Purpose: This study examines how strategic digital orientation affects firm performance and whether business agility mediates that relationship among firms operating in Makassar, Indonesia, a regional economic hub in Eastern Indonesia.
Research Methodology: A quantitative, explanatory cross-sectional survey was conducted with 218 managers of service, trade, and manufacturing firms in Makassar selected through purposive sampling. Constructs were measured with five-point Likert scales, and the mediation model was estimated using PLS-SEM in SmartPLS 4.0 with 5,000 bootstrap resamples.
Results: Strategic digital orientation positively affects firm performance (β = 0.214; p = 0.001) and business agility (β = 0.580; p < 0.001), and business agility positively affects firm performance (β = 0.528; p < 0.001). Business agility partially mediates the relationship, with the indirect effect (β = 0.306) accounting for 58.8% of the total effect, explaining 51.2% of the variance in firm performance.
Conclusions: Strategic digital orientation improves performance directly and, more substantially, indirectly through business agility, indicating that the benefits of a firm's strategic digital orientation are realised largely through agile capabilities rather than through digital commitment alone.
Limitations: The cross-sectional design limits causal inference, the use of self-reported perceptual measures may introduce common method bias, and the single-city sample constrains generalisability to other regions and sectors.
Contributions: The study empirically tests business agility as a mechanism linking strategic digital orientation to firm performance and provides firm-level evidence from a secondary metropolitan area in an emerging economy.