Impact of Digital Transformation on Organizational Culture within Saudi Enterprises: The Mediating Roles of Leadership Styles

doi:10.21203/rs.3.rs-4976726/v1

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Impact of Digital Transformation on Organizational Culture within Saudi Enterprises: The Mediating Roles of Leadership Styles

https://doi.org/10.21203/rs.3.rs-4976726/v1

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The main aim of the study was to investigate the impact of digital transformation on organizational culture and the roles played by leadership styles in mediating this impact. The researcher adopted the descriptive-analytical approach as the most suitable methodology for the study. The sample was selected using stratified random sampling from employees working in Saudi business organizations. The researcher used the questionnaire as the main instrument for data collection. The results of the study demonstrated a positive impact of digital transformation on organizational culture in various Saudi institutions. Furthermore, the research results showed an impact of digital transformation on organizational culture in light of leadership styles as mediating variables.

Management

Digital Transformation

Organizational Culture

Leadership Styles

The digital age has significantly altered the way people live, work, and communicate. Technological breakthroughs have allowed them to interact with others from all over the world, access huge reservoirs of knowledge, and automate a wide range of tasks (Bozkus, 2023; Khawaji, 2023). Digital transformation has made a significant change in how firms operate and interact with their customers, partners, and staff. It entails using digital technologies to develop new business models, increase efficiency, improve consumer experiences, and gain a competitive advantage. Digital transformation emphasizes the integration of digital technology tools into every facet of corporate operations. If this action is successful, it will drastically alter how a firm runs, improve teamwork, maximise productivity, and add value for consumers (Lan, 2021).

Companies must give priority to their digital transformation endeavours to maintain their competitiveness and market position. A comprehensive strategy that takes into account factors like flexibility, change management techniques, ongoing evaluation, knowledge acquisition, interdepartmental cooperation, and organisational culture is necessary for effective digital transformation (Deep, 2023). A company's principles and practices that contribute to its distinct social and psychological environment are referred to as its organisational culture. The expectations, experiences, philosophy, and values that sustain an organisation are embodied in its self-image, internal operations, relationships with the outside world, and aspirations for the future. These elements make up organisational culture (Kalaichelvi, Antony & Vimalanathan, 2017).

If these elements are included in strategic efforts, organisations may effectively navigate the challenges posed by digital transformation. With an appropriate strategy and mindset, digital transformation can be a great catalyst for the development and success of an organisation (Reisberger et al., 2024). Based on what has been mentioned above, one can conclude that an essential component of an organization's digital transformation strategy is its culture. It is a vital part of digital transformation and necessitates the development of critical skills, traits, and mindsets to foster openness and acceptance among managers and staff and help organisations adjust to the change (Kocak & Pawlowski, 2022; El Din, 2023).

During digital changes, staff cooperation and communication can be influenced by organisational culture. If the company encourages cooperation and values cross-functional teamwork, then employees are more likely to work together, exchange knowledge, and assist one another while implementing new procedures and digital tools. Employee beliefs affect their attitudes, behaviours, and ways of thinking about implementing new technology. When values align with the goals of digital transformations, they may improve change management, empower individuals, foster employee engagement, and provide a supportive environment for learning and development (Elmetwaly, 2023).

Leaders are essential in creating a culture that values technological transformation and welcomes innovation while maintaining a careful balance between using emerging technology and respecting the organizational culture. Organisations all across the globe are dealing with quick and intricate changes in technology, business procedures, and workplace culture as they continue into the digital transformation age. Organisations must have proactive and effective leadership in managing digital transformation to overcome these issues. By doing this, businesses may establish a setting that is inclusive, supportive, and resilient for all parties involved (Bozkus, 2023; Muktamar et al., 2023).

In today's rapidly changing business environments, successful leadership is acknowledged as essential to an organization's success. A crucial component of leadership that has received a lot of attention is the leader's capacity to adjust to and impact the culture of the organisation (Albogami, Sharawi & Khan, 2024). As digital transformation becomes a reality, organisational routines demand leaders to comprehend the nature of organisational change processes to minimise and prevent user resistance and provide the best performance (Almatrodi & Skoumpopoulou, 2023). The prevailing organisational culture and the implementation of digital transformation can be impacted by varied leadership styles such as transformational and contingency styles (Gunasilan, 2022).

Statement of the Problem

Digital transformation encompasses more than just a company's use of digital technology. Nonetheless, it entails modifications to a company's business model, tactics, and culture. However, the effects of digital transformation on organisational culture have not been well investigated (Pfaff et al., 2023). There are few assessments on digital transformation in businesses that deal with organisational culture (Reisberger et al., 2024). Though research on digital transformation is advancing, there is still a dearth of studies on the human side of digital transformation, notably about the leadership styles needed to successfully instigate and propel organisational transformation in the context of the digital era (Schiuma et al., 2024). In the Kingdom of Saudi Arabia, business models are changing as a result of innovative technology and practices. Digital transformation helps achieve Vision 2030's objectives for a more sustainable and greener future by improving resource management, lowering carbon emissions, and encouraging eco-friendly behaviours. Through digital transformation initiatives, Saudi organizations can attain their goals of prosperity, growth, and sustainable development in the 21st century by promoting environmental sustainability, driving economic diversification, improving competitiveness, promoting social development, and fostering innovation (Alnasser et al., 2024). Currently, public organisations are evaluated by the Saudi government according to how well they meet certain digital transformation goals. Additionally, organisational culture plays a critical role in affecting performance in Saudi organizations (Almatrodi, 2024). Almdani et al. (2022) have revealed that the organisational culture of Saudi organisations is impacted by the digital revolution. One important factor that might affect the growth and accomplishment of the goals of digital transformation is the company's culture. Despite the significance of both digital transformation and organizational culture in Saudi business environments, there is a lack of studies dedicated to investigating the effect of digital transformation on organizational culture and the mediating roles played by leadership in this process.

Questions of the Study

The main questions of the study can be reviewed as follows:

Is there a statistically significant effect at a significance level (α ≤ 0.05) of digital transformation on organizational culture in Saudi organizations?
Is there a statistically significant effect at a significance level (α ≤ 0.05) of leadership styles on organizational culture in Saudi organizations?
Is there a statistically significant effect of leadership styles as mediating variables on the relationship between digital transformation and organizational culture within Saudi organizations?

Objectives of the Study

The objectives of the study can be shown as follows:

Verifying the existence of any statistically significant effect at a significance level (α ≤ 0.05) of digital transformation on organizational culture in Saudi organizations.
Exploring the statistically significant effect at a significance level (α ≤ 0.05) of leadership styles on organizational culture in Saudi organizations.
Revealing the statistically significant effect of leadership styles as mediating variables on the relationship between digital transformation and organizational culture within Saudi organizations.

Hypotheses of the Study

The hypotheses of the study can be investigated as follows:

There is a statistically significant effect at a significance level (α ≤ 0.05) of digital transformation on organizational culture in Saudi organizations.

There is a statistically significant effect at a significance level (α ≤ 0.05) of leadership styles on organizational culture in Saudi organizations.

There is a statistically significant effect of leadership styles as mediating variables on the relationship between digital transformation and organizational culture within Saudi organizations.

Significance of the Study

The significance of the study revolves around adding to the body of knowledge on the connection between organisational culture and digital transformation, which is a rapidly developing and significant field of study. The study can provide a more thorough knowledge of the intricate dynamics involved in the digital transformation of organisations by looking at the mediating roles of leadership styles. Understanding how organisational culture, leadership styles, and digital transformation interact may help organizations create plans and policies that effectively handle the cultural shifts brought about by the process of digital transformation. The investigation of the mediating effects of leadership styles in the study might help Saudi businesses create leadership development and training initiatives that take into account digital transformation objectives and organizational culture roles. Organisations may develop the leadership qualities required to support successful digital projects by understanding the crucial role that leadership plays in forming organisational culture throughout digital transformation.

Definitions of the Study

i. Digital Transformation

The term digital transformation describes how an organization's work routines, procedures, structure, and culture are altered as a result of integrating digital technology like automation and data analytics (Almatrodi & Skoumpopoulou, 2023). Digital transformation is viewed as a drastic change that enhances performance by impacting an organization's services, products, and processes (Spyridon, 2023). In the current study, digital transformation refers to the strategic and complete adoption of digital technology and technical processes to completely change how Saudi enterprises work, communicate with consumers, and achieve their business goals.

ii. Organizational Culture

The collective behaviour of individuals inside an organisation is known as organisational culture (Praveena & Fonceca, 2023). Organisational culture has a significant impact on organisational management at all levels, from the individual to the overall, due to its collaborative and collective patterns (Morelli & Wang, 2020). Individual behaviour inside a Saudi organization is guided by shared values, beliefs, norms, and practices. This culture is influenced by both universal ideals and the Kingdom's distinct cultural environment, which includes Islamic beliefs, familial relationships, hierarchical systems, gender roles, and hospitality.

Many countries are leveraging digital transformation to enhance productivity and organizational performance. In Saudi Arabia, this transformation is pivotal to the Saudi Vision 2030 plan (Alojail et al., 2023). The government promotes technology as a cornerstone of economic development (Gadi, 2021). Consequently, digital transformation is reshaping the global business environment, with Saudi Arabia integrating it as a central element of its Vision 2030 strategy. This shift, driven by technologies such as cloud computing, artificial intelligence, and the Internet of Things (IoT), aims to advance economic diversification, competitiveness, and social development. Effective leadership, collaboration, and innovation are essential for harnessing these technologies. Saudi Arabia's focus on digital transformation is crucial for achieving Vision 2030's goals, aiming to boost productivity, drive economic growth, and foster social progress, thereby aligning with its strategic objectives for a sustainable future.

i. Digital Transformation

Digital transformation is a critical and evolving concept in the modern business landscape, reflecting how organizations adapt to and leverage new technologies to drive growth and innovation. As businesses navigate an increasingly digital world, understanding digital transformation becomes essential. In the following section, we will explore various definitions of digital transformation, providing a comprehensive overview of its scope and impact. This presentation will highlight how digital technologies reshape business systems, processes, technology, and organizational culture, offering insights into the fundamental aspects of digital transformation:

According to Surianarayanan (2020), digital transformation is defined as the process of leveraging digital technologies and integrating them across all areas of a business to fundamentally reshape four key aspects: systems, processes, technology, and the people within the enterprise.

While Gašperlin et al., (2021) indicated that digital transformation refers to the process of redefining how enterprises conduct business by utilizing digital technology. It involves altering existing organizational processes both within and between organizations.

In summary, digital transformation is a comprehensive process that fundamentally redefines how businesses operate by integrating digital technologies across all facets of the organization. Whether through reshaping systems, processes, and technologies or by altering internal and external organizational processes, digital transformation is about leveraging digital tools to drive significant change and innovation within enterprises.

Digital transformation is not merely a one-time event or the simple adoption of new technologies; it requires a profound shift in how organizations function. This shift involves redefining existing paradigms and models, empowering the organization, and bolstering its competitive position. The ultimate goal of digital transformation is to cultivate greater innovation within the organization, allowing it to transcend routine processes and focus on achieving broader strategic objectives. By fully embracing this transformation, organizations can position themselves to thrive in an increasingly dynamic and digital landscape (Alshammari, 2023).

As indicated by Surianarayanan, (2020) digital transformation involves the application of digital technologies across all areas of a business, fundamentally reshaping systems, processes, technology, and people to create new opportunities. This transformation provides several significant benefits:

Lower Investment Costs: By optimizing processes and leveraging technology, businesses can reduce their investment expenditures.
Enhanced Financial Performance: Digital transformation often leads to improved financial results through increased efficiency and effectiveness.
Increased Employee Productivity: Implementing digital tools and processes boosts employee productivity by automating routine tasks.
Better Customer Experience: Advanced technologies enable businesses to meet customer expectations more effectively and provide a superior experience.
Improved Interoperability: Enhanced systems and technology improve the integration and interaction between different parts of the organization.

According to the Diffusion of Innovations theory, potential adopters initially lack awareness of an innovation. At this early stage, the innovation-decision process model emphasizes the use of effective communication channels to raise awareness and move potential adopters to the knowledge stage. Once aware, potential adopters actively seek information about the possible impacts of adopting the innovation, which shapes their attitudes toward its attributes during the persuasion stage. The theory suggests that having sufficient practical knowledge about the innovation is crucial for progressing to the next stage, where the adoption decision is ultimately made (Brandt, 2018).

The transformative impact of digital transformation in Saudi Arabia, aligned with Vision 2030 objectives, is significant. Leadership, collaboration, and innovation are pivotal for success. Embracing digital technologies offers opportunities for economic diversification, enhanced competitiveness, and social development. Continuous monitoring and adaptation are essential to navigate the evolving digital landscape effectively. Overall, digital transformation holds promise for Saudi Arabia's future, fostering inclusive growth and sustainable development in line with Vision 2030's aspirations. Technological advancements like cloud computing, artificial intelligence, and the Internet of Things (IoT) offer organizations unparalleled opportunities to streamline operations, optimize processes, and develop innovative products and services. These technologies act as catalysts for digital transformation, enabling organizations to boost efficiency, productivity, and agility in an ever-evolving business environment (Alnasser et al., 2024. P.24).

ii. Organizational Culture

Organizational culture is a fundamental aspect of any organization, encompassing the shared values, beliefs, and norms that influence how employees behave and interact within the workplace. It serves as the underlying framework that guides decision-making and shapes the overall environment of an organization. In the following section, we will explore various definitions of organizational culture provided by different researchers, offering a comprehensive understanding of how this concept has been interpreted and its significance in shaping organizational behaviour:

According to Kumar & Hamid (2021), organizational culture refers to the values and norms of behaviour that are accepted and understood by every member of the organization, it is used as a basis for behaviour in the organization. While Abbas (2023) defined organizational culture as encompassing the beliefs and values that employees have embraced over time. These values shape their expectations of work and significantly influence their behaviour and attitudes in the workplace. Finally, Mohamed (2023) stated that organizational culture refers to the shared values and beliefs among members of an organization, initially established by the leader and then communicated and reinforced through various methods to shape employee behaviour and their understanding of the organization's mission and goals. Organizational culture is typically measured across three dimensions: employee orientation, customer focus, and responsibility.

Organizational culture consists of the values that are deeply embedded within an organization or company, serving as guiding principles for its members in their daily activities. These cultural guidelines, whether formally documented or informally understood, can vary in strength depending on certain organizational variables. These variables include employee adherence to regulations, individual commitment to achieving goals, and the ability to meet work targets within set deadlines. Since organizational culture is closely linked to the work environment, it significantly influences employee performance. In the absence of a strong organizational culture, employees may struggle to fulfil their responsibilities effectively due to a lack of commitment and clarity. A robust organizational culture, on the other hand, fosters, enhances and sustains high performance. The stronger the organizational culture, the higher the level of employee performance (Amran & Setyanegara, 2021).

Organizational culture is crucial to the functioning of an organization, making it a topic of significant interest not only to researchers and scholars but also to companies and their managers. As one of the most complex aspects of change management, organizational culture consists of both formal and informal elements. Importantly, these cultures are neither static nor uniform; they evolve over time (Alfadhili et al., 2023).

Organizational culture is shaped by the foundational philosophy upon which the organization was established. This culture significantly influences the criteria for evaluating employee performance. The actions of top management play a crucial role in defining what behaviours are deemed acceptable or unacceptable within the organization. The effectiveness of employee socialization depends on how well the values of new employees align with the organization's values during the selection process and the preferences set by top management (Permana, 2020).

Organizational culture encompasses the values that emerge within an organization and guide the behaviour of its members. It is a fundamental aspect of any company, often associated with the shared values, norms, attitudes, and work ethics among the organization’s components. These elements are essential for assessing employee quality, influencing their thinking, collaboration, and interaction with the environment. A strong organizational culture can enhance employee performance and contribute significantly to the company’s success, as it provides clear direction for employees in fulfilling their responsibilities (Mulyaningrum et al., 2022).

Organizational culture is a crucial and highly strategic factor in the growth and advancement of organizations across various sectors, including business, government, educational organizations, and socio-religious organizations. Rather than existing naturally, organizational culture must be deliberately created, maintained, strengthened, and sometimes adapted to meet both internal and external demands. It plays a significant role in shaping organizational effectiveness (Ningsih, 2022).

According to Ilie et al., (2020), organizational culture is a fundamental and intangible element within a company, characterized by several key attributes:

Intangible and Immeasurable: Organizational culture is an abstract system of shared values that cannot be easily quantified but significantly influences company dynamics.
Complex System of Shared Values: It represents a network of unwritten rules and collective norms that guide employees' daily behaviours and interactions.
Collective Thinking and Norms: The culture encompasses the shared attitudes, beliefs, and norms within the organization, which can also be observed by external market players.
Origins and Evolution: It originates from the company's founding, often influenced by its shareholders or top management in the case of multinationals.
Distinctive Environment: The culture is established by creating a unique environment or atmosphere that distinguishes the company and enhances its market recognition.
Presence of Subcultures: Alongside the overarching organizational culture, various subcultures may exist within different roles or departments, each with distinct characteristics but aligned with the broader organizational culture.

In addition, Jafari et al., (2023) indicated that when organizational culture aligns with organizational objectives, it enhances the organization’s efficiency and effectiveness. Characteristics of Organizational Culture include:

Values & Belief: Shared understandings within the organization.
Assumptions
Organizational culture within the organization is characterized by underlying assumptions
Norms: guidelines within the organization.

Goals: Common objectives that the organization strives to achieve.

Lastly, Ramos & Ellitan, (2022), indicates that the characteristics of organizational culture are:

System of Shared Meanings: Organizational culture is defined by a system of shared meanings held by members, which distinguishes the organization from others.
Observable Way of Acting: The culture is characterized by an observable way of acting exhibited by all members of the organization.
Existence of Norms: The culture includes norms that set standards of behaviour for members.
Rules and Regulations: Some specific rules and regulations bind all members of the organization.
Organizational Climate: The culture is marked by an organizational climate, which is the interaction between individuals and their environment, influencing their perceptions, impressions, and feelings.
Habits and Traditions: The current habits, traditions, and general ways of doing things within the organization are the results of past actions.
Founders' Influence: The highest source of an organization's culture is its founders, whose actions and decisions have shaped the culture.

According to the Resource-Based View (RBV), a firm's unique set of resources and capabilities is crucial for achieving and maintaining a competitive advantage. In terms of organizational culture, RBV emphasizes the importance of a strong and well-aligned culture as a valuable resource that can influence employee behaviour and decision-making (Alateeg & Alhammadi, 2024).

iii. The impact of digital transformation on organizational culture in light of leadership styles

This section explores the impact of digital transformation on organizational culture, with a particular focus on the influence of leadership styles. Digital transformation presents significant challenges for organizations, requiring a fundamental rethinking of organizational structures and internal processes to adapt to rapid technological and market changes. In this context, leadership plays a crucial role in steering this transformation and shaping an organizational culture that embraces innovation and achieves sustainable success.

Organizational culture is a critical aspect of any organization. It can be understood through seven key indicators: willingness to take risks, attention to detail, results orientation, people orientation, team orientation, aggressiveness, and stability (Rauf et al., 2020). Organizational culture is composed of three elements: external adaptation tasks, internal integration tasks, and fundamental underlying assumptions (Setiono et al., 2022).

Organizational culture is shaped by its people, processes, and technology. It reflects the organization's integrity, development, future vision, social influence, and brand value. As rapid digitalization transforms how we work, communicate, prioritize customer value, and plan for the future, it inevitably impacts our organizational structures, both directly and indirectly, necessitating ongoing adaptation. However, swiftly altering an established culture is challenging and can sometimes negatively affect employee trust, performance, and internal corporate dynamics (Dash & Gatharia, 2015).

Digital transformation involves the application of digital technologies across all areas of a business, fundamentally altering business processes to create new opportunities for meeting customer expectations, adapting to evolving business needs, and responding to dynamic market trends. At its core, digital transformation is the process of reshaping a business's systems, processes, technology, and people (Firican, 2023).

In the digital era, organizations face an unparalleled shift in the global business landscape, driven by rapid technological advancements. To stay competitive and achieve sustainable growth, businesses must embrace digital transformation, which integrates digital technologies into their processes, culture, and customer interactions, creating new value and opportunities. Leadership plays a pivotal role in steering this transformation and fostering innovation within organizations, making it a critical factor in the successful integration of digital practices and the evolution of organizational culture (Yansen & Yujie, 2023). Digital transformation goes beyond simply adopting and utilizing new digital technologies; it involves a comprehensive organizational shift driven by the integration of digital knowledge, fostering a culture that embraces rethinking work processes, and adopting new practices and business models. Leaders play a vital role in shaping the organizational culture and environment, essential for cultivating, developing, and managing digital knowledge (Schiuma et al., 2024).

A study conducted by Malik et al., (2024) indicated that specific leadership traits—agility, participation, innovativeness, and openness—along with democratic and transformational leadership styles, and a strong foundation in cognitive, social, technological, and digital skills, are instrumental in driving business model innovation and organizational change. These qualities are crucial for the successful digital transformation of organizational culture.

In conclusion, the effect of digital transformation on organizational culture within Saudi enterprises is profound, with leadership styles playing a critical mediating role. Digital transformation necessitates a comprehensive shift in organizational structures, processes, and culture to adapt to rapid technological advancements and evolving market demands. Effective leadership is essential in navigating these changes and fostering a culture that embraces innovation, agility, and continuous improvement. Leadership styles, particularly those that are agile, participatory, and transformational, are key to successfully integrating digital technologies and ensuring that organizational culture evolves in a way that supports sustainable growth and competitiveness in line with Saudi Arabia's Vision 2030 objectives.

First: Research Methodology

The researcher adopted a descriptive-analytical approach as the most suitable methodology for the research.

Second: Research Population and Sample

The research population consisted of employees in Saudi institutions. Given the large population size, a sampling technique was employed. Specifically, 384 employees were selected using stratified random sampling, with each institution representing a stratum.

Third: Characteristics of the Research Sample

A. Distribution of sample individuals according to their characteristics

Table 1

Distribution of Sample Individuals by Their Characteristics
Gender	Frequencies	Percentages
Male	250	65.10%
Female	134	34.90%
Overall grade	384	%100.0
Academic qualification	Frequencies	Percentages
Diploma	102	26.56%
Bachelor's degree	257	66.93%
Master's degree	15	3.91%
Doctorate	10	2.6%
Overall degree	384	%100.0
Years of experience	Frequencies	Percentages
Less than 5 years	102	26.56%
5–9 years	160	41.67%
10–14 years	70	18.23%
15 + years	52	13.54%
Overall degree	384	%100.0
Age	Frequencies	Percentages
Below 30 years	110	28.64%
Ages 30–39	152	39.58%
Ages 40–49	85	22.14%
Over 50	37	9.64%
Overall degree	384	%100.0

Fourth: Instrument Validity and Reliability

The researcher designed a questionnaire. Its validity and reliability were established through various methods, including content validity. The questionnaire was sent to experts to assess the clarity of its language and the relevance of its items. There was an 84% agreement among the experts. After this expert review, the final questionnaire consisted of 76 items distributed across three dimensions. Internal consistency reliability was calculated for each dimension by computing Pearson correlation coefficients between each item and the total score of its respective dimension. All correlations were statistically significant at the 0.01 level

The internal consistency reliability for the first dimension, organizational culture, ranged between ).880**-.892** ). For the second dimension, digital transformation, it ranged between (.914**-.765**). For the third dimension, leadership, it ranged between (.832**-.928**). The overall construct validity of the questionnaire was examined by calculating the correlation coefficients between each dimension and the total score. These coefficients were high, ranging between (.849**-.943**). They were all statistically significant at the (0.01) level. Additionally, Cronbach's alpha coefficients were calculated for each dimension and the overall questionnaire. The values ranged between (.911-.809) for the dimensions and (.892) for the overall questionnaire. These reliability coefficients indicate that the questionnaire is reliable and suitable for use.

Fifthly: Statistical Methods:

Based on the nature of the research and the objectives the researcher sought to achieve, the data was analyzed using the Statistical Package for the Social Sciences (SPSS). The results were extracted using the following statistical methods: frequencies and percentages, means, standard deviations, Pearson correlation coefficient, Cronbach's alpha, simple linear regression, and Baron and Kenny's mediation analysis to identify the mediation relationship between the independent and dependent variables. Additionally, the range equation was employed to describe the mean of responses to each statement and the overall dimension.

First: Descriptive statistics for study variables

A- Descriptive statistics of the responses of the research sample members regarding the organizational culture variable

The mean and standard deviation were calculated for each dimension of the first axis: organizational culture. The dimensions were then ranked in descending order based on their mean scores. The results are presented in the table below:

Table No. (2) Means and standard deviations of sample members’ responses to the first axis: Organizational culture

NO	Dimensions of the first axis	Means	Standard deviation	Rank response	Score
1	The first dimension: Organizational values	3.45	1.129	High	2
2	The second dimension: Organizational beliefs	3.44	1.077	High	4
3	The third dimension: Organizational norms	3.49	1.210	High	1
4	The fourth dimension: Organizational expectations	3.45	1.178	High	3
Overall average		3.46	1.011	High

B- Descriptive Statistics of Research Sample Responses Regarding the Second Axis: Digital Transformation. The means and standard deviations of the dimensions of the second axis: digital transformation were calculated. Subsequently, these dimensions were ranked in descending order based on the mean of each dimension, as shown in the following table:

Table 3

Means and Standard Deviations of Sample Respondents' Answers for the Second Axis: Digital Transformation
NO	Dimensions of the second axis	Means	Standard deviation	Rank response	Score
1	Infrastructure	3.71	1.106	High	3
2	Leadership	3.82	1.075	High	1
3	Digital transformation culture	3.52	1.265	High	5
4	Digital Transformation Strategy	3.82	1.136	High	2
5	Employees	3.44	1.101	High	6
6	Financing	3.55	1.124	High	4
Overall average		3.65	.967	High

Descriptive statistics of research sample responses regarding the third axis: Leadership

Means and standard deviations were computed for the third axis dimension: leadership. Subsequently, these dimensions were rank-ordered in descending mean values, as presented in the table below:

Table No. (4) Means and standard deviations of sample members’ responses to the third axis: Leadership

NO	Dimensions of the third axis	Means	Standard deviation	Rank response	Score
1	Democratic Style	3.49	.989	High	5
2	Autocratic Style	3.56	1.016	High	4
3	Laissez-Faire Style	3.89	1.023	High	3
4	Transformational Leadership	4.09	1.000	High	2
5	Transactional Leadership	4.10	1.053	High	1
Overall average		3.83	.894	High

Second: Testing Research Hypotheses

This section presents the results of the hypothesis testing as follows:

The first hypothesis, which states that " There is a statistically significant effect at a significance level (α ≤ 0.05) of digital transformation on organizational culture in Saudi organizations", was tested using simple linear regression analysis. The following table presents the results.

Table 5

Impact of Digital Transformation on Organizational Culture in Saudi Organizations
Independent Variable	B	Beta	R	R2	T.value	Sig.T
Digital Transformation	.711	.680	.680^a	.462	17.533	.000
Constant	.867
Adj R2	.460
F value	307.406
Sig F	Statistically significant .000b

Source: Statistical analysis of field study data

The table above demonstrates a significant positive impact of digital transformation on organizational culture in Saudi institutions. The correlation coefficient (R) was found to be 0.680 (p < 0.001), indicating a strong positive relationship. Moreover, digital transformation explains 46.2% of the variance in organizational culture, as indicated by the coefficient of determination (R²). These findings support the first hypothesis, which states that "there is a significant positive impact of digital transformation on organizational culture in Saudi institutions at a significance level of α ≤ 0.05. This result is consistent with Kocak & Pawlowski (2022) who revealed that an essential component of an organization's digital transformation strategy is its organizational culture. In addition, El Din (2023) confirmed that skills, traits, and mindsets of leaders play crucial roles in fostering openness and acceptance of digital transformation.

The second hypothesis, which states that " There is a statistically significant effect at a significance level (α ≤ 0.05) of leadership styles on organizational culture in Saudi organizations" was tested using simple linear regression. The following table presents the results:

Table 6

presents the impact of leadership styles on organizational culture in Saudi Organizations
Independent Variable	B	Beta	R	R2	T.value	Sig.T
Leadership	.793	.702	.702^a	.492	18.629	.000
Constant	.422
Adj R2	.491
F value	347.023
Sig F	Statistically significant .000b

Source: Statistical analysis of field study data

The preceding table indicates a significant positive impact of leadership styles on digital transformation in Saudi institutions. The correlation coefficient (R) was found to be 0.702 (p < 0.001), suggesting a strong positive relationship. Furthermore, leadership explains 49.2% of the variance in digital transformation within Saudi organizations, as indicated by the coefficient of determination (R²). These findings support the second hypothesis, which states that "there is a significant positive impact of leadership styles on digital transformation in Saudi institutions at a significance level of α ≤ 0.05. This result goes in harmony with Muktamar et al. (2023) who revealed that organisations must have proactive and effective leadership in managing digital transformation.

The third hypothesis posits that

There is a statistically significant effect of leadership styles as mediating variables on the relationship between digital transformation and organizational culture within Saudi organizations" To verify this hypothesis, it is necessary to analyze and interpret the mediation process from the independent variable to the dependent variable. This involves demonstrating both the direct and indirect relationships between the independent and dependent variables, as well as the overall effect. In other words, the mediating variable explains how the independent variable influences the mediating variable, which in turn influences the dependent variable. Therefore, it focuses on both direct and indirect effects, where the direct effect equals the value of the relationship between the independent and dependent variables, and the indirect effect equals the product of the relationship between the independent and mediating variables multiplied by the relationship between the mediating variable and the dependent variable. Hence, a hypothetical causal model must be constructed to explain the causes of this relationship between cause and effect. The following figure provides further details and clarification.

The symbols in the previous figure represent the following:

X: Independent variable, digital transformation.
Y: Dependent variable, organizational culture.
M: Mediator variable, leadership.
Path a: Represents the causal effect of the independent variable (X) on the mediator variable (M).
Path b: Represents the causal effect of the mediator variable (M) on the dependent variable (Y).
Path c: Represents the total effect of the independent variable (X) on the dependent variable (Y) without the mediator variable (M). It is calculated using the equation c = c'+a*b), meaning the total effect is the sum of the direct effect and the indirect effect.
Path c': Represents the direct effect of the independent variable (X) on the dependent variable (Y) controlling for the mediator variable (the effect in the presence of the mediator in the regression model). This part is used to determine whether the mediation is partial or full.
Path ab: Represents the indirect effect of the independent variable (X) on the dependent variable (Y). It is the difference between the total effect and the direct effect (C'-C), or it is the indirect effect represented by two paths (a & b) that link the independent variable (X) to the dependent variable (Y) through the mediator variable (M). This part is used to determine whether the mediator variable (M) mediates the relationship between the independent variable (X) and the dependent variable (Y). The values next to the symbols mentioned above are the outputs of the model used in the current study to assess the mediator variable.

To test the mediation hypothesis, several methods can be employed, the most prominent of which is:

Baron and Kenny method (1986): This method relies on regression analysis to test mediation hypotheses. It involves conducting a series of regression analyses to examine the relationships between the independent variable, the dependent variable, and the mediator variable.
Sobel Z test: This test is used to assess the statistical significance of the indirect effect (the product of paths a and b) in mediation analysis. It provides a z-score and a corresponding p-value.
Chi-square difference test: This test is used to compare the goodness of fit of two nested models, one with and one without the mediator. It helps to determine if the mediator significantly improves the model fit.
Modelling using specialized software (e.g., AMOS): This involves using structural equation modelling (SEM) software like AMOS to test mediation hypotheses. SEM allows for more complex models and can handle multiple mediators and moderators.
Bootstrap confidence intervals: This method involves repeatedly resampling the data to create multiple datasets. For each dataset, the indirect effect is calculated, and a confidence interval is constructed based on the distribution of these indirect effects. This provides a more accurate estimate of the uncertainty around the indirect effect compared to the Sobel test. The PROCESS macro for SPSS, developed by Andrew F. Hayes, is a popular tool for conducting bootstrapping analysis.

The current study adopted the aforementioned bootstrap method using Andrew F. Hayes' PROCESS macro for mediation analysis. Specifically, Model 4 (simple mediation model) was employed, and the bootstrap method was applied with 5000 resamples and a 95% confidence interval. The bootstrap test is used within the macro to examine the significance of the indirect effect and thereby confirm the presence or absence of mediation. This is because in many cases, the Z-test and p-values for these indirect effects cannot be fully relied upon. It is therefore recommended to use confidence intervals. The following steps outline the application of this model:

1-Results of the mediator variable M (leadership)

The matrix presents the results of the mediator variable (M) through two tables. The first table provides a model summary and displays the correlation results between each pair of the independent and mediator variables. The second table presents the model for path a, which represents the effect of the independent variable (x, digital transformation) on the mediator variable (M, leadership).

Table 7

The model summary outputs
Model Summary
R	R-sq	MSE	F	df 1	df 2	P
.8395	.7048	.2364	854.7943	1.0000	358.0000	.0000

Table 8

The results of the path a
Model
	Coeff	SE	t	P	LLCI	LUC
constant	.9968	.1001	9.9555	.0000	.7999	1.1937
X	.7761	.0265	29.2369	.0000	.7239	.8283

Based on the results of the previous two tables, there is a positive and moderate correlation of .8395 between the variables. Additionally, the results show that digital transformation has a significant positive effect on leadership, with a regression coefficient of .7761 for path a. This coefficient represents the predictive value of the independent variable on the mediator variable. The standard error is .0265, and the p-value is less than .05, indicating that the effect of digital transformation on leadership is statistically significant.

2-Results for the dependent variable Y (organizational culture):

The matrix presents the results of the dependent variable through two tables. The first table provides a summary of the model and displays the correlation results. The second table presents the model for path b, which is the effect of leadership on organizational culture (Y), and path c', which is the direct effect of digital transformation (x) on organizational culture (Y) in the presence of leadership (M).

Table 9

The model summary output
Model Summary
R	R-sq	MSE	F	df 1	df 2	P
.7212	.5201	.4928	193.4372	2.0000	357.0000	.0000

Table 10

the results of paths b and c'
Model
	Coeff	SE	t	P	LLCI	LUC
constant	.3673	.1634	2.2486	.0251	.0461	.6886
X	.3212	.0705	4.5528	.0000	.1825	.4599
M	.5017	.0763	6.5740	.0000	.3516	.6518

The results from the previous tables show that the mediating variable (leadership, M) has a significant impact on the dependent variable (organizational culture, Y) with a path coefficient of .5017, indicating a substantial causal effect of the mediator on the dependent variable in the presence of the independent variable (X) in the regression model. This effect is statistically significant at the .0000 level, with a standard error of .0763. Additionally, the direct effect of the independent variable (digital transformation, x) on the dependent variable (organizational culture, Y), as represented by path c', is also significant at the .0000 level, with a path coefficient of .3212 and a standard error of .0705. This suggests a direct influence of digital transformation on organizational culture, even when controlling for the effect of leadership.

3- The Total Effect Model (Outcomes of the Dependent Variable Y: Organizational Culture)

The following matrix presents the results of the dependent variable (Y) through two tables. The first table is a model summary, showing the correlation results. The second table displays the model for path C, which represents the total direct effect of digital transformation (x) on organizational culture (Y).

Table 11

Model Summary Output
Model Summary
R	R-sq	MSE	F	df 1	df 2	P
.6797	.4620	.5509	307.4065	1.0000	358.0000	.0000

Table 12

Results of Path C
Model
	Coeff	SE	t	P	LLCI	LUC
constant	.8674	.1529	5.6745	.0000	.5668	1.1681
X	.7106	.0405	17.5330	.0000	.6309	.7903

An examination of the preceding tables reveals a significant impact of the independent variable (digital transformation, X) on the dependent variable (organizational culture, Y), specifically through Path C. Path C measures the total direct effect of the independent variable (X) on the dependent variable (Y), without the influence of the mediating variable (M). This effect is calculated using the equation C = C' + a*b, which equals .7106 with a standard error of .0405 and is statistically significant at the α < 0.01 level. This indicates that digital transformation (X) has a significant overall impact on organizational culture (Y).

4- Total, Direct, and Indirect Effects of Independent Variable X on Dependent Variable Y

The following matrix includes three main tables, as follows:

Table 1: the total effect of the independent variable (X) on the dependent variable (Y), without the presence of the mediating variable (M), {path C}.
Table 2: The direct effect of the independent variable (X) on the dependent variable (Y), in the presence of the mediating variable (M), [path C'].
Table 3: The indirect effect of the independent variable (X) on the dependent variable (Y), {path ab}, and this table is dedicated to proving or disproving the hypothesis.

The total effect of (x) on (Y) {path C}

Table number (13): The total effect of the independent variable X on the dependent variable Y>

Effect	SE	t	P	LLCI	LUC
.7106	.0405	17.5330	.0000	.6309	.7903

The direct effect of (X) on (Y) [path C']

Table number (14): The direct effect of the independent variable X on the dependent variable.

Effect	SE	t	P	LLCI	LUC
.3212	.0705	4.5528	.0000	.1825	.4599

The indirect effect of (X) on (Y) through path ab.

Table 15

The indirect effect of the independent variable X on the dependent variable Y
	Effect	BootSE	BootLLCI	BootULCI
M	.3894	.0656	.2482	.5047
Based on the data presented in Tables 13, 14, and 15, it is evident that:

Regarding Tables 13 and 14, which pertain to path c, it should be noted that these tables have been updated in the preceding tables. As for Table 15, which pertains to path ab, we observe the indirect effect of the independent variable (digital transformation, X) on the dependent variable (organizational culture, Y). The indirect effect (Ab) represents the difference between the total effect and the direct effect, or it is the indirect effect mediated through two paths (a & b) that connect the independent variable (X) to the dependent variable (Y) through the mediator variable (M), which is estimated at .3894. Hayes suggests that the significance level is determined by the confidence intervals. If the lower and upper bounds are far from zero, the mediator's role is significant. Looking at the table, we find that the lower limit of the confidence interval (LLCI) is .2482 at the 95% level, and the upper limit of the confidence interval (ULCI) is .5047 at the 95% level. This means that zero is far from both values, indicating the significance of the mediator's role. In other words, zero does not fall between them, and therefore the mediator variable (M) mediates the relationship between the independent variable (X) and the dependent variable (Y). Therefore, the null hypothesis (H0) will be accepted, and thus, leadership mediates the relationship between digital transformation and organizational culture in Saudi institutions. This may be attributed to the fact that digital transformation is considered an influential factor on organizational culture in Saudi institutions. This result is consistent with Malik et al., (2024) who indicated that specific leadership traits are crucial for the successful implementation of digital transformation and essential for digital organizational culture adoption.

The current research findings demonstrate a positive impact of digital transformation on organizational culture in various Saudi institutions. This can be attributed to the effectiveness of digital transformation in achieving institutional goals through enhancing the concept of organizational culture among employees in Saudi institutions. The Kingdom of Saudi Arabia's strong focus on digital transformation is of paramount importance for achieving the goals of Vision 2030, which aims to enhance productivity, drive economic growth, and promote social progress, thus aligning with its strategic objectives for a sustainable future. Furthermore, the research results showed an impact of digital transformation on organizational culture in light of leadership. Leadership styles play a crucial mediating role in strengthening the relationship between digital transformation and organizational culture. Additionally, digital transformation involves a complete overhaul of organizational structures to adapt to rapid technological advancements and changing market demands. Effective leadership is essential to address these changes and foster a culture that embraces innovation, agility, and continuous improvement. Based on the obtained results, the researcher recommended creating a digital transformation plan and vision that are in line with the Saudi organization's values and culture and empowering leaders at all levels to spearhead the digital transformation and model the desired behaviours and mindsets.

Participant Consent and Ethics Declaration: All participants involved in this study provided informed consent to participate in the research. The study was conducted following the ethical guidelines approved by the Institutional Review Board (IRB) at Al-Qadisiyah University. Participant consent for publication was also obtained, ensuring that their contributions could be included in the published research findings. In cases where explicit consent was waived, the need for consent was determined to be unnecessary by the approving ethics committee.

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Impact of Digital Transformation on Organizational Culture within Saudi Enterprises: The Mediating Roles of Leadership Styles

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Abstract

Figures

Introduction

Statement of the Problem

Questions of the Study

Objectives of the Study

Hypotheses of the Study

Significance of the Study

i. Digital Transformation

ii. Organizational Culture

Literature Review

i. Digital Transformation

ii. Organizational Culture

iii. The impact of digital transformation on organizational culture in light of leadership styles

Research Procedures

First: Research Methodology

Second: Research Population and Sample

Third: Characteristics of the Research Sample

Fourth: Instrument Validity and Reliability

Fifthly: Statistical Methods:

Discussion

First: Descriptive statistics for study variables

A- Descriptive statistics of the responses of the research sample members regarding the organizational culture variable

Descriptive statistics of research sample responses regarding the third axis: Leadership

Second: Testing Research Hypotheses

This section presents the results of the hypothesis testing as follows:

The symbols in the previous figure represent the following:

Results

1-Results of the mediator variable M (leadership)

2-Results for the dependent variable Y (organizational culture):

3- The Total Effect Model (Outcomes of the Dependent Variable Y: Organizational Culture)

4- Total, Direct, and Indirect Effects of Independent Variable X on Dependent Variable Y

The following matrix includes three main tables, as follows:

The total effect of (x) on (Y) {path C}

Conclusion

Declarations

References

Additional Declarations

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