Building Micro-Foundations for Digital Transformation: A Moderated Mediation Model of the Interplay between Digital Literacy and Digital Transformation

In an era where digital transformation (DGT) is pivotal for organizational resilience and competitiveness, integrating sustainability into the digitalization process has emerged as a strategic imperative. By employing the resource-based view (RBV) and the dynamic capability theory (DCT), this study delves into the micro-foundations of DGT in medium- and large-sized enterprises, highlighting the synergistic role of managerial digital literacy in fostering digital transformation through the mediation role of digital readiness and the moderation role of the top management team (TMT). To fulfill the objectives of this study, data were collected through a cross-sectional mail survey, yielding responses from 235 senior and mid-level managers across medium- and large-sized firms in various industries within Turkey. Results have confirmed that digital literacy significantly enhances digital transformation and readiness, laying the groundwork for successful digital transformation initiatives. Digital readiness significantly mediates the relationship between digital literacy and digital transformation, indicating that enhancing digital literacy is a crucial step that indirectly influences digital transformation through improving digital readiness. The moderating effect of top management team (TMT) behavioral integration on the digital literacy and digital readiness link is affirmed, highlighting its critical role in facilitating organizational digital adaptation. TMT behavioral integration does not positively moderate the direct relationship between digital literacy and digital transformation. The study’s findings offer a novel lens on digital transformation, revealing that the interplay between digital literacy, readiness, and TMT behavioral integration crafts a strategic scaffold for enhancing organizational agility and competitive edge in the digital era.