Enhancing Business Agility: The Effects of IT Capability and Digital Transformation

Digital technology with IT capability support has been a significant driver of digital Transformation, leading to changes in business operating systems and customer, supplier, and stakeholder interactions. Nevertheless, there needs to be more previous research literature that discusses the impact of IT capabilities on enhancing family SME business agility through digital Transformation. The research aims to explore and confirm the extent to which digital Transformation has an effect and a positive influence on improving its agility-convergence triangulation research method with explanatory design through follow-up explanation. The research population comprises a family of small and medium-sized enterprises that have been managing the business for over five years. The questionnaires were distributed to 185 respondents online using random sampling techniques, and only 163 responded, with a response rate of 88.11%. Data processing with Likert scale and analytical tools using SEM-PLS. The research showed that small and medium-sized enterprises are heavily influenced by IT flexibility and IT integration, mediated by digital Transformation to improve operational efficiency, customer service, and opportunities to reach broader markets. Building IT integration requires the involvement of digital transformation processes in increasing business agility. While IT flexibility does not need to be supported by the digital Transformation process.