Why Do Some Digital Transformation Initiatives Succeed? Evidence from Indonesia's Pulp and Paper Sector

Indonesia’s pulp and paper industry is under increasing pressure to advance digital transformation to improve sustainability and operational performance. However, empirical evidence on the organizational factors that enable this transition remains limited. This study aims to empirically examine whether digital transformation in Indonesia’s pulp and paper industry is primarily driven by leadership influence or workforce capabilities, addressing the limited sector-specific evidence in developing economies. Applying a quantitative research design, data were collected from 183 professionals through purposive sampling and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings show that digital transformation in this sector is predominantly driven by workforce capability. Digital literacy is the strongest predictor (β = 0.513), indicating that employees’ digital competence plays a central role in shaping transformation outcomes. Digital infrastructure also exerts a significant but more moderate influence (β = 0.189), functioning as an enabling condition rather than a distinguishing factor. Digital leadership, however, demonstrates no significant direct effect (β = 0.127), suggesting a gap between managerial intent and the practical execution of digital initiatives. These results highlight the importance of strengthening human capital development and addressing infrastructure limitations to accelerate digital transformation across the pulp and paper industry.