Analyzing the Mediating Role of Organizational Readiness on Industry 4.0 Capabilities and Digital Transformation Strategy

Abstract

This study examines the role of Industry 4.0 capabilities in shaping digital transformation strategy (DTS) within municipal service management, with a particular focus on the mediating role of organizational readiness. This study aims to provide fresh insights into how technological capabilities are translated into strategic transformation outcomes in the context of Omani municipalities. A quantitative research approach was adopted using a structured survey administered to 400 respondents across Omani municipalities. Stratified random sampling was used to ensure representation across departments and managerial levels. Structural equation modeling (SEM) using SmartPLS 4 was employed to test the proposed relationships and mediation effects among Industry 4.0 capabilities, organizational readiness, and DTS. The results revealed that Industry 4.0 capabilities have a significant positive impact on DTS  and organizational readiness. Organizational readiness also significantly influences DTS and partially mediates the relationship between Industry 4.0 capabilities and DTS. These findings highlight the critical role of organizational preparedness in enabling the effective implementation of digital transformation strategies in municipal contexts. This study contributes to the literature by integrating the RBV, DCV, and PBV to explain the relationship between Industry 4.0 capabilities and DTS. It offers a novel perspective by identifying organizational readiness as a key mediating mechanism, providing both theoretical advancement and practical insights for policymakers and municipal managers in digitally transforming environments.