Digital leadership capabilities and dynamic workplaces enhance IT firm performance through digital innovation using a PLS SEM and ANN approach

Abstract This study investigates the influence of digital leadership skills and dynamic, innovative work environments on firm performance in China’s IT sector, with digital innovation acting as a mediating factor. Drawing on the Dynamic Capabilities View (DCV) and the Resource-Based View (RBV), we develop and test a framework that combines leadership, workplace, and innovation perspectives. Using data from 338 managers in IT manufacturing companies in Guangdong and Zhejiang, the model was evaluated with PLS-SEM for causal links and Artificial Neural Networks (ANNs) for predictive validation. Results show that digital leadership significantly boosts performance both directly and indirectly through digital innovation, while workplace dynamism improves performance directly but not via innovation. This non-significant mediation suggests that in China’s IT sector, cultural and institutional factors may allow workplaces to influence outcomes independently of technological innovation. By combining SEM and ANN, the study offers a methodological contribution and clarifies how leadership and workplace dynamics jointly shape digital transformation outcomes in an emerging economy context.