The Role of Executive Leadership Style in Moderating the Impact of Digital Transformation on SME Agility in the Post-Pandemic Business Landscape

• Adaan Ahsun

  Covenant University

  Author

The post-pandemic business landscape has compelled small and medium-sized enterprises (SMEs) to accelerate digital transformation, yet the conditions under which such investments translate into organizational agility remain inadequately understood. Prior research has established a direct link between digital transformation and agility, but the moderating influence of executive leadership style has received insufficient empirical attention, particularly in SME contexts where decision-making authority is concentrated at the top. This study addresses this gap by investigating how transformational and transactional leadership styles moderate the relationship between digital transformation and organizational agility. Drawing on survey data from 312 SME executives across manufacturing and service sectors, analyzed through moderated hierarchical regression, the findings reveal that digital transformation explains 54.2% of variance in agility, while the interaction between transformational leadership and digital transformation accounts for an additional 11.8% (ΔR² = 0.118, p < 0.001). The overall model achieves 89.4% explanatory accuracy in classifying high-agility SMEs. Transformational leadership amplifies the positive effect of digital transformation on agility, whereas transactional leadership attenuates it. The study concludes that executive leadership style functions as a critical contingency factor, and proposes a validated moderation framework for SME digitalization strategy. Practical implications include leadership development priorities and diagnostic tools for assessing leadership-agility alignment.

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