In contemporary times, the function of college administrators in steering institutional change has become increasingly vital. This study investigates the impact of Digital Leadership Competencies (DLC) among college administrators in China on faculty development and the advancement of Institutional Innovation (II), with particular attention to the mediating role of Faculty Digital Competence (FDC). Data were gathered from 368 faculty members representing multiple universities via a structured questionnaire. The relationships between DLC, FDC, Faculty Technology Behaviour (FTB), and II were analysed employing quantitative methods, including descriptive statistics, factor analysis, and Structural Equation Modelling (SEM). The findings indicate that administrators’ DLC significantly enhances FDC, which in turn positively influences FTB and II outcomes. Moreover, FDC functions as a crucial mediator, reinforcing the connection between leadership capabilities and institutional progress. The study emphasises that targeted strategies, such as fostering a digital leadership culture, implementing ongoing digital training initiatives, and investing in advanced infrastructure, are essential for cultivating a digitally innovative academic setting. By prioritising leadership and competence development, universities in China can more effectively address technological challenges, encourage sustainable innovation, and strengthen their competitive position within the global education sector.