationship between digital leadership and digital culture.
H3. 
There is a positive relationship between digital leadership and employees’ digital capabilities.

2.3. The Role of Digital Culture

Previous studies have highlighted the critical importance that a company’s digital culture plays in realizing the full potential of digitalization in new endeavors, and leaders significantly influence organizational culture [17,37,38,39]. The behavioral norms that define a new company’s identity are included in its culture [40]. Flat hierarchies and decentralized decision making are also permitted in digital cultures, which encourage creativity and create prospects for digital goods and services [37,41]. In addition, motivating individuals to work with a new set of technologies that may or may not be employed is a huge problem for digital leaders, given the ambiguity of the digital future. A digital culture fosters innovation and new knowledge, thus supporting the creation of new goods and services [18]. Moreover, this leads to financial and non-financial organizational performance.
Furthermore, digital culture influences behavioral changes brought by technology use within a company. This culture may consist of adaptable and sustainable skill sets that allow for failure when developing digital skills, agile and flexible working styles, an emphasis on data, and a mindset that prioritizes digital processes in new enterprises [39]. Moreover, no significant mediation effect of organizational learning culture exists between empowering leadership and open innovation [42]. However, Proksch et al. [43] found that digital culture is mediated between digital strategy and digital innovation. In other words, digital leaders should allow businesses to more easily incorporate digital capabilities into developing their culture and competence [35]. In view of previous research findings, we believe that a digital culture can mediate the interaction between DL and organizational performance. Digital culture is essential for digitalization and communication among internal and external environments. Consequently, we hypothesize the following:
H4. 
There is a positive relationship between digital culture and organizational performance.
H5. 
Digital culture positively mediates the relationship between digital leadership and organizational performance.

2.4. The Mediating Role of Employees’ Digital Capabilities

The capacity to use digital technologies is reflected in employees’ digital capabilities, expertise, and technical knowledge [44]. For instance, to apply Big data analytics, employees need to be familiar with the apps that enable them to store, process, and utilize a vast amount of data to simulate scenarios, establish networks, or develop causal explanations [43]. According to Ritter and Gemünden [45], the outcomes of such work may be utilized, for example, to enhance or develop new digital products/services or processes and, ultimately, organizational performance.
Two examples of an employee’s digital capabilities are the capacity to actively exchange information and documents through digital platforms, such as cloud services [46], and the capacity to use digital channels (such as mobile platforms and social media) to integrate digital communication processes [47]. In a study in a new venture, Proksch et al. [42] found that employees’ IT capabilities are partially mediated by digital strategies and process digitalization. Therefore, the impact of digital leadership in terms of digital products/services and processes may be strengthened by employees’ digital competencies. Employees with a high level of digital proficiency can monitor workflows in real time and can make them more visible. Thus, identifying processes that can be modified or improved using digital technology is possible [48,49]. Therefore, we assume that employees’ digital skills in the digitalized era impact digital leadership and organizational performance for sustainable organizations. Consequently, we believe that employees’ digital skills act as a mediating factor between digital leadership and organizational performance [37]. As a result, we speculate the following:
H6. 
There is a positive relationship between employees’ digital capabilities and organizational performance.
H7. 
Employees’ digital capabilities positively mediate the relationship between digital leadership and organizational performance.

3. Research Model and Methodology

In the era of digital technology, employees, leaders who are digital experts, and digital culture make an organization sustainable and competitive. Figure 1 shows the proposed model describing the effect of digital leadership on organizational performance. Moreover, it shows the mediating effect of digital culture and employees’ digital capabilities between digital leadership and organizational performance.

3.1. Sample and Data Collection

We collected these data from employees of South Korean industries, such as manufacturing, engineering, accounting/finance, human resources, supply chain/logistics, sales/marketing, services, and information technology, using an online questionnaire in Google Forms (Appendix A). We randomly selected employees who were willing to participate in this study. Out of 159 employees, we only validated 149 filled-out questionnaires for analysis. The remaining questionnaires had irregularities, so we discarded them. Therefore, the rate of usable data was 93.71%. Based on the distribution of employee characteristics, the results show that the sampled respondents were appropriately represented. The most common industry type was the manufacturing sector (32.90%), followed by the services (18.10%) and supply chain/logistics (18.10%) sectors. The results indicate that the majority of organizations had a size between 21 and 50 employees (46.30%), followed by sizes of 11 to 20 employees (27.50%) and 51 to 100 employees (17.40%).
Furthermore, the data show that organizational sizes of more than 500 employees were not common (2.00%). For employee position, the majority of respondents indicated senior staff or assistant manager (79.20%) as their job positions, 12.10% had staff positions, and those who were general managers or above belonged to 0.70%. The majority of respondents (56.40%) indicated that they had between 6 and 10 years of work experience, followed by those with 1 to 5 years of work experience (40.30%). Moreover, 2.00% indicated that they had worked in the organization for less than one year.

3.2. Measurement of Variables

Digital Leadership: Ulutas and Arslan [50] used six items [12] to measure digital leadership in the textile industry to assess employees’ perceptions of digital leadership. However, due to very low loading, we removed one item from the study: “In order to increase participation in the corporate vision, a digital leader guides the employees of the institution about the technological tools that can be used”. Therefore, in this study, we used six items for measuring digital leadership. We used the following sample item regarding digital leadership: “A digital leader raises awareness of the organization’s employees about the risks of information technologies”. We assessed each item on a five-point Likert scale (1 = strongly disagree, 5 = strongly agree).
Digital Culture: We measured digital culture using five items from the work of Proksch et al. [43], a previous study by Lukas et al. [51], and a digital culture study by Duerr et al. [18]. We used the following sample item regarding digital culture: “We openly discuss failures with all team members”. We assessed each item on a five-point Likert scale (1 = never, 5 = always).
Employees’ Digital Capabilities: We measured employees’ digital capabilities using five items from the work of Rosin et al. [52], which was originally based on technological competence and employee expertise, adopted from the work of Ritter and Gemünden [45] and Knight et al. [49] for measuring digital innovation. We used the following sample item regarding employees’ digital capabilities: “We offer different types of training (courses, literature, coaching) to improve the digital expertise of our team members”. We assessed each item on a five-point Likert scale (1 = strongly disagree, 5 = strongly agree).
Organizational Performance: We used five items to measure organizational performance in this study [53]. We used the following sample item: “Our Company is more successful than competitors”. We assessed each item on a five-point Likert scale (1 = strongly disagree, 5 = strongly agree).

3.3. Construct Validity Analysis

In this study, we examined the hypothesized model using SPSS version 23 and AMOS version 16. The analysis included convergent validity, discriminant validity, data reliability, validity measurement models, and confirmatory factor analysis (CFA). We utilized exploratory and confirmatory factor analyses to ascertain the validity. Cronbach’s alpha revealed that the measurement scales were reliable [54], with a value of >0.60 indicating excellent internal consistency [55]. Using the indices suggested by Anderson and Gerbing [56], we found that x2 = 0.000, x2/df = 1.836, GFI = 0.876, AGFI = 0.826, RMR = 0.029, RMSEA = 0.075, NFI = 0.925, CFI = 0.964, and TLI = 0.956. Based on [57,58], the values of GFI and AGFI are acceptable if they are higher than 0.8. Therefore, our model is fit. The construct validity analysis is shown in Table 1.
As shown in Table 2, for reliability, Cronbach’s alpha values range from 0.877 to 0.946, which are higher than 0.70, and the CR values are more significant than 0.70, which is in the acceptable range. In addition, for convergent validity, all constructs’ standardized factor loadings are substantial (p < 0.000). Their standardized regression estimates extend from 0.826 to 0.878 for digital leadership, from 0.812 to 0.869 for digital culture, from 0.765 to 0.848 for employees’ digital capabilities, and from 0.857 to 0.899 for organizational performance. Based on the construct reliability results and significant factor loadings, we can conclude that our model also has convergent validity [56,59]. Moreover, the AVE (average variance extracted) values for all constructs are greater than 0.60, and the results provide confidence that the study has high convergent validity [55].
Table 3 shows discriminant validity, which demonstrates that the model is correct if the AVE value of the constructed result is more than the square of the AVE of the other constructs [60]. Therefore, discriminant validity is present in our study model. As shown in Table 4, the bold elements on the diagonal are the square roots of the AVEs that are bigger than the corresponding correlation construct’s row or column.

4. Empirical Results

4.1. Structural Model

The mean, standard deviation, and correlation matrix used in this study are shown in Table 4. Employees’ experience and position are negatively correlated with organization size. However, digital leadership has a significant positive correlation with digital culture (r = 0.778, p < 0.01) and employees’ digital capabilities (r = 0.743, p < 0.01). Moreover, digital leadership has a positive relationship with organizational performance (r = 0.743, p < 0.01), and the control variables do not have any significant correlation with study model variables such as digital leadership, digital culture, employees’ digital capabilities, and organizational performance.

4.2. Testing of the Hypotheses

We used structural equation modeling with AMOS version 16 to evaluate the hypotheses. We also used a bootstrapping resampling method to examine the mediating effect and the other two hypotheses [61]. Previously, this method has been preferred over Baron and Kenny’s [62] method, which was heavily criticized [63]. A total of 1000 bootstrap samples with 95 percent bias-corrected confidence intervals were chosen [64]. The hypothesis of an indirect impact is accepted or rejected based on the lower and upper confidence interval boundaries. If the number zero is contained within the two borders, the alternative hypothesis in which the indirect influence is zero is rejected with 95% confidence. The indirect impact alternative hypothesis is chosen if no zero exists between the lower and upper ranges.

5. Conclusions and Discussions

5.1. General Discussion

We conducted the above analysis to accomplish the goals of our study. As is known, leaders are the influencers of organizational performance. Therefore, we examined the direct effect of DL on organizational performance (Figure 2). Our analysis showed that DL has a positive direct effect on organizational performance (ß = 0.743, p < 0.001). However, with mediators, the result indicates that DL is also significant (ß = 0.184, p < 0.05); therefore, H1 is accepted.
In this model, we found that DL has direct and indirect effects on organizational performance. Based on the above results, we examined the direct impact of digital leadership on digital culture (H2). The effect of digital leadership on digital culture is positive and significant (ß = 0.778, p < 0.001); therefore, we accepted H2, which is supported by a previous study [31]. Then, we found that DL positively affects employees’ digital capabilities (ß = 0.743, p < 0.001); therefore, we accepted H3.
Moreover, the hypothesized effect of digital culture on organizational performance is statistically significant (ß = 0.419, p < 0.001); therefore, we accepted H4. In addition, we accepted H5 because a significant indirect effect exists between DL and organizational performance (ß = 0.325, p < 0.01). Thus, digital culture has a partial mediating effect on the relationship between DL and organizational performance. Additionally, for measuring the effect of employees’ digital capabilities on organizational performance, we developed H6. The result shows that employees’ digital capabilities significantly and positively affect organizational performance (ß = 0.340, p < 0.001). Therefore, we accepted H6. The results also reveal that employees’ digital capabilities partially mediate the relationship between DL and organizational performance (ß = 0.253, p < 0.01); thus, we accepted H7. Consequently, we can conclude that employees’ digital capabilities play a crucial role in performance improvement and sustainability in South Korea.

5.2. Implications

Adopting new technology is a difficult task in the era of digital technology and the VUCA environment, but digital leaders can help achieve organizational sustainability smoothly. This study’s results can theoretically help us better understand the connection between digital leadership and organizational performance in South Korea. As is known, digital leadership has the influencing power of fostering digital culture and reshaping organizational environments, as digital leaders have the expertise and dynamic capability to reorganize organizational environments and ensure sustainable performance. In excellent digital culture environments, employees are empowered to employ digital technologies, and digital culture can mediate the interaction between digital leadership and organizational performance. In addition, based on Hambrick and Mason’s upper echelons theory [33], digital leadership is crucial in allocating resources to sustain business in the future [65]. Digitally skilled managers encourage their staff to adopt creative techniques, thus boosting motivation and productivity. In addition to their leadership style, leaders of businesses must be able to adjust to new technology to influence their workforce to follow current trends [12]. The results of this study shed light on the importance of digital leadership for organizational performance in a digitally advanced country such as South Korea. Implementing digital leadership supports employees’ digital capabilities and organizational performance. This study has some valuable theoretical contributions; Earhan et al. [12] suggested that DL can be used as a core variable to find other matching variables for empirical testing in the future.
Theoretically, this study contributes to both leadership behavior and the RBV theory. In this study, DL was the core variable, and organizational performance was the dependent variable. However, the results demonstrate a significant direct effect but an insignificant indirect effect on organizational performance. Moreover, this study’s results conflict with previous research [19,21,22,23] even though digital culture has a partial mediating effect on the relationship between DL and organizational performance in the South Korean context. In addition, based on El Sawy et al.’s [24] findings, digitalization enhances organizational capability. Moreover, we found that employees’ digital capabilities have a partial mediating effect that aligns with Ritter and Gemünden’s [46] research.
By examining Industry 4.0’s role in technology management, as conducting future research in the fourth industrial revolution is more efficient, this study contributes to the empirical literature. As digital leadership possesses both transformational leadership and digital skill [8], digital leadership behaviors foster the construction of a digital workplace but is not supported by concrete research [13]. In this case, the findings of this study indicate that digital culture and employees’ digital capabilities partially mediate the relationship between DL and organizational performance. This suggests that leaders’ support for improving employees’ digital capabilities increase organizational performance. Furthermore, in a digital environment, an organization’s digital culture also enhances organizational performance; therefore, organizations need to form a digital culture. Organizations in the digital transformation era demand digitally skilled leaders to influence staff to improve capabilities and to maintain a consistent digital culture for improved performance. Likewise, a firm’s futuristic, digitally professional leaders can maintain a digital cultural environment and promote the improvement of employees’ digital capabilities. Organizations should pay more attention to digitally capable employees to improve performance. The results of this study have a large contribution that is supported by digital leadership and sustainable organizational performance through digital culture.

5.3. Limitations and Future Research

This study, like previous studies, has some limitations. First, the results cannot be generalized because we only studied the manufacturing, human resource, and service industries in South Korea. Therefore, this study cannot be generalized to all industries; however, in the future, a single industry, such as the IT industry, can be studied. Moreover, future studies can test our model in different cultural contexts in other nations. Second, we used 149 respondents for our analysis; thus, future researchers can collect more data.
Moreover, we used two mediating variables to find the relationship between digital leadership and organizational performance. Future researchers can use different variables, such as digital business strategies, structures, etc. Last, we used organizational performance as a dependent variable. However, many variables are related to digital leadership. Therefore, future researchers must find new variables that are affected by digital leadership.

Author Contributions

For this research article, M.A.M. wrote and analyzed the theoretical portion, and J.C. performed data curation and writing—review and editing under the supervision of J.S. The co-authors then revised the manuscript. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

The data presented in this study are available on request from the corresponding author.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A. Questionnaire

1. Digital Leadership: Please rate whether the following statements apply to your company on a scale from 1 (strongly disagree) to 5 (strongly agree).
DL1: A digital leader raises the awareness of the employees of the institution about the risks of information technologies.
DL2: A digital leader raises awareness of the technologies that can be used to improve organizational processes.
DL3: A digital leader determines the ethical behaviors required for informatics practices together with all its stakeholders.
DL4: A digital leader plays an informative role to reduce resistance to innovations brought by information technologies.
DL5: A digital leader shares his/her own experiences about technological possibilities that help his/her colleagues to learn about the organization’s structure.
DL6: In order to increase participation in the corporate vision, a digital leader guides the employees of the institution regarding the technological tools that can be used.
2. Employees’ Digital Capabilities: Please rate whether the following statements apply to your company on a scale from 1 (strongly disagree) to 5 (strongly agree).
EDC1: We offer different training (courses, literature, coaching) to improve the digital expertise of our team members.
EDC2: Digital skills are an important selection criterion in recruiting new team members.
EDC3: Our team members use all digital services and products we offer.
EDC4: Our team has the necessary skills to further digitalize our company.
EDC5: We actively discuss our digital projects within our company, including failures and best practices.
3. Digital Culture: Please rate whether the following statements apply to your company on a scale from 1 (strongly disagree) to 5 (strongly agree).
DC1: We openly discuss failures with all team members.
DC2: Decisions are based on the opinion of the whole team, not on a single person only.
DC3: We work in cross-functional teams (combining people from IT, marketing, finance, etc.).
DC4: In our company, we avoid strong hierarchies in project work.
DC5: Every team member brings in ideas and suggestions for digital products and services.
4. Organizational Performance: Please rate whether the following statements apply to your company on a scale from 1 (strongly disagree) to 5 (strongly agree).
OP1: Compared with key competitors, our company is more successful.
OP2: Compared with key competitors, our company has a greater market share.
OP3: Compared with key competitors, our company is growing faster.
OP4: Compared with key competitors, our company is more profitable.
OP5: Compared with key competitors, our company is more innovative.

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Figure 1. Proposed research model.
Figure 1. Proposed research model.
Sustainability 15 02027 g001
Figure 2. Analyzed model.
Figure 2. Analyzed model.
Sustainability 15 02027 g002
Table 1. Construct validity analysis.
Table 1. Construct validity analysis.
Fit IndexRecommended ValueModel and Factors
Factor 1 *Factors 2 **Factors 3 ***Factors 4 ****
x2>0.05-0.0000.0000.000
x2/df<2.50-2.3482.2871.836
GFI>0.801.0000.8870.8310.876
AGFI>0.80-0.8270.7720.826
RMR<0.080.0000.0430.0430.029
RMSEA<0.080.3570.0950.9030.075
NFI>0.901.0000.9210.8910.925
CFI>0.901.0000.9530.9350.964
TLI>0.90-0.9400.9230.956
* Digital leadership, employees’ digital capabilities, digital culture, organizational performance. ** Digital leadership + employees’ digital capabilities, digital culture, organizational performance. *** Digital leadership + employees’ digital capabilities + digital culture, organizational performance. **** Digital leadership + employees’ digital capabilities + digital culture + organizational performance.
Table 2. Reliability and validity of construct.
Table 2. Reliability and validity of construct.
ConstructIndicatorsFactor LoadingStandard
Error
t-Valuep-ValueAVECRCronbach’s Alpha
Digital LeadershipDL10.826 0.0000.7780.9330.915
DL20.8780.07311.9780.000
DL50.8570.06411.1320.000
DL60.8600.00011.2550.000
Digital CultureDC20.854 0.0000.7110.8110.877
DC40.869
DC50.8120.07912.7900.000
Employees’ Digital CapabilitiesEDC10.806 0.0000.6820.8590.875
EDC20.817
EDC30.765
EDC50.8480.12610.8860.000
Organizational PerformanceOP10.899 0.0000.8110.9550.946
OP20.8570.06415.5140.000
OP30.8790.07315.9830.000
OP40.8790.05817.2190.000
OP50.8970.08016.1290.000
Table 3. Discriminant validity analysis.
Table 3. Discriminant validity analysis.
Construct1234
Digital Leadership0.882
Digital Culture0.778 **0.825
Employees’ Digital Capabilities0.743 **0.843 **0.843
Organizational
Performance
0.743 **0.828 **0.814 **0.900
** p < 0.01.
Table 4. Means, standard deviations, and correlations among variables.
Table 4. Means, standard deviations, and correlations among variables.
VariablesMeanSD12345678
1. Types of organizations4.1272.5901
2. Organization Size2.9330.9490.318 **1
3. Experience2.5700.5600.0010.263 **1
4. Employee Position1.9730.479−0.0240.234 **0.486 **1
5. Digital Leadership3.9090.7940.004−0.0060.0680.163 *1
6. Digital Culture3.6640.9190.061−0.0720.0900.164 *0.778 **1
7. Employees’ Digital Capabilities3.7260.7820.044−0.0410.1310.229 **0.743 **0.843 **1
8. Organizational Performance3.5780.8500.066−0.0550.1200.230 **0.743 **0.828 **0.814 **1
* p < 0.05; ** p < 0.01.
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Shin, J.; Mollah, M.A.; Choi, J. Sustainability and Organizational Performance in South Korea: The Effect of Digital Leadership on Digital Culture and Employees’ Digital Capabilities. Sustainability 2023, 15, 2027. https://doi.org/10.3390/su15032027

AMA Style

Shin J, Mollah MA, Choi J. Sustainability and Organizational Performance in South Korea: The Effect of Digital Leadership on Digital Culture and Employees’ Digital Capabilities. Sustainability. 2023; 15(3):2027. https://doi.org/10.3390/su15032027

Chicago/Turabian Style

Shin, Jinkyo, Md Alamgir Mollah, and Jaehyeok Choi. 2023. "Sustainability and Organizational Performance in South Korea: The Effect of Digital Leadership on Digital Culture and Employees’ Digital Capabilities" Sustainability 15, no. 3: 2027. https://doi.org/10.3390/su15032027

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