Key determinants of employee dynamic capabilities and individual performance in the context of digital transformation

Abstract

To remain sustainable and relevant in the digital age, public sector organisations must adapt their models and focus on employee competencies to drive systemic change. Despite widespread digital transformation, few empirical studies explore the factors influencing employee dynamic capabilities (EDC) and performance (EP) in Malaysia’s public sector. This study investigates the impact of five personality traits (agreeableness, conscientiousness, openness, extraversion, neuroticism), cognitive capability, and intrinsic motivation on EDC and EP. Using a quantitative approach, data from 276 public sector employees across various ministries were analysed via SmartPLS. Findings reveal that conscientiousness, openness, neuroticism, cognitive capability, and intrinsic motivation significantly influence EDC and EP, with EDC mediating these relationships. However, extraversion and agreeableness showed no significant effects. The study contributes to theory by positioning EDC as a micro-foundation of dynamic capabilities and offers practical insights for human capital strategies in digital transformation.