| Summary: | This study aims to empirically investigate the mediating role of Organizational Capability in the relationship between IT investment and organizational performance within local government entities. This research is quantitative methods using primary data obtained through questionnaires. The research is conducted on all district/city governments in Indonesia, with a sample of 38 districts/cities selected from East Java using convenience sampling—data processing and testing using WrapPLS version 6. The unit of analysis is at the organizational level, specifically focusing on the district/city level. The results highlight that Organizational Capability partially mediates the positive relationship between IT investment and Organizational Performance in the local government sector. Notably, the impact of IT investment on Organizational Capability is weaker than the influence of Organizational Capability on Organizational Performance. These findings provide valuable insights into the dynamics of IT investment, Organizational Capability, and organizational performance within the context of local government. The study contributes to the existing literature and offers practical implications for local government entities aiming to improve their performance through effective IT investments and the development of organizational capabilities. © 2023, Success Culture Press. All rights reserved.
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