Steering the digital transformation: How paradoxical leadership juggles innovation culture and organizational agility

Background Paradoxical leadership and alignment between innovation culture and organizational goals are crucial for successful digital transformation. Leaders should balance stability with innovation and foster an agile environment conducive to transformation. Objective This study aims to investigate the impact of paradoxical leadership on digital transformation, using dynamic capability theory to analyze the roles of organizational agility and innovation culture. Methods Data was collected in two-time intervals from 258 employees involved in DT initiatives across various sectors in Pakistan. The study utilized PLS-SEM to test the hypothesized relationships. Results The findings confirm that paradoxical leadership significantly enhances organizational agility, which in turn positively influences digital transformation. However, contrary to existing literature, the study reveals that an innovation culture, underdeveloped or misaligned with organizational goals, can weaken the positive effect of organizational agility on digital transformation. Conclusions The study underscores the importance of adaptive leadership and supportive organizational culture in driving digital transformation, particularly in developing regions, where these factors can significantly impact social and economic development. The insights are valuable for leaders and policymakers striving to overcome digital transformation challenges in similar contexts.