DIGITAL CAPABILITIES AND INNOVATION PERFORMANCE IN PAKISTAN: THE ROLE OF EMPLOYEE ENGAGEMENT

Abstract

The increasing pace of technological advancement and globalization has compelled organizations to develop strong digital capabilities to remain competitive in today's business environment. Digital capabilities refer to an organization's ability to acquire, integrate, and utilize digital technologies, resources, and competencies to improve business processes and create value. The study examines how digital capabilities (Cloud Computing Adoption (CCA), Cybersecurity Capability (CC), AI-based Decision Support Systems (ADSS), and Digital Transformation (DT) affect the Innovation Performance (IP) in organizations in Pakistan. The research uses quantitative method, and 350 employees were the subjects. Data was analyzed using PLS-SEM and examined with mediation of Employee Engagement (EE) and moderation of Organizational Digital Culture (ODC). All digital capabilities were found to positively influence innovation performance both directly and indirectly, via employee engagement. Organizational digital culture plays significant moderating role between employee engagement & innovative performance. The results indicate that technological integration should go hand-in-hand with human-centered engagement and positive digital culture to maximize innovative outcomes.