From Digital Leadership to Firm Performance: Linking Work Engagement with Social Sustainability

Digital transformation has reshaped organizational routines, requiring leadership approaches that integrate technological orientation, employee motivation, and stakeholder responsibility. This study investigates how digital leadership relates to firm performance through the mediating roles of work engagement and social sustainability. Drawing on Job Demands–Resources theory and stakeholder theory, a serial mediation model was tested using data collected from employees working in firms located in Kocaeli, Türkiye. Social sustainability and firm performance were assessed as employees’ perceptions of organizational practices and outcomes rather than as objective or aggregated firm-level measures. Participants were reached through convenience sampling, and the data were gathered using a questionnaire. After incomplete responses were excluded, the final sample comprised 368 employees. The proposed relationships were analyzed through partial least squares structural equation modeling (PLS-SEM) using SmartPLS 4. The results show that digital leadership is positively associated with work engagement, social sustainability, and firm performance. Work engagement is also positively related to social sustainability and firm performance, while social sustainability is positively linked to firm performance. The mediation analysis indicates that work engagement and social sustainability separately explain part of the relationship between digital leadership and firm performance. In addition, the sequential pathway from digital leadership to work engagement, then to social sustainability, and ultimately to firm performance is supported, providing evidence of a statistically significant sequential indirect association.