This briefing document summarises the key themes and findings of a research paper that investigates the influence of employees' cognitions (specifically, psychological safety) and behaviours (employee-led process improvement) on data-driven digital transformation and ultimately, operational productivity.

• Socio-Cognitive Theory as a Framework: The study employs socio-cognitive theory, which posits a "triadic relationship between social environment, human cognitions (personal processes) and behaviours (outcomes)" to explain how employees' psychological safety (a cognition) influences their engagement in employee-led process improvement (a behaviour), leading to organisational attainments like data-driven digital transformation and improved operational productivity.
• Psychological Safety as a Key Driver: The research defines psychological safety as a "'shared belief held by employees that their work environment values their contributions and talent, and is safe to ask questions, ask for help, share views, knowledge and concerns, and admit making mistakes without the risk of being penalised'" . The authors argue that a psychologically safe environment encourages mutual respect, trust, and the willingness to share ideas, crucial for collaboration and continuous improvement.
• Employee-Led Process Improvement as a Behavioural Outcome: The study defines employee-led process improvement in a hospital setting as a "'set of social practices that encourage team-work, empowerment and process/quality improvement in a hospital environment'" (adapted from Narayanan et al., 2022).
• Data-Driven Digital Transformation as an Organisational Attainment: This is described as the "use of digital technologies and the data these digital technologies produce to introduce significant improvements and changes to operations, strategies, and customer experiences" (Papanagnou et al., 2022).
• Operational Productivity as the Outcome of Interest: Defined as the "ratio of the total output about the total input in any transformation process" (Ong et al., 2021), operational productivity in a hospital setting reflects "'operational capabilities that target the efficient use of resources and the input-output ratio'" (adapted from Shah and Ward, 2007).
• Managerial Implications: The findings underscore the importance of viewing employees as key stakeholders in digital transformation initiatives, shifting the focus beyond purely technological solutions.
• Management should prioritise creating a social environment that fosters psychological safety to encourage employee engagement, risk-taking, and open communication, which are vital for both process improvement and successful digital transformation.
• The identification of different pathways (individual and serial mediations) guides resource allocation and strategic interventions to enhance operational productivity. Implementing strategies to improve psychological safety can lead to operational benefits through fostering employee-led improvements and facilitating the adoption and effectiveness of data-driven digital transformation.
• The study suggests that a holistic approach, considering both employee-led initiatives and data-driven technologies within a psychologically safe environment, will maximise the positive impact on operational productivity.

Source: Excerpts from Malik et al. 2024 "A socio-cognitive theorisation of how data-driven digital transformation affects operational productivity?" Free version available at https://www.sciencedirect.com/science/article/pii/S0925527324002603

Main Theme: This paper explores how organisations develop digital-enabled strategic agility through the lens of organisational sensemaking. It argues that existing dynamic capability perspectives are insufficient and proposes a novel framework based on intertwined "actions" and "meaning" to remove equivocality in responding to environmental dynamism.

Digital-Enabled Strategic Agility: This is defined as extending strategic agility by incorporating digital technologies essential for sensing and responding to environmental dynamism. It involves remaining flexible, adjusting strategic direction, and developing innovative ways to create value, all enhanced by a "digitally enabled backbone." "

Organisational Sensemaking: The research uses organisational sensemaking theory to explain how firms interpret and act upon environmental cues. This involves two key elements: external sensing and equivocality removal. Sensemaking is not simply about shared meaning but a "discourse" that shapes how people make sense of themselves and the world around them. The discourse then translates into routinized actions.

Digital Orientation: This is conceptualised as a high-level discourse representing organisational actors' collective cognitive framework for digital technologies. It's a strategic positioning to leverage digital opportunities, driving organizational plans, behaviour and performance. It represents the shared cognitive frameworks and interpretive structures that guide how organizational actors perceive and respond to environmental signals.

Information Governance: This is theorized as providing the organisational routines and structures required for action, structuring how organizations manage, process, and act upon information. It serves as a process facilitator, enabling sensemaking by managing information flows. Ineffective information governance can negatively impact digital agility.

Digital Transformation: Defined as a qualitative change in how an organisation operates, enabled by digital technologies (SMACIT: Social, Mobile, Analytics, Cloud, and Internet of Things). It's a focal point for operational meaning and action.

Theoretical Implications:

• Extends the literature on strategic agility by introducing a sensemaking-informed perspective.
• Highlights the importance of information governance in interpreting environmental cues.
• Provides an empirically supported framework explaining how digital transformation affects digitally enabled strategic agility.
• Demonstrates the collective impact of digital orientation, information governance, and digital transformation on digitally enabled strategic agility.
• Show that firms gain strategic agility either by investing in information governance or digital transformation.

Practical Implications:

• Provides managers with a blueprint for achieving digital-enabled strategic agility.
• Highlights the importance of fostering a digital-oriented mindset.
• Suggest a sequential approach: invest in digital orientation and information governance first, then digital transformation.
• Emphasizes the complementarity of the three pathways (H1, H2 and H3) in achieving digital-enabled strategic agility.

Source: Malik et al 2025 "An organisational sensemaking theorising of how firms construct digital-enabled strategic agility" at https://www.sciencedirect.com/science/article/pii/S0378720625000333

Key Theme: The research investigates how social capital contributes to successful digital transformations in Australian healthcare organisations, specifically focusing on the development of dynamic capabilities.

Key Takeaways:

Successful digital transformations require organisations to look beyond their internal resources and leverage their social capital to access and integrate valuable external knowledge.

• Cultivating strong network relationships and strategically engaging in collaborative ecosystems are critical for acquiring non-generic complementarities.
• Focusing on developing dynamic capabilities such as absorptive capacity, integration effort, and big data analytics is crucial for achieving positive digital transformation outcomes.
• The findings offer a new perspective for practitioners in the healthcare sector, highlighting the importance of a digital business ecosystem view and a shift from inward-looking approaches.

Social Capital as the Source of External Complementarities: The research posits that social capital, defined as "the aggregate of resources embedded within, available through, and derived from the network of relationships possessed by an organisation", is crucial for accessing the non-generic and non-substitutable external complementarities necessary for digital transformation.

"Social capital refers to this ability of a firm to source such non-generic complementarities from network relationships."

Dynamic Capabilities as Mediators: The study argues that social capital facilitates the development of crucial dynamic capabilities including absorptive capacity, integration effort, and big data analytics. These capabilities, in turn, directly influence positive digital transformation outcomes.

"Dynamic capabilities provide the mechanisms to continually alter the ordinary capabilities of a firm to cope with digital disruptions, therefore, building dynamic capabilities is essential for effective digital transformation outcomes."

Focus on the Australian Healthcare Sector: The research focuses on the Australian healthcare sector as a context where digital transformation is both advanced and presents unique challenges, including regulatory constraints and data privacy concerns.

Detailed Breakdown of Key Mediators:

Absorptive Capacity: The ability to identify, acquire, assimilate, and apply external knowledge related to digital technologies is crucial. This allows organisations to internalise valuable knowledge from their network and translate it into practical applications for their transformation.

Integration Effort: Effective digital transformations require a strategic alignment of digital technologies with existing organisational resources and processes. This involves reshaping structures, managerial mindsets, and collaborative efforts to achieve synergy between transactional and digital aspects.

"Integration effort is one such attempt by the management to create synergies between digital technologies and transactional resources."

Big Data Analytics Capability: Leveraging the abundance of data available within and beyond the organisation's boundaries is vital. This requires developing strong big data analytics capabilities, encompassing both the technical infrastructure and the expertise to extract actionable insights and business value.

Sources: Excerpts from "A relational view of how social capital contributes to effective digital transformation outcomes": Malik et al. (2024). Journal of Strategic Information Systems 33 (2024) 101837