Digital Transformation and Management Capability in National Defense Posture: The Moderating Role of Defense Industry Self-Reliance

Abstract

Digital transformation has become central to defense modernization, yet evidence remains limited on how digital capabilities and management capacity interact with national defense-industry self-reliance to shape national defense posture. This study examines the direct effects of digital transformation, management capability, and defense-industry self-reliance, and tests whether self-reliance changes the effects of digital transformation and management capability on defense posture. The conceptual model integrates Dynamic Capability Theory, which explains organizational sensing, seizing, and transformation processes, with the Resource-Based View, which emphasizes strategic resource endowments. A cross-sectional survey produced 225 usable responses from personnel and officials associated with Indonesian defense institutions. The constructs were measured with 90 perception-based items and analyzed using partial least squares structural equation modeling with bootstrapping and predictive assessment. Digital transformation had the strongest positive direct effect on national defense posture, followed by management capability and defense-industry self-reliance. Defense-industry self-reliance significantly weakened the positive relationship between digital transformation and defense posture, contrary to the predicted direction, while it strengthened the relationship between management capability and defense posture. The model explained 75.4 percent of the variance in national defense posture and showed substantial out-of-sample predictive relevance. The negative moderation indicates that industrial localization can create short-term compatibility, resource-allocation, certification, and implementation frictions when domestic capabilities are not synchronized with digital modernization. The study contributes by showing that strategic resources do not automatically amplify dynamic capabilities; their value depends on alignment and implementation timing. Policy should therefore prioritize interoperable digital architectures, phased localization, technology-transfer milestones, and managerial capability development so that industrial self-reliance complements rather than constrains digital defense transformation.