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Article

Impact of Digital Capabilities on Digital Transformation: The Mediating Role of Digital Citizenship

by
Marko Slavković
1,*,
Katarina Pavlović
2,
Tatjana Mamula Nikolić
3,
Tamara Vučenović
3 and
Marijana Bugarčić
1
1
Faculty of Economics, University of Kragujevac, 34000 Kragujevac, Serbia
2
Faculty of Project and Innovation Management, EDUCONS University, 21208 Sremska Kamenica, Serbia
3
Faculty of Management, Metropolitan University, 11158 Belgrade, Serbia
*
Author to whom correspondence should be addressed.
Systems 2023, 11(4), 172; https://doi.org/10.3390/systems11040172
Submission received: 8 February 2023 / Revised: 21 March 2023 / Accepted: 24 March 2023 / Published: 26 March 2023
(This article belongs to the Section Systems Practice in Social Science)
Browse Figure
Versions Notes

Abstract

:
The imperative of changes associated with digital transformation gave impetus to this study, which aims to examine the impact of digital capabilities and digital citizenship on digital transformation, as well as to identify the role of digital citizenship in the relationship between digital capabilities and digital transformation. Digital transformation is observed via change management and risk management, and two facets of digital citizenship are examined: information and data literacy and information security management. A survey was carried out, and respondents were managers employed in companies from various industries in Serbia. Considering the total sample of 224 valid questionnaires the PLS-SEM method was used to test the relationships in the proposed model. Results suggest that digital capabilities have a significant positive impact on change management, information and data literacy, and information security management. Results also confirm that digital citizenship mediates the relationship between digital capabilities and both change management and risk management.

1. Introduction

Digital transformation is one of the most significant business changes to prompt societal changes, thus altering old patterns of human activity, behavior, communication, and everyday routines. These changes have often been called dramatic because they entailed a transformation in present business structures and strategies for achieving a competitive advantage under new circumstances. Private companies are typically more agile in terms of digital transformation, but public companies are under pressure to follow digitalization trends in the delivery of their services, resulting in broader changes dispersed throughout society. The impact of digitization is readily apparent in the improvement of business processes or their complete transformation, the acceleration of operations, new requirements for employee training, the creation of a completely new job design with new job descriptions that incorporate digital skills, and the replacement of human labor with machines, which are all outcomes of workforce reduction. Success or failure in the era of digitalization depends largely on how human capital is managed, which is also due to the increasing interest for human–machine interaction. In addition to technical concerns and their solutions, the Industry 4.0 revolution demands employees who are creative, inventive, competent, and prepared to face challenges in the digital world.
Digital transformation (DT) affects companies on multiple levels and in different forms, reshaping traditional business models and strategies, which has repercussions for social relationships and networking [1,2]. Numerous studies addressed the distinctions and challenges posed by digitalization, such as customer demands, competitor behavior [3,4], new applications of information, communication technologies (ICT) [5], and acquired knowledge and skills [6]. To ensure success, employees must develop a “digital mindset” [7]. In other words, it is necessary to develop capabilities, such as innovativeness, intellectual agility, and a collaborative approach, and to build an organizational climate that supports digital transformation [8].
Previous studies have proved that dynamic capabilities have an important impact on the ability to effectively address digital transformation challenges [9,10]. Digital transformation requires a unique set of skills and competencies [11], including information literacy [12], information security [13], automation, cloud computing, agile approaches, and effective internal and external communications skills. Therefore, digital capabilities entail creative, critical, and safe use of information and communication technologies; empirical evidence shows that digital capabilities have a positive impact on digital innovation [14] and organizational performance [15]. Addressing the above, our conception of digital capabilities comprises applying digital technologies through a business model change. It accomplishes this study’s purpose through acquiring a more comprehensive knowledge of customer needs, developing new channels for selling and promoting products and services, or communicating with consumers. Digital capabilities defined in this way integrate technological achievements and their application in business, with the aim of establishing sustainable development and substantial changes in customer behaviors, which use a variety of digital technologies on a daily basis and focus on digital capabilities as the starting point for transformation based on digitalization. Traditional business models are increasingly losing their competitiveness and are replaced by new models that promote digital transformation.
Digital capabilities should be used in accordance with the proposed standards of responsible digital citizens’ behavior [16,17,18]. In the literature, digital citizenship is defined as the ability to manage information and interact with others using digital technologies [19]. According to the results of previous studies, digital citizenship has become an important element for successful digital transformation [20,21] while maintaining a balance between online and offline life [22]. Digital citizenship refers to safe and responsible behavior in using digital technologies [23,24]; therefore, the most common elements of digital citizenship are digital security, rights and responsibilities, digital literacy, and communication [24]. Although the essence of digital citizenship is the use of digital technology to exchange content and achieve virtual interaction, the security aspect must not be neglected. Widespread use of digital technologies offers significant benefits to users, but at the same time, opens a field of possible risks associated with their use, which is confirmed by the aforementioned research. Thus, this study incorporated two constructs related to information and data literacy and information security management in the assessment of digital citizenship.
Previous studies have focused on the drivers of digital transformation, success factors, and implications [25]. The concept of digital transformation is still relatively new, hence the primary focus of the present research was placed on digital citizenship and capabilities as the two primary drivers of transformation. Digital citizenship explains an individual’s ability to access, use, and create information in the digital environment while exercising safety-consciousness and responsible behavior [26]. Meanwhile, a set of skills and attitudes should be developed to assist individuals and companies in handling challenges caused by digitalization [27]. There is a limited number of empirical studies on the effects of employees’ capabilities on the effectiveness of digital transformation [18,28,29]. Considering the importance of digital transformation and the related concepts, the aim of this study was to investigate the effects of digital capabilities and digital citizenship on digital transformation, as supported by employees through their change management and risk management attitudes, which are inherent in digital transformation.
Digital citizenship is becoming the key to individual behaviors, integrating them in modern society based on collectively shared values [30]. Considering the requirements of digital transformation, digital citizenship focuses on education and training for developing skills and competencies that are necessary for dealing with issues in new technologies. To ensure rapid technology adoption and satisfy citizens’ needs, it is necessary to allow suggestions on directions in ensuring appropriate behaviors with contemporary digital tools [31]. Therefore, efforts are being made in education, which will provide universal access to technology and develop new literacies, mainly digital skills, in order to promote a more inclusive and engaged world [32]. Previous studies investigated the mediating role of a digital transformation strategy [33], ICT self-efficacy, ICT interest [34], and the ability to use communication technology [35], but to our knowledge, there is no evidence on the mediating role of digital citizenship. Therefore, this study extends the existing body of knowledge by exploring the mediating effect of digital citizenship on the relationship between digital capabilities and digital transformation.
The contribution of this study is the validation of the favorable impact of digital capabilities on digital transformation in the change management domain. According to the results of the statistical analysis, the development of digital capabilities enhances the capacities of the organization and its employees’ for digital transformation. The findings of this study provide an answer to the questions of how and to what extent digital citizenship influences digital transformation. In addition, an important contribution of this research is the questioning of the mediating effect of digital citizenship in the relationship between digital capabilities and constructs that represent digital transformation.
The paper is divided into several sections. After the introduction, the study includes a summary of the relevant literature and prior research on the latent variables that comprise the research model. Following this section, the study’s methodology is described, followed by the results and their analysis. Separate parts provide a discussion of the acquired results, as well as their theoretical and practical implications. In addition, the study limitations and future research directions are integrated and provided in a separate section. Finally, there is a section with the concluding remarks.

2. Literature Review and Hypothesis Development

New technologies, such as cloud computing, big data, artificial intelligence, human–machine interactions, and the Internet of Things (IoT), are disrupting and transforming businesses [36]. Legner et al. [27] state that this process of dealing with digital technologies in order to undergo organizational change is referred to as digital transformation. Digital transformation considers a broad range of changes, including cultural, organizational, and operational transformations, by integrating digital technologies, orientation, and capabilities at all levels of organization [37]. These changes refer to a fusion of advanced technologies and the integration of physical and digital systems in order to develop innovative business models and new processes that will enable the creation of smart products and services [38]. As a multidimensional phenomenon [39], digital transformation entails a wide range of changes supported by the usage and applications of technology, which will transform the existing human-driven process into a software-driven process [37].
According to the European e-Competence Framework 3.0 [40], change management and risk management are considered dimensions for analyzing the accomplished degree of digital transformation in order to evaluate organizational readiness for the transformation. Jansson and Andervin [41] note that there are several stages of digital transformation. The first stage includes changes in technology, products, services, and behavior, while the other dimensions include building a good cooperation between actors in a digital environment and the development of ecosystems that will provide the integration of hardware and software. As a result of previous assumptions in the literature, change management is important for the development of a framework for: (i) Managing the people who acquire new knowledge, values, and skills; and (ii) Adopting new behaviors [42]. The transformation affects all organizational aspects, so it is relevant to formulate directions and initiatives that will be communicated and avoid a sense of lack of vision [43]. In accordance with the above remarks, conducting risk analysis is one of the essential steps in the transformation process, and it will provide necessary information regarding communication. Apart from calculating the probability (or frequency) of a potential problem and its consequences, in the digital transformation process, it is necessary to identify the possible barriers to successful organizational change and to define the actions that should be taken in order to overcome the aforementioned obstacles [43,44].
In order to overcome obstacles in the implementation of new technological solutions, it is relevant to develop a new set of skills in the virtual environment [45]. Schnasse et al. [46] note that digital transformation should be perceived as a “holistic socio-technical challenge”, pointing to the application of technologies by people. Respecting the dynamic managerial capabilities approach [47], companies need to constantly adjust and modify their resources and capabilities in a dynamic and volatile environment to ensure sustained innovation and market survival [25]. Entrepreneurial and managerial actions are needed to adapt and change the resources, processes, and structures required when a company engages in the digital transformation process [37]. While digital transformation depends on digital technology, it will not be successful if employees do not have an appropriate set of skills and competencies [48].
According to previous evidence, human collective intelligence could lead to better organizational performance and enhance innovative capacity [49]. In correlation with the demands of digitalization, digital capabilities entail leading the development, articulation, and effective utilization of technologies and organizational resources. Digital capabilities “allow enterprises to use digital resources for innovation purposes” [50], and also enable organizations to use digital technologies as a support for decision-making [51]. According to the digital capabilities framework, there are six key areas: ICT productivity and proficiency; information, data, and media literacy; digital creation, problem-solving and innovation; digital communication, collaboration, and participation; digital learning and development; and digital identity and well-being [52].
One of the key concepts related to digital literacy refers to the competencies needed to participate and interact with digital devices such as smartphones, tablets, laptops, and desktop PCs [53]. For example, digital literacy enables entrepreneurs to connect their ventures to digital platforms [54] and to achieve improvements in efficiency and effectiveness [55]. Therefore, organizational capabilities should be developed to enhance the ability to fail, and also be agile and flexible [7]. Previous research confirms the relationship between digital capabilities and business performance [14,28,37]. The development of capabilities is one of the assumptions for successful digital transformation, while the variety of capabilities depends on the specific sector and the specific needs of a particular enterprise [28]. Organizational capabilities encompass digital capabilities, and according to the findings of Konopik et al. [29], organizational capabilities are a component of dynamic capabilities, which are the core of the digital transformation process. Moreover, digital capabilities have a positive impact on digital innovation [14]. Following previous evidence, digital transformation can be perceived as a process that changes the entire business model and must be supported by a dedicated digital strategy and the development of digital skills [37]. Carcary et al. [56] show that organizations have shifted from a process-based approach to a capability-based approach in aiming at undergoing digital transformation. Heredia et al. [15] confirm that digital capabilities positively influence business performance through digital transformation, but only in conjunction with technological capabilities. Based on a summary of prior research, it can be stated that digital capabilities are an important premise for digital transformation; however, to our knowledge, there are no studies assessing the direct effect of digital capabilities on digital transformation. Consequently, we found that a relationship should be established between digital capabilities as an independent variable and digital transformation as a dependent variable. Digital transformation as a risk-involved change implies decomposing this variable into two constructs: change management and risk management. Therefore, we present the following hypotheses:
Hypothesis 1a (H1a).
Digital capabilities have a positive direct effect on change management.
Hypothesis 1b (H1b).
Digital capabilities have a positive direct effect on risk management.
Humans, as digital users, became addicted to information and new technology; thus, they have been transformed from passive receivers to active information processors, who must engage with, construct with, respond to, and act with information and technology. As a result of certain trends, the concept of digital citizenship has emerged in the literature [19,24,30]. Jæger [20] states that the digitalization of society completely changed the lives of citizens in the way they work, communicate, and make decisions. According to Simsek and Simsek [19], digital citizenship is defined as the ability to uncover information and interact with people digitally. Initially, Mossberger [22] and Ribble and Miller [24] explained digital citizenship in terms of online access, which has evolved into safe and responsible behavior. Recently, Ribble and Miller defined digital citizenship as comprising the concepts of responsibility, rights, safety, and security. Digital citizenship is defined by UNESCO [26], which notes the ability of citizens “to locate, access, use and create information effectively, actively, critically, sensitively and ethically engage with users and content while navigating digital environments, as well as, being safety-conscious and acting responsibly”. Morandi Sheykhjan [16], Spector [17], and Oberländer et al. [18] agree that digital skills entail the creative, critical, and safe use of ICT, factors necessary for citizens to adapt to a digital environment.
Digital citizenship contains several elements, such as digital access, digital commerce, digital communication and cooperation, digital etiquette, digital governance, digital health and well-being, digital law, digital rights and obligations, and digital security and confidentiality [24,30]. Important prerequisites for these qualifications, which are important for the competencies of the digital citizen, are digital literacy and skills. In this paper, digital citizenship is presented by the constructs of: (i) Information security management; and (ii) Information and data literacy. In numerous studies conducted during previous years, it was possible to identify justifications for information literacy, media literacy, digital literacy, and data literacy. Doyle [57] explains that information literacy is “the ability to access, evaluate and use information from a variety of sources”. Pangrazio and Selwyn [58] state that data literacy entails the way “individuals might better engage with and make use of the ‘personal data’ generated by their own digital practices”.
Digital citizenship is a set of abilities that are necessary for conducting activities in the context of the digital environment in an appropriate way to evaluate information and realize the consequences responsibly [19]. In contemporary circumstances, employees should acquire digital capabilities, since digital transformation requires a special set of skills and competencies, such as automation, cloud computing, emerging technology, agile management, cyber security, and effective internal and external communications skills. Digital technologies are becoming a part of everyday life and are integrated into nearly all professions. The ability to uncover information and interact with people digitally are important determinants to deal with digital issues and to implement digital business. The development of digital technologies requires that citizens use a growing range of skills to complete a task and solve problems in the digital environment [30]. Summarizing previous research, no direct relationship between digital capabilities and digital citizenship was recorded, but the importance of developing digital citizenship, including changing the behavior of employees, was emphasized. Many facets of digital citizenship have been discussed in previous research, with a focus on those pertaining to data, information management, and security. In the interests of developing a relationship between digital capabilities and digital citizenship, we used the constructs of information security management and information and data literacy, and we present the following hypotheses:
Hypothesis 2a (H2a).
Digital capabilities have a positive direct effect on information and data literacy.
Hypothesis 2b (H2b).
Digital capabilities have a positive direct effect on information security management.
The transition from the current to the digital business model and digitalization of business processes is a complex process that goes beyond the implementation of technologies and includes all aspects of an organization. Previous studies were mainly focused on investigating digital transformation from the technological perspective, neglecting the managerial and organizational aspects [59]. In order to exploit the opportunities related to digitalization, change is necessary and it includes the transition from the current state to another state based on the implementation of digital transformation. Considering the fact that about 70% of change initiatives regarding digitalization fail [60], digital transformation is complex and risky. Keenan et al. [61] argue that the lack of communication skills, and change and risk management skills were the main reasons for the failure.
Digital citizenship enables people to overcome challenges, such as internet safety, privacy and security, relationships and communication, cyberbullying, digital footprints, self-image and identity, information literacy, and copyright. Jæger [20] argues that 60% of digital businesses would suffer major service failures due to the inability of security teams to manage digital risk. In consideration of the above, it is reasonable to suppose that information security management directly influences risk management as a part of digital transformation. According to a poll of 1500 executives conducted by Marsh and McLennan [62], 79% of worldwide executives rate cyber-attacks and threats as some of their organization’s top concerns. In addition, society is faced with a variety of crises that require a specific management approach, given that digital skills, information and data literacy, and information security management are essential components for a successful digital transformation. The role of education in the process of developing digital citizenship and enhancing the benefits of digital transformation is indisputable [30]. Coskun [63] argues that the development of literacy skills should improve students’ readiness to be more effective in the digital age, and therefore, improve preparedness for future jobs. Many institutions must invest in digital tools, devices, and technologies for learning and teaching [64] in order to assure that the students learn how to use technological solutions and acquire important knowledge [65].
Based on the above, we conclude that information and data literacy can contribute to the change brought about by digital transformation. Additionally, information security management can have a positive impact on risk management associated with digital transformation, and can contribute to a better perception of the risks related to change management in digital transformation. The establishment of links between the above-mentioned constructs is a logical outcome in the proposed research model, especially considering that no study investigating these relationships was identified in the literature. Thus, we have defined the following hypotheses:
Hypothesis 3a (H3a).
Information and data literacy has a positive direct effect on change management.
Hypothesis 3b (H3b).
Information and data literacy has a positive direct effect on risk management.
Hypothesis 3c (H3c).
Information security management has a positive direct effect on change management.
Hypothesis 3d (H3d).
Information security management has a positive direct effect on risk management.
It has been revealed that digital skills are important for maintaining the normal course of ongoing events and their interpretations [30]. Digital communication and cooperation, digital etiquette, digital governance, digital health and well-being, and digital security and confidentiality can enhance the effects of digital capabilities on the outcomes of digital transformation [24,30]. To maximize the benefits of using advanced technologies, business models based on digital technologies call for a different spectrum of skills, abilities, and competencies. Stimulating creativity and critical thinking, promoting independence, cognitive abilities, and emotional and intellectual competence, social skills are some of the competences necessary to develop citizens capable of dealing with digital issues [30]. In a time of crisis, digital citizenship contributes to the community’s understanding and individual practices, along with the changes in organizational culture that are necessary for survival [30,37]. An information-literate citizen will have the ability to be more productive and satisfied, using appropriate information and technologies [66].
Research conducted by Heredia et al. [15] confirm the positive influence of digital capabilities on firm performance, but only through the mediating influence of technological capabilities. In other studies, the mediating effect of digital citizenship was not recorded. Starting from the previously defined relations between digital capabilities and the constructs contained in the digital transformation variable, we establish relations in the research model, which include testing the mediating role of digital citizenship. Therefore, we present the following hypotheses:
Hypothesis 4a (H4a).
Information and data literacy mediates the effect of digital capabilities on change management.
Hypothesis 4b (H4b).
Information and data literacy mediates the effect of digital capabilities on risk management.
Hypothesis 4c (H4c).
Information security management mediates the effect of digital capabilities on change management.
Hypothesis 4d (H4d).
Information security management mediates the effect of digital capabilities on risk management.

3. Methodology

3.1. Sampling

Before compiling a list of firms, we voluntarily imposed two limitations on the initial sample. The first limitation relates to the exclusion of IT companies due to the industry’s specificity, which is characterized by the imminence of digital transformation, as well as the assessment that digital literacy is highly prevalent among all employees, and above average compared to companies outside this industry. Another restriction relates to the absence of public firms from the sample due to the peculiarity of the management approach and bureaucratic barriers to digital transformation implementation. We identified 3905 firms in central Serbia after applying the exclusion criteria [67]. Using the inverse square root method [68], we found that the sample must include a minimum of 147 firms. To form the initial sample, 356 firms from a variety of industries were randomly selected. The following stage involved contacting firms in order to inform them about the research and obtain their consent to participate in the study. We employed a key informant approach to present the purpose of our study and to map managers as potential online questionnaire survey participants. In compliance with the ethical standards applicable to this type of research, all potential participants were assured of their anonymity and the full academic purpose of the study. In addition, all participants were assured that the responses base and their demographic information will never be shared with a third party. Potential participants were kindly invited to complete the questionnaire, but only on a voluntary basis and within their personal available time. The 287 managers who consented to participate were given two weeks to complete the questionnaire. There was a total of 228 completed questionnaires, of which 224 were fully completed and valid for use in the study.
The structural analysis of the sample revealed that 71.4 percent of firms are in the service industry, while 28.6 percent are in the manufacturing industry. Medium-sized businesses, employing between 50 and 249 personnel, dominate the sample at 42.4 percent. They are followed by large companies with over 250 workers, which account for 23.2 percent, and small firms with 10 to 49 employees, which account for 21.9 percent. The smallest presence was micro-businesses, which employ less than 10 workers, with a participation of 12.5 percent. The structure of the sample does not reflect the structure of the population in the economy, in which small and micro firms account for 81.2% and 14.4% of the total, respectively. On the other hand, the structure of the sample in the study indicates the real economic power of the entire population, since medium-sized and large companies employ over 64.8% of the total employees and generate over 70% of the national GDP [69]. In the domain of the demographic characteristics of the respondents, the involvement of females is recorded at 58.5 percent, while the rest of the sample is made up of males. In terms of age, the dominant group in the sample is individuals over the age of 41 years at 36.6 percent, followed by those between the ages of 31 and 40 years at 32.6 percent, and those under 30 years at 26.3 percent. Graduates account for 44.2 percent of the sample, followed by respondents with a high school degree (34.4 percent), and respondents with a high school diploma (21.4 percent).

3.2. Measurements

We developed a structured questionnaire to collect the necessary data for statistical analysis. The questionnaire was divided into four sections. We employed a structured questionnaire to collect the data that are essential for statistical analysis. The questionnaire had four main components. The first section had items of independent variables, followed by items of dependent variables. The third and fourth sections of the questionnaire featured information on the firms and the respondents’ demographics, respectively.
For the purpose of observing the state of the latent variables included in the study, we employed standard measurement scales from prior studies. Specifically designed constructs and statements have a substantial predictive value, and Amankwaa et al. [70] provide evidence for this approach. The items used in the study were originally written in the English language. The initial stage after the selection of constructs was their translation into the Serbian language and further customization of their meaning to the Serbian context. To ensure the initial validity of the statement, preliminary testing was conducted on a sample of 30 respondents. After the successful testing, we concluded that the items conform to the national context and after that the sampling continued. Respondents were asked to evaluate each item on a 5-point Likert scale, from “strongly disagree“ (value 1) to “strongly agree“ (value 5). Different measuring scales were utilized for each of the study’s three primary variables. “Digital Citizenship“ comprises two constructs, information and data literacy and information security management, whereas “Digital Transformation“ consists of two constructs, change management and risk management.
Digital capabilities (DC). This construct uses six statements proposed by Westerman et al. [71]. The following are examples of statements used: “We are using digital technologies (such as analytics, social media, mobile, and embedded devices) to understand our customers better”, “We sell our products and services through digital channels”, and “Technology is allowing us to link customer-facing and operational processes in new ways”.
Information and data literacy (IDL). This construct consists of six statements, such as “I am able to formalise customer requirements”,“I am able to translate/reflect business behavior into structured information”, and “I am able to capture, storage, and analyze, data sets, that are complex and large, not structured and in different formats”. The well-known European e-Competence Framework 3.0: A shared European Framework for ICT Professionals in all industry sectors [40] provides statements for observing this construct.
Information security management (ISM). This construct consists of two items [40]: “I am able to apply relevant standards, best practices and legal requirements for information security”, and “I am able to anticipate required changes to the organization’s information security strategy and formulate new plans”.
Change management (CM). For the observation of this construct, four items [40] were used, such as “Awareness of the impact of business changes on legal issues”, and “Ability to select appropriate ICT solutions based upon benefit, risks, and overall impact”.
Risk management (RM). This construct has three statements: “Ability to communicate and promote the organization’s risk analysis outcomes and risk management processes”, “Ability to design and document the processes for risk analysis and management”, and “Ability to apply mitigation and contingency actions” [40].

4. Results and Analysis

The study’s hypotheses (Figure 1) were examined by conducting the partial least squares approach of structural equation modeling (PLS-SEM). We identified several compelling arguments that drove us to select this data processing approach. First, the study is based on a complex model composed of a large number of constructs, in which the mediator impact is assessed in addition to the direct relationships between the constructs. Second, the preliminary analysis revealed the presence of data that were not normally distributed. The selection of approach is supported by the work of Hair et al. [72], who stated that variance-based SEM demonstrates excellent performance, while working with complex research models and data with a non-normal distribution. Third, the study incorporates some of the most important aspects of research in business, management, and information systems. Each of the aforementioned research domains is well-grounded in the partial least squares approach to structural equation modeling [72,73,74]. Anderson and Gerbing [75] suggest a two-step procedure for the deployment of the aforementioned SEM approach, which we utilized for the validation of the measurement model and evaluation of the structural model’s quality. The statistical program SPSS in Version 24 was used for preliminary data preprocessing. The key indicators of the reflective model defined in the study were then calculated using SmartPLS 3.0 software.
The research model is determined by five constructs in the study: digital capabilities (DC), information and data literacy (IDL), information security management (ISM), change management (CM), and risk management (RM). Digital citizenship incorporates the concepts of information and data literacy, as well as information security management, whereas digital transformation encompasses change management and risk management.

4.1. Measurement Model Assessment

The consistent PLS algorithms procedure was ran to perform confirmatory factor analysis. It comprised all items contained in the study model’s constructs in order to test their reliability and validity. The items “I am able to gather internal and external knowledge and information needs” (IDL02) and “Ability to develop risk management plan to identify required preventive actions” (RM01) did not meet the necessary criteria and were, therefore, excluded from further calculation. The results of the proposed model’s internal consistency reliability and convergent validity analyses are reported in Table 1. According to the criteria established by Nunnally and Bernstein [76], the Cronbach’s alpha coefficient (α) is adequate for all model constructs. The composite reliability (CR) for all latent variables is significantly higher than the threshold value of 0.7 [77]. The appropriate values of the two indicators mentioned above lead to the conclusion that the study has strong internal consistency. The average variance extracted (AVE) indicator value varies from 0.639 to 0.832, and is above the cutoff value of 0.5 [78]. Collinearity statistics evaluated by the variance inflation factor (VIF) reveal that multi-collinearity does not pose a difficulty for the measurement model. As indicated, the cross-validated communality index [71] ranges from 0.436 to 0.654 and shows positive values for all latent variables. In what follows, there is a discussion on the results and how they can be interpreted from the perspectives of previous studies and the working hypotheses. Findings and their implications are discussed in the broadest context possible. Future research directions may also be highlighted.
In this study, multicollinearity is not a concern. The variance inflation factor (VIF) was utilized for assessment, and all values of this coefficient for the items employed in the study are significantly lower than 5, the maximum acceptable value. The Fornell–Larcker criteria [78] and the heterotrait–monotrait (HTMT0.85) criterion [79] were used to assess the discriminant validity.
The reason for applying both criteria is additional certainty in the validity of the constructs contained in the research model. The results shown in Table 2 verify the discriminant validity according to the Fornell–Larcker criterion, while the results shown in Table 3 prove the discriminant validity according to the heterotrait–monotrait (HTMT0.85) criterion. Summarizing the above, it can be concluded that the measurement model of our study matches the satisfactory discriminant validity.

4.2. Structural Model Assessment

To assess the strength and significance of the path coefficients, the standard PLS-SEM bootstrapping procedure was applied. For each relationship established in the research model, the bootstrapping procedure was used to calculate the two-sided bias-corrected 95 percent confidence intervals (CIs) in order to estimate the direct effect and test the corresponding hypotheses. The structural model results, lower and upper Cis, and the relationship tested on direct effects are reported in Table 4. The results of the statistical analysis reveal that digital capabilities are positively related to change management (β = 0.188, p ˂ 0.01), thus confirming hypothesis H1a, but the relation between digital capabilities and risk management is not statistically significant; therefore, hypothesis H1b is rejected. Hypotheses H2a and H2b are confirmed because a positive and statistically significant relationship was found between digital capabilities and information and data literacy (β = 0.545, p ˂ 0.001) and digital capabilities and information security management (β = 0.466, p ˂ 0.001). Additionally, empirical evidence indicates that the one-point increase in digital capabilities would increase information and data literacy by 0.545 points and increase information security management by 0.466 points, suggesting a strong predictive impact on the stated outputs. Statistical analysis indicates that information and data literacy is positively and statistically significantly associated with change management (β = 0.324, p ˂ 0.001), as well as with risk management (β = 0.334, p ˂ 0.01). Considering the above, it can be concluded that hypotheses H3a and H3b are confirmed. Hypotheses H3c and H3d are also confirmed because a positive and statistically significant relationship was found between information security management and change management (β = 0.273, p ˂ 0.01) and information security management and risk management (β = 0.466, p ˂ 0.001).
The bootstrapping procedure was also applied to evaluate the indirect effects determined by the research model. Additionally, the bootstrapping method was used to assess the indirect effects defined by the study model. The results of the indirect effects are shown in Table 5, which provides a comprehensive insight of the mediating role of information security management and information and data literacy. A statistically significant indirect effect and positive relationship between digital capabilities and change management through information and data literacy was revealed (β = 0.177, t = 3.383, p ˂ 0.01), as well as between digital capabilities and change management through information security management (β = 0.127, t = 2.840, p ˂ 0.01). Information and data literacy was found to have a positive indirect effect and intervening role in the association between digital capabilities and risk management (β = 0.182, t = 3.191, p ˂ 0.01). The same positive and statistically significant indirect effect was confirmed between digital capabilities and risk management, including the intervening role of information security management (β = 0.155, t = 3.186, p ˂ 0.01). The procedure described by Zhao et al. [80] was utilized to confirm the mediator effect. The role of information security management as a partial mediator between digital capabilities and change management and digital capabilities and risk management was validated. The partial mediating role of information and data literacy was revealed between digital capabilities and change management, while the full mediating role of information and data literacy was validated between digital capabilities and risk management. Based on the evidence presented, it is concluded that hypotheses H4a, H4b, H4c, and H4d were confirmed. In addition, this study confirms the importance of digital citizenship as a mediator in all relationships comprising the research model.
In PLS-SEM, a blindfolding procedure was used to evaluate the quality of the structural model. A cross-validated redundancy index (Stone–Geisser Q2) was utilized to confirm the predictive value of endogenous constructs. The Stone–Geisser Q2 coefficients for change management, information and data literacy, information security management, and risk management were calculated to be 0.287, 0.199, 0.175, and 0.334, respectively (Table 5). For all specified latent variables, the value of the mentioned index is positive, indicating that the structural model has good quality [81,82]. The coefficient of determination of the explained variance (R2) was determined utilizing the same constructs as previously described. The recorded values for the R2 indicator showed that 44.9 percent of change management, 29.7 percent of information and data literacy, 21.7 percent of information security management, and 42.5 percent of risk management indicate a high level of explanatory power of the proposed structural model. The goodness-of-fit (GOF) was manually calculated for all dependent and intermediate latent variables by using the square root of the multiplication of communality and R2. The GOF values for change management, information and data literacy, information security management, and risk management vary in the range from 0.195 to 0.377, and are generally in the acceptable range of 0–1. The goodness-of-fit (GOF) was manually calculated for all dependent and intermediate latent variables by using the square root of the multiplication of communality and R2. The range of acceptable GOF values for change management, information and data literacy, information security management, and risk management is between 0.195 and 0.377. Henseler et al. [83] suggest using the standard root mean square residual (SRMR) to prevent model misspecification. The proposed structural model of the current study has an SRMR value of 0.063, which is significantly below the criteria stated by Hu and Bentler [84]. It provides a concise and precise description of the experimental results, their interpretation, as well as the experimental conclusions that can be drawn.

5. Discussion

This paper proposed and tested a conceptual model of the impact of digital capabilities and digital citizenship on digital transformation, and the mediating role of digital citizenship. As important dimensions of digital citizenship, information security management, and information and data literacy were highlighted [57,58], while digital transformation was analyzed through two constructs, change management and risk management [40].
The findings in this study show the positive significant impact of digital capabilities on change management, while the impact of digital citizenship on risk management is not proven. This is one of the first studies to look at this relationship; thus, there is no supporting literature, to the best of our knowledge. The study conducted by Khin and Ho [14] contains digital capabilities as an independent variable, but it analyzed the impact of digital capabilities on organizational performance and digital innovation. Similarly, a study by Heredia et al. [15] proves the impact of digital capabilities on firm performance. The research model in the current study also contains digital capabilities as an independent variable, but this variable’s effect on digital transformation is tested. Konopik et al. [29] prove that digital capability plays a strategic role in supporting top management in pandemic circumstances, especially when organizing and implementing remote work [85]. In addition, Konopik et al. [29] highlight the importance of different organizational capabilities for different stages of digital transformation. In contrast to the aforementioned research that examines the importance of many organizational capabilities for digital transformation, our study focuses solely on digital capabilities. The results of the work of Heredia et al. [15] reveal that digital capabilities positively influence firm performance only through technological capabilities, while the research model of this paper includes digital citizenship as a mediator variable. The findings prove that digital capabilities have a relevant role in change management, which determines the effectiveness of digital transformation.
Furthermore, since “being a digital citizen” means overcoming numerous challenges, this study tested the influence of digital capabilities on dimensions of digital citizenship. After conducting the analysis, it was concluded that digital capabilities have an important positive impact on information and data literacy, as well as on information security management. These findings are consistent with the findings of an earlier study conducted by Wiesböck and Hess [30], where it was found that citizens should use a growing range of skills to fulfill tasks and solve problems in the digital environment. Next, findings of the current research show that digital citizenship has a positive direct effect on change and risk management. Although this study is the first, to our knowledge, to look at this relationship, the results imply that information and data literacy and information security management are some of the important factors that influence digital transformation in times of crisis.
The analysis in the above was conducted to identify whether there is a mediating role of the latent variables of digital citizenship. The mediation results prove that digital citizenship mediates the relationship between digital capabilities and change and risk management. This implies that digital capabilities influence change management both directly and indirectly through digital citizenship. Additionally, the empirical data reveal that digital citizenship serves as a significant mediator between digital capabilities and risk management, meaning that overcoming challenges in organizations, such as information and data literacy and information security management, is relevant in enhancing the relationship between digital capabilities and the effectiveness of digital transformation.

6. Theoretical and Practical Implications

Considering the purpose of this research, there is limited evidence in the literature on the relationship between digital capabilities, digital citizenship, and digital transformation. This study complements prior research investigating drivers of digital transformation [25]. In extending the existing body of knowledge, our study has several theoretical implications. First, we have filled the gap in the literature regarding factors that can improve the effectiveness of digital transformation. We have argued that digital capabilities and digital citizenship may enhance change management and risk management related to digital transformation practices in companies.
Another contribution has been noted in highlighting key dimensions of digital citizenship. Since digitalization announced the beginning of numerous challenges that have an impact on individuals’ professional and private life, being skilled in the domain of information and data literacy and information security management can make employees more competent for digital transformation. Additionally, to prevent failure in the digital age, it is important to protect relevant information from unauthorized activities; thus, information security management can be one of the key dimensions of digital citizenship. This study shows that these dimensions of digital citizenship can play an important role in realizing the potential of digital capabilities for implementing digital transformation.
Finally, the study findings are of importance in terms of understanding digital transformation. Since the readiness for digital transformation can be perceived differently, this research contributes to developing a unique framework for effective digital transformation, highlighting several factors that should be considered to extend the level of digital readiness. Moreover, concerning the European e-Competence Framework [40], it can be concluded that change management and risk management should be used in the assessment of the effectiveness of digital transformation.
This study’s findings provide a solid foundation for identifying various practical implications. The confirmed positive impact of information security management and information and data literacy on digital transformation suggests the possibility of fostering this process through suitable HR practices. This may be accomplished via candidate selection, training, and compensation system policies. By establishing selection criteria, it is possible to select applicants who are skilled in the domain of information and data literacy and information security management. For existing employees, targeted training can contribute to the improvement of digital citizenship that will meet the demands of digital transformation. By developing a compensation system that encourages personal development, it is possible to incentivize employees to improve their competencies to support digital transformation. Investments in the development of human capital in the domain of digital transformation can enhance the efficiency of human capital [86] and create the preconditions for value generation. For the creators of national policies, the research results indicate the need to develop digital citizenship through the education system. Investments in education that incorporate components of digital citizenship can generate a strong incentive for businesses to undergo digital transformation. In this way, conditions are established for economic development, a more prosperous society, and better individual integration. The aforementioned practical implications should be viewed largely in light of the emerging economy and the potential limitations of HR practice and education in Serbia, compared to developed countries. Additionally, the heterogeneous structure of the sample that is present in the study provides general guidelines, while it should be taken into account that the mentioned practical implications may be limited by the size of the firms or the industry.

7. Limitations and Future Research Direction

Similar to prior studies, this study has certain limitations. First, a limitation stems from the structure of the sample, which can be characterized as heterogeneous. Although organizations from the IT industry and public companies were excluded from the sample, the participation of companies from different industries can be noted as a limitation of the study. Some traditional industries continue to lack dramatic change pressure; therefore, incremental digital transformation is likely to occur. On the other hand, many industries would be on their way to extinction without digital transformation in its radical form. Second, the study model does not contain variables that are contextual to digital transformation. It is possible to include the organizational culture, the climate for implementing changes, the design of the organizational structure, and similar elements among these factors. Third, the research was conducted in Serbia, which is not among the leading countries in the development of modern technologies. This fact may suggest inferiority in digital transformation; however, in assessing the national context, it should be taken into account that Serbia is ranked in the A group of countries according to the GovTech Maturity Index (GTMI) published by the World Bank [87]. This result proves the significant progress of public administration in digital transformation, and implies that private companies are also not lagging in this change.
The limitations are a starting point for developing future research directions. In this context, the potential of conducting research with companies from a single industry or several industries with comparable characteristics is underlined. The projected sample size is a potential risk for this type of study, necessitating in-depth assessment beforehand. If the prerequisites of homogeneity and sample size are achieved, research that includes companies from different national settings might be a significant step forward. Such a study, in addition to determining the relationship between variables, would also enable a comparison between different countries of digital transformation, but in the domain of companies that would be included in the sample.

8. Conclusions

The research model presented in this study establishes a relationship between digital capabilities and digital transformation while testing the mediating effect of digital citizenship. By reviewing the literature, the mentioned variables were identified in individual previous studies; however, the model establishes relationships between variables that are not present in the existing literature, to our knowledge, thus filling the existing research gap. The variable digital citizenship was analyzed through two constructs, information security management and information and data literacy, as well as the variable digital transformation, which consists of the constructs change management and risk management. This represents a research novelty compared to previous studies, which can be an incentive for future research and improvement of the model. The findings of this study indicate that the improvement of digital capabilities contributes positively to the digital transformation in the domain related to change management. The absence of a direct impact of digital capabilities on the risk management component is compensated by the indirect impact of digital capabilities on risk management with the full mediating effect of digital citizenship. Other direct relationships between the constructs of digital citizenship and digital transformation were confirmed, indicating the importance of competencies related to information security management and information and data literacy for implementing digital transformation. As an indirect conclusion derived from the preceding discussion, it becomes apparent that digital transformation is essentially dependent on people, and that employee development plays an important role. The fusion of people and advanced technology will not be effective if it is not supported by appropriate employee competencies. In this context, the results of this study provide practical implications for digital transformation through the development of digital citizenship. Skills and abilities related to information and data literacy and information security management have a direct positive impact on both observed aspects of digital transformation, change management and risk management, respectively. Additionally, the mediating effect of digital citizenship confirms its important role in the relationship between digital capabilities and digital transformation. The results presented in this paper are based on a sample of companies from Serbia, a country classified as an emerging economy. Although the sample meets the prerequisites required by the applied statistical method, it still remains relatively small and heterogeneous. Due to the above, it can be concluded that the tested model can have limited application in developed countries that demonstrate leadership in the development and application of digital technologies. Additionally, the heterogeneity and absence of a larger participation of small firms in the sample does not give a complete insight into the applicability of the model in emerging economies. At the same time, this provides an incentive for new research that will focus on small and medium-sized firms or a specific industry.

Author Contributions

Conceptualization, M.S., K.P., T.M.N., T.V. and M.B.; methodology, M.S. and M.B.; software, M.S.; validation, M.S., K.P., T.M.N., T.V. and M.B.; formal analysis, M.S., K.P. and M.B.; investigation, M.S., K.P., T.M.N., T.V. and M.B.; resources, K.P., T.M.N. and T.V.; data curation, M.B.; writing—original draft preparation, K.P., T.M.N., T.V. and M.B.; writing—review and editing, M.S. and M.B.; visualization, M.S.; supervision, M.S.; project administration, M.B. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Data Availability Statement

The datasets generated and/or analyzed during the study are available from the corresponding author upon reasonable request.

Conflicts of Interest

The authors declare no conflict of interest.

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Systems 11 00172 g001 550
Figure 1. Research model.
Figure 1. Research model.
Systems 11 00172 g001
Table
Table 1. Measurement model and constructs.
Table 1. Measurement model and constructs.
Construct and Item DescriptionConvergent ValidityVIFComposite ReliabilityαAVECross-Validated Communality Index (H2)
DC: Digital Capabilities 0.9140.8860.6390.490
DC010.7922.331
DC020.8533.106
DC030.8022.658
DC040.8562.945
DC050.7211.649
DC060.7641.828
Digital Citizenship
IDL: Information and Data Literacy 0.9260.9040.6770.528
IDL010.7952.081
IDL020.8012.363
IDL030.8732.890
IDL040.8202.313
IDL050.8112.531
IDL060.8322.821
ISM: Information Security Management 0.9080.7980.8320.423
ISM010.9071.790
ISM020.9181.790
Digital Transformation
CM: Change Management 0.8820.8220.6530.422
CM010.7571.715
CM020.7631.735
CM030.8582.722
CM040.8492.652
RM: Risk Management 0.9250.8780.8040.570
RM010.8832.218
RM020.9052.547
RM030.9012.508
Table
Table 2. Discriminant validity (Fornell–Larcker criterion).
Table 2. Discriminant validity (Fornell–Larcker criterion).
Constructs12345
1. CM: Change Management0.808
2. IDL: Information and Data Literacy0.6120.823
3. ISM: Information Security Management0.5810.6790.912
4. DC: Digital Capabilities0.4920.5450.4660.799
5. RM: Risk Management0.7000.5980.5920.4070.896
Table
Table 3. Discriminant validity (HTMT0.85 criterion).
Table 3. Discriminant validity (HTMT0.85 criterion).
Constructs12345
1. CM: Change Management–
2. IDL: Information and Data Literacy0.703
3. ISM: Information Security Management0.7130.797
4. DC: Digital Capabilities0.5700.6020.549
5. RM: Risk Management0.8170.6680.7050.458–
Table
Table 4. Results of testing the hypothesis: direct effects.
Table 4. Results of testing the hypothesis: direct effects.
RelationshipPath Coefficientt-Value95% CIs (Bias Corrected)Results
DC → CM0.188 **3.257[0.069, 0.285]Supported
DC → RM0.0701.133[−0.066, 0.187]Not supported
DC → IDL0.545 ***10.470[0.442, 0.640]Supported
DC → ISM0.466 ***8.096[0.349, 0.568]Supported
IDL → CM0.324 ***3.656[0.165, 0.506]Supported
IDL → RM0.334 **3.343[0.150, 0.546]Supported
ISM → CM0.273 **3.008[0.096, 0.449]Supported
ISM → RM0.332 **3.380[0.132, 0.517]Supported
Notes: CM: change management; IDL: information and data literacy; ISM: information security management; DC: digital capabilities; RM: risk management. ** p ˂ 0.01; *** p ˂ 0.001.
Table
Table 5. Results of testing the hypothesis: indirect effects.
Table 5. Results of testing the hypothesis: indirect effects.
RelationshipPath Coefficientt-Value95% CIs (Bias Corrected)Results
DC → IDL → CM0.177 **3.383[0.088, 0.300]Supported
DC → ISM → CM0.127 **2.840[0.046, 0.225]Supported
DC → IDL → RM0.182 **3.191[0.082, 0.304]Supported
DC → ISM → RM0.155 **3.186[0.057, 0.258]Supported
Stoner-Geisser Q2R2GOF
Change Management0.2870.4490.359
Information and Data Literacy0.1990.2970.243
Information Security Management0.1750.2170.195
Risk Management0.3340.4250.377
SRMR0.063
Notes: CM: change management; IDL: information and data literacy; ISM: information security management; DC: digital capabilities; RM: risk management. ** p ˂ 0.01.
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MDPI and ACS Style

Slavković, M.; Pavlović, K.; Mamula Nikolić, T.; Vučenović, T.; Bugarčić, M. Impact of Digital Capabilities on Digital Transformation: The Mediating Role of Digital Citizenship. Systems 2023, 11, 172. https://doi.org/10.3390/systems11040172

AMA Style

Slavković M, Pavlović K, Mamula Nikolić T, Vučenović T, Bugarčić M. Impact of Digital Capabilities on Digital Transformation: The Mediating Role of Digital Citizenship. Systems. 2023; 11(4):172. https://doi.org/10.3390/systems11040172

Chicago/Turabian Style

Slavković, Marko, Katarina Pavlović, Tatjana Mamula Nikolić, Tamara Vučenović, and Marijana Bugarčić. 2023. "Impact of Digital Capabilities on Digital Transformation: The Mediating Role of Digital Citizenship" Systems 11, no. 4: 172. https://doi.org/10.3390/systems11040172

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