Organizational Inertia, Digital Capabilities, Digital Transformation, and Firm Competencies

Abstract

Research Aims: This research aims to look at the impact of organizational inertia on digital capabilities and digital transformation to optimise firm competencies. Design/Methodology/Approach: The dataset was produced through a quantitative survey of 125 Indonesian businesses using the Structural Equation Model (SEM) to analyse the data. Research Findings: The results of this study indicate that digital capabilities and digital transformation indirectly impact business competencies due to organizational inertia. While organizational inertia affects digital capabilities but not digital transformation, the latter affects both a firm's skills. Theoretical Contribution/Originality: This study contributes to the literatures on organizational behaviour and strategic management by investigating the impact of organizational inertia on the achievement of digital transformation and its impact on firm competencies. Managerial Implication in the South East Asian context: The research findings embrace digital transformation practices by enhancing firms' digital capabilities, particularly in digital transformation response, digital opportunity identification, innovative digital technology product development, acquisition, and mastery of cutting-edge digital technologies. Research Limitation & Implications: The findings of this study reflect the conditions of numerous enterprises operating in several industry sectors in Indonesia during the chaotic post-COVID-19 pandemic period. Furthermore, the survey respondents represent a diverse range of businesses at varying stages of digital transformation implementation. Keywords: Inertia, Digital Capabilities, Digital Transformation, Firm Competencies