Leadership Style Innovation Capability Knowledge Management and Firm Growth in Pakistan’s Small and Medium Enterprises

Abstract

Digital transformation has become a strategic priority for financial institutions seeking sustainable performance in increasingly competitive environments. This study investigates the impact of digital transformation on organizational performance in Pakistan’s banking sector, with particular emphasis on the mediating roles of customer satisfaction and employee engagement. Using survey data collected from banking professionals, the study employs Structural Equation Modeling to examine the proposed relationships. The empirical findings indicate that digital transformation has a significant positive effect on organizational performance, both directly and indirectly. Customer satisfaction and employee engagement are found to partially mediate this relationship, highlighting their critical role in translating digital initiatives into performance outcomes. The results suggest that effective digital transformation enhances service quality, operational efficiency, and workforce involvement, thereby strengthening overall organizational performance. This study contributes to the literature by providing empirical evidence from an emerging economy context and offers practical insights for banking managers and policymakers aiming to leverage digital innovation for sustained competitive advantage.