Digitalization Capability, Business Process Reengineering, and Business Performance: Evidence from Six Middle Eastern Markets

Enterprises across the Middle East have absorbed substantial digital investment, yet returns are uneven: firms with comparable digital technologies do not report comparable innovation, agility, or performance. Drawing on the Resource-Based View and Dynamic Capabilities perspective, this study tests Business Process Reengineering (BPR) as a mediator between digitalization capability (DC) and Organizational Agility (OA), Digital Innovation (DI), and Business Performance (BP), and whether digital leadership (DL) moderates the DC-BPR association. Because within-firm agreement on these constructs is negligible (Section 6.6), all constructs, hypotheses, and results below are defined and interpreted at the level at which they were measured: as employees’ individual perceptions of firm-level digital practices and outcomes, not as verified firm-level records. A structural model was estimated using genuine PLS-SEM (Mode A, PATH weighting) with percentile-bootstrap inference (2000 resamples for the base model; 1000 for the moderation and mediation sub-analyses) on 336 respondents nested within 50 firms across six Middle Eastern markets (Egypt, Saudi Arabia, the UAE, Jordan, Morocco, Qatar); firm-clustered standard errors correct inference for the base paths, and all percentile bootstraps—including the indirect and interaction effects—additionally use firm-block resampling for fully dependence-aware inference throughout (Section 6.6). DC was most strongly associated with BPR (β = 0.485), and all remaining hypothesized base paths (H1 - H7) were significant. For DC - DI, results show a complementary (partial) mediation pattern via BPR (H8: direct = 0.210, indirect = 0.120, confirmed by a dedicated single-estimand, firm-block bootstrap, 95% CI [0.073, 0.172], p < 0.001; Section 7.8). For BPR - BP, the direct effect was nonsignificant; restricted to the specifically hypothesized organizational-agility route (H9), the indirect BPR → OA → BP path was positive and, under its own dedicated firm-block bootstrap, significant (β = 0.070, 95% CI [0.032, 0.114], p < 0.001), consistent with indirect-only mediation through agility, while a supplementary, non-hypothesized route through digital innovation was also positive and significant (β = 0.044, p < 0.001) and is reported separately as exploratory (Sections 7.8, 7.13). The hypothesized DC × DL interaction on BPR (H10) reached significance under naive standard errors but not under bootstrap validation, so H10 is not robustly supported. These findings indicate that digitalization capability is associated with performance-relevant outcomes largely through organizational reconfiguration (BPR), with agility and innovation representing distinct downstream routes to performance; digital leadership’s hypothesized moderating role did not hold up once resampling uncertainty was taken into account. The cross-sectional, single-source design and the two-indicator DL measure limit the conclusions that can currently be drawn; robustness checks already completed (firm-clustered standard errors and firm-block, dependence-aware bootstraps throughout, outlier trimming, controls) left the significant base paths unchanged.