Digital Leadership and the Innovation Process in Libyan Organizations: The Mediating Roles of Technological Readiness and Organizational Sustainability

Abstract

Digital transformation has become essential for organizations seeking long-term sustainability, innovation, and resilience. However, empirical evidence from developing countries remains limited, particularly in oil-dependent economies where modernization and diversification are often constrained by weak institutions and governance challenges. To address this gap, this study examines the relationship between digital leadership (DL) on the innovation process (IP) in Libyan organizations, with technological readiness (TR) and organizational sustainability (OS) as mediating mechanisms. Using a quantitative research design, data were collected through a structured questionnaire from 423 employees and managers working in medium and large organizations across key sectors, including energy, banking/finance, telecommunications, and other service industries. Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) were used to validate the measurement model, followed by Structural Equation Modeling (SEM) to test the hypothesized relationships. The results show that DL is significantly associated with TR and OS, but does not have a significant direct association with IP. Instead, significant indirect associations between DL and IP were observed through TR and OS, suggesting that the relationship between DL and innovation is linked with technological readiness and sustainability-oriented organizational capabilities. The study contributes to the literature by showing that DL functions as an enabling strategic capability rather than merely as a managerial approach to technology adoption. Its association with IP was observed primarily through the indirect relationships involving TR and OS, suggesting that transferable digital leadership practices may support broader organizational transformation by strengthening the capabilities through which innovation is generated and implemented.