Dynamic Capabilities and Digital Transformation Performance: The Role of Organizational Agility in the Public Sector

This study investigates the role of dynamic capabilities, organizational agility, digital literacy, and leadership support in influencing digital transformation performance within the public sector. Drawing on the Dynamic Capability View (DCV), the research proposes an integrated model in which organizational agility mediates the relationship between dynamic capabilities and performance, while digital literacy and leadership support act as moderating variables. Data were collected from 123 civil servants at the Aceh Civil Service Agency (BKA) using a census approach and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results reveal that dynamic capabilities—comprising sensing, seizing, and reconfiguring—do not have a significant direct effect on digital transformation performance. However, they significantly enhance organizational agility, which in turn has a strong and significant impact on performance. Mediation analysis confirms that organizational agility fully mediates the relationship between dynamic capabilities and digital transformation performance, highlighting its central role as a translation mechanism. In contrast, the moderating effects of digital literacy and leadership support are found to be statistically insignificant, suggesting that these factors function more as enabling conditions than as direct amplifiers of performance relationships. These findings extend the Dynamic Capability View by emphasizing the importance of organizational-level mechanisms in realizing the value of strategic capabilities. Practically, the study underscores the need for public organizations to prioritize agility—through flexible structures, rapid decision-making, and process integration—over purely technological or skill-based interventions. Ultimately, the study demonstrates that successful digital transformation is fundamentally an organizational challenge rather than a technological one.