<![CDATA[This study explores how strategic agility and innovation capability mediate the effects of digital transformation and dynamic capabilities on strategic performance in the public sector, with digital leadership serving as a moderating factor. Drawing on the Dynamic Capabilities View (DCV), data were collected from 275 civil servants in the Surabaya City Government, Indonesia—one of the country’s pioneers in digital governance. Using Structural Equation Modeling (SEM-LISREL), the results reveal that digital transformation and dynamic capabilities significantly enhance strategic agility, which subsequently strengthens innovation capability and improves strategic performance. However, their direct effects on performance are insignificant without the presence of strong digital leadership. These findings demonstrate that technology adoption alone does not guarantee better performance; instead, organizational agility, innovation capability, and leadership alignment are essential to realizing the benefits of digital transformation. Theoretically, this study advances DCV by identifying strategic agility and innovation capability as sequential mechanisms linking digital transformation to performance outcomes. Practically, it highlights the need for policymakers and public managers to integrate digital transformation initiatives with leadership development, organizational culture reform, and innovation management to achieve sustainable, citizen-oriented public sector performance.]]>
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