IMPACT OF DIGITAL TRANSFORMATION ON FIRM PERFORMANCE IN THE TEXTILE INDUSTRY: THE MEDIATING ROLE OF ORGANIZATIONAL AGILITY

Abstract

This study aims to understand how digital transformation affects the performance of textile firms in Pakistan and to clarify the mediating role of organizational agility in the relationship between digital transformation and textile firms’ performance. The study draws on dynamic capabilities theory and the resource-based view, and views digital transformation as a strategic capability to redefine processes, information flows, and managerial routines. In the context of the textile industry, the study used a quantitative, cross-sectional survey design. A total of 263 respondents were considered for hypothesis testing, and the proposed relationships were examined using partial least squares structural equation modeling. Indicator reliability, internal consistency, convergent and discriminant validity of the measurement model were acceptable. The structural results indicate that digital transformation has a positive direct effect on firm performance and a positive, strong direct effect on organizational agility. Organizational agility also positively affects firm performance and creates a strong indirect link from digital transformation to performance. The results suggest that the direct effect remained significant, indicating complementary partial mediation. The study contributes to the literature by explaining how digital investments generate performance value in a resource-constrained manufacturing setup in a developing country. It also shows that technology alone is not enough; companies can achieve better results when digitalization becomes more responsive, flexible, and adaptable in production and operations.