Digital leadership and adaptive capacity of family firms: intervening roles of sensing capability and organizational agility

Purpose The goal of this research is to examine the influence of digital leadership (DL) on adaptive capacity (ADC) of small- and medium-sized family businesses (SMFBs). Moreover, the study investigates the mediating influence of the microfoundations of dynamic capabilities represented by sensing capability (SC) and organizational agility (OA), both parallelly and sequentially. Design/methodology/approach Drawing on the dynamic capabilities view (DCV) and supporting empirical evidence, a conceptual framework is developed along with a set of hypotheses. Using survey data collected from 263 SMFBs in Oman, the hypotheses are tested using structural equation modeling through partial least square-structural equation modeling (PLS-SEM). Findings The analysis reveals that DL positively influences ADC, SC and OA. Additionally, SC and OA both parallelly mediate the link between DL and ADC. Finally, both SC and OA act as sequential mediators in the relationship between DL and ADC among SMFBs. Practical implications For practitioners, the study reveals critical role of DL in strengthening SMFBs. Family business leaders may consider the evidence and invest in leadership development programs to enhance digital competencies, enabling better SC and agility. Policymakers can offer training programs and resources, helping family businesses to build DL and dynamic capabilities essential for thriving in a competitive and evolving business environment. Originality/value This study makes four key contributions. First, this study expands the literature at the crossroads of the family business, digitalization, dynamic capabilities and resilience, to investigate the influence of DL on ADC. Second, the role of SC as a mediator in the above relationship, tested in the current study, seems to be overlooked in the empirical literature. Third, the findings demonstrate the mediating role of OA in relationship between DL and ADC. Finally, this appears to be the first study that presents sequential mediating role of SC and OA between DL and ADC, adding a finer-grained understanding of how influence of DL is transmitted to ADC.