Strategic alignment as a mediator between digital transformation and innovation management in Saudi renewable energy companies

Type of the article: Research ArticleAbstractThis paper examines the impact of digital transformation on innovation management and strategic alignment as a mediator within Saudi Arabian renewable energy companies. A quantitative cross-sectional research design was employed with a convenience sample of 371 lower-, middle-, and senior-level managers. These respondents were involved in the implementation of digital transformation, innovation management processes, and organizational strategic planning within 45 officially licensed renewable energy companies. SmartPLS 4 (PLS-SEM) was chosen to assess the measurement and structural model. Findings demonstrate that digital transformation has a significant positive impact on innovation management (β = 0.348, p < 0.001), with varying effects across subdimensions of technological innovation (β = 0.165, p < 0.001), innovative organizational structure (β = 0.160, p < 0.001), and innovation strategy (β = 0.139, p < 0.001). Strategic alignment is significantly influenced by digital transformation (β = 0.300, p < 0.001), subsequently contributing to innovation management (β = 0.290, p < 0.001). Notably, strategic alignment partially mediates the digital transformation–innovation relationship (indirect effect: β = 0.087, p < 0.001), with indirect effect accounting for approximately 25%. These results suggest that digital transformation has a direct positive effect on the management of innovation by increasing technological capabilities, and strategic alignment can significantly increase the benefits of digital transformation. Overall, integration and strategic alignment between resources and capabilities enable companies to better utilize digital opportunities, tone business focus and workforce priorities, and support the role of the industry in achieving the overall objectives of Saudi Vision 2030.AcknowledgmentWe are grateful to Middle East University, Amman, Jordan, for the financial support to cover this article’s publishing fee.