The Role of Company Sector on the Impact of Digital Orientation Strategy and Digital Capabilities Mediated by Company Readiness on Digital Innovation

This study aims to analyze the effects of Strategic Digital Orientation and Dynamic Digital Capabilities on Digital Innovation, mediated by Company Readiness, in both service and non-service companies.This research employs a quantitative research method with descriptive and confirmatory characteristics. This study uses Structural Equation Modeling (SEM) with PLS-SEM multigroup analysis (PLS-MGA) to process data. This study's findings reveal a positive and significant influence of Strategic Digital Orientation and Digital Capabilities on both Company Readiness, and Digital Innovation. Contrary to expectations, Company Readiness did not significantly impact Digital Innovation, nor did it significantly mediate the relationship between Strategic Digital Orientation and Digital Innovation or between Digital Capabilities and Digital Innovation. Interestingly, the research uncovered a significant difference between service companies and non-service companies regarding the influence of Digital Capabilities on Digital Innovation, underscoring the sector-specific dynamics of digital innovation strategies. The influence of Digital Capabilities on Digital Innovation was found to be stronger in service companies, highlighting the critical role of digital capabilities in enhancing innovation within sectors directly interfacing with customers and reliant on digital platforms for service delivery. This study presents certain limitations. Firstly, it does not incorporate external variables, variations in the scale, and restricts its sample solely to Indonesian Financial Directors Association members.