The Effect of Leadership on Digital Competence: The Moderating Role of Organizational Culture

Abstract

The rapid advancement of digital technology has increased the demand for employees with strong
digital competence, particularly in the banking industry. Leadership is often regarded as a key
driver of digital capability development; however, empirical evidence regarding its effectiveness
remains inconsistent, especially when organizational culture is considered. This study examines
the effect of leadership on employees' digital competence and investigates the mediating role of
organizational culture. A quantitative research design with a causal approach was employed using
survey data collected from 203 banking employees in Jakarta and Lampung, Indonesia. Data were
analyzed using Structural Equation Modeling (SEM). The findings reveal that leadership does not
have a significant direct effect on employees' digital competence. Nevertheless, leadership exerts a
significant indirect effect through organizational culture, indicating that an adaptive organizational
culture strengthens the influence of leadership on digital capability development. These results
suggest that organizational culture functions as a crucial mechanism linking leadership with
employees' digital competence. Consequently, banking organizations should not rely solely on
leadership development but should also cultivate a collaborative, innovative, and learning-oriented
organizational culture to accelerate digital transformation and improve workforce readiness. This
study contributes to the digital leadership literature by demonstrating the strategic role of
organizational culture in enhancing digital competence within the Indonesian banking sector.