Digital leadership and innovation performance in MSMEs: The mediating roles of job crafting and organizational commitment

Abstract

Innovation performance (IP) has become a critical determinant of competitiveness for Micro, Small, and Medium Enterprises (MSMEs), particularly in regions undergoing rapid digital transformation such as Southwest Papua, Indonesia. Despite growing interest in digital leadership (DL), empirical evidence explaining how DL translates into innovation outcomes in MSMEs remains limited. This study aims to examine the effect of DL on IP by investigating the mediating roles of job crafting (JC) and organizational commitment (OC). Using a quantitative cross-sectional research design, data were collected from 144 MSME actors and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results demonstrate that DL significantly and positively influences IP, JC, and OC, highlighting the strategic role of leadership in promoting digital-oriented work behaviors and strengthening employees’ psychological attachment to their organizations. However, JC does not show a significant effect on IP and therefore does not mediate the relationship between DL and IP. In contrast, OC emerges as a significant predictor of IP and serves as a key mediating mechanism through which DL enhances IP. These findings extend the leadership and innovation literature by clarifying the internal organizational processes that enable digital leadership to generate innovation outcomes within MSMEs. From a practical standpoint, the study suggests that strengthening DL capabilities and fostering OC are crucial strategies for improving IP. Policymakers and development agencies are encouraged to design targeted training programs and digital transformation initiatives that reinforce DL capacity and employee OC in MSMEs.