The Impact of Dynamic Capability, Digital Technology and Digital Transformation on Value Creation of Local Fashion Industry

Abstract— The growth of Indonesia’s local fashion industry highlights the importance of value creation in strengthening competitiveness and responding to changing consumer preferences. This research aims to examine how Dynamic Capability, Digital Technology, and Digital Transformation affect Value Creation in the local fashion industry. A quantitative methodology was employed, comprising a structured online questionnaire distributed to consumers who had purchased or actively followed local fashion brands within the previous year, which was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS 4.0. The research findings are conclusive: Dynamic Capability, Digital Technology, and Digital Transformation positively and significantly influence Value Creation. It invites the conclusion that local fashion businesses ought to adopt a comprehensive, strategic approach to improve value creation. This involves more than simply adopting basic technology; leaders need to build strong organizational capabilities, integrate digital technologies purposefully, and embed digital transformation into core business operations. These strategic actions must be implemented concurrently to enhance customer value and maintain competitiveness in an increasingly digital market. Ultimately, these methods provide a strong foundation for businesses to thrive, fostering long-term growth and competitiveness in the fashion industry. Keywords—dynamic capability, digital technology, digital transformation, value creation, local fashion industry