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Terrorism had a profound impact on the global economy, society and security. Malaysia encountered a comparable scenario in the Movida attack. The availability of funds is a crucial determinant for successful terrorist activities. Hence, a guideline was introduced to deal with terrorism financing. As reporting institutions, the compliance officers are the gatekeepers to report any suspicious transaction related to money laundering and terrorism financing. However, lack of study has looked into the role of the compliance officer in reporting potential terrorism financing activities. Hence, this study aims to examine the factors that influence terrorism financing reporting, focusing on terrorism financing policy, terrorism financing red flags and the integrity of the officers.

A total of 120 responses were collected among the compliance officers and 91 responses were analyzed using multiple regression analysis.

Findings show that only terrorism financing policy and terrorism financing red flags influence suspicious transaction reporting among the compliance officers. Hence, there is a need to focus on officer’s competency, by enhancing the training module, especially on the latest terrorism financing trends and red flags.

This will help the compliance officers to be more competent in fulfilling their role as the reporting entity because their roles are vital in preventing terrorism financing.

This study focuses on terrorism financing risk assessment, which is different from prior literature that focuses on money laundering risk assessment. Owing to lack of prior studies, the questionnaire developed in the study was made based on guidelines provided by the authority and regulator.

This study proposes the novel construct of digital transformation anxiety and investigates its effect, which is mediated by absorptive capacity and dynamic capability, on digital innovation performance.

This study conducted a questionnaire survey among Taiwanese manufacturing and service companies to verify the research framework. A total of 130 valid responses were collected and analyzed using partial least squares structural equation modeling (PLS-SEM) and bootstrapping to test direct and mediation effects, respectively.

Digital transformation anxiety negatively affects absorptive capacity and dynamic capability, whereas absorptive capacity and dynamic capability positively affect digital innovation performance. Dynamic capability more strongly mediates the association between digital transformation anxiety and digital innovation performance than absorptive capacity. Additionally, digital transformation anxiety does not negatively affect digital innovation performance. Finally, manufacturing companies had significantly higher levels of digital transformation anxiety than service companies.

This study proposes the novel construct of digital transformation anxiety to address a gap in the literature. Digital transformation anxiety leads companies to adopt unnecessarily conservative practices, preventing them from flexibly responding to technological advances. This insight highlights the negative effect of such anxiety on absorptive capacity and dynamic capability, extending the application of path dependency theory to companies. The findings underscore the value of enhancing dynamic capability and reallocating resources to foster digital innovation. The study identified and explored the concept of digital transformation anxiety and extended the perspective of dynamic capability to include digital transformation and digital innovation.

The current findings indicate that digital transformation anxiety does not substantially affect digital innovation performance in Taiwanese companies. Consequently, Taiwanese companies should focus on developing their absorptive capacity and dynamic capability to enhance digital innovation.

The study proposes the novel construct of digital transformation anxiety and explores its effect on business units. It presents a pioneering framework derived from path dependence theory and the perspective of dynamic capability.