Prediction of Innovation Capability: the Role of Mediation in the Relationship between Digital Transformation and Competitiveness with the PLS-SEM Model

Abstract

This study explores the mediating role of innovation capabilities (IC) on the relationship of digital transformation (DT) and competitiveness (CP), by proposing model construction. Four research questions and four hypotheses were posed. The survey method was carried out by distributing research instruments to 98 respondents, the collected data was used to analyze the relationship between digital transformation, innovation ability and competitiveness, also used to test hypotheses. Evaluation of predictions through structural equation models with partial least squares-structural equation modeling (PLS-SEM). Research findings, show that DT directly has a significant positive effect on CP. DT has a significant positive effect on IC. The IC has a significant positive influence on CP. IC are proven to have a mediating effect on the influence of DT on CP. The contribution of this research broadens the horizons on the effectiveness of highly competitive businesses in this era, where digital transformation capabilities, digital skills and innovation capabilities must be prepared.