Abstract

Small and medium enterprises (SMEs) face unique challenges in digital transformation (DT), often lacking the structural flexibility and digital resources of larger firms. Yet, many attempt to navigate digital shifts while balancing operational continuity and innovation demands. This idea tries to explore: “How does paradoxical leadership (PL) shape strategic agility (SA) and digital ambidexterity (DA) to enhance digital transformation effectiveness (DTE) in SMEs?” PL refers to leadership behaviors that embrace tensions—such as stability vs. change, or control vs. autonomy—to achieve adaptive balance (Zhang et al., 2021). We argue that PL promotes both SA (the ability to reallocate resources and respond rapidly) and DA (balancing exploration and exploitation of digital technologies) in SMEs, enabling them to overcome digital inertia while maintaining business continuity. Drawing on the paradox theory of leadership (Smith & Lewis, 2011), we propose a model in which PL indirectly influences DTE through the development of these two dynamic capabilities. We also try to examine how SA and DA interact, forming a complementary configuration for innovation outcomes in SMEs. This session invites dialogue on how paradoxical leadership facilitates DT under capability constraints, and how theory-based capability development models can be contextualized for digitally lagging sectors. Our empirical plan includes a large-scale SEM study of 1,000 Taiwanese SMEs, addressing a literature gap by linking paradoxical leadership to specific DT outcomes through mediating organizational capabilities.

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