Unlocking Innovation in Manufacturing: The Impact of Data Analytics Maturity and Knowledge-Oriented Leadership

Abstract

This study examines the impact of data analytics maturity on innovation capabilities in Pakistan's manufacturing sector, emphasizing the mediating role of knowledge-oriented leadership. It also investigates the distinct influence of data science skills and data analytical skills on explorative and exploitative innovation capabilities. This research fills a gap in the literature by exploring how organizations can leverage data competencies alongside leadership to drive innovation within a developing economy. A deductive methodology was adopted, with data collected from 354 respondents in manufacturing firms across Lahore, Faisalabad, Karachi, and Sialkot. Convenience sampling was employed, and Structural Equation Modeling (SEM) with Smart PLS 4.0 was utilized for data analysis. To ensure reliability, validity and robustness, the study assessed outer loadings, R-squared values and variance inflation factors. Results indicate that data analytical skills significantly influence both explorative and exploitative innovation capabilities, while data science skills have a stronger impact on explorative innovation. Knowledge-oriented leadership plays a crucial mediating role, reinforcing the importance of leadership in translating data competencies into innovation outcomes. The empirical findings confirm that knowledge-oriented leadership enhances both types of innovation, supporting theories of transformational leadership and organizational learning. The model exhibited strong explanatory power, with statistically significant path coefficients supporting the acceptance of all hypotheses. The study underscores that while data capabilities are essential, their impact on innovation is maximized when complemented by effective leadership. These findings contribute to research on digital transformation and innovation management, offering practical insights for manufacturing firms to integrate data-driven decision-making with leadership development. By fostering data analytics maturity and knowledge-oriented leadership, organizations can enhance their innovation capabilities, ensuring a sustainable competitive advantage in the era of Industry 4.0.