Digital transforming capability and performance: a microfoundational perspective

Abstract

PurposeDrawing on the literature on dynamic capabilities and digital transformation, this paper conceptualises and investigates the relevant antecedents of an essential capability for digital transformation – the digital transforming capability – and its effect on the competitive advantage of firms.Design/methodology/approachA framework with individual and organisational microfoundations of the digital transforming capability is proposed based on previous research. The digital transforming capability is conceptualised as a second-order construct. The model is tested using data from a broad spectrum of large US companies. Structural equation modelling (SEM) is applied to test the proposed framework.FindingsThe study identifies three main microfoundations that, when combined, build a digital transforming capability (digital-savvy skills, digital intensity and context for action and interaction); in addition, the study tests the relationship between digital transforming capability and firm performance. The results validate the proposed theoretical framework. In addition to proposing relevant microfoundations of the digital transforming capability, we advance knowledge on the performance effects of those microfoundations.Originality/valueThe paper contributes to advancing the understanding of the digital transformation phenomenon by revealing the role of the primary components underlying the digital transforming capability. Yet the mechanisms by which the micro-level aspects are important for digital transformation and organisational outcomes are only suggested by anecdotal evidence. The paper also contributes to ongoing calls for further investigation to extend the understanding of the microfoundations of dynamic capabilities. Finally, by drawing on archival data, this study also contributes to calls to broaden the toolkit used in dynamic capabilities research.

The impact of digitalization and inter-organizational technological activities on supplier opportunism: the moderating role of relational ties

“…Our study also contributes to the SC digitalization literature. First, our findings empirically validate the role of digitalization in promoting inter-organizational technological activities, which responds to the call of Ritter and Pedersen (2020) and Sousa-Zomer et al (2020) for more empirical research to investigate the influence of digitalization in real-world practices. SC scholars have described how the emergence of digital transformation may change SC processes and operations (Holmstrom et al, 2019;Seyedghorban et al, 2020).…”

Exploring digital servitization trajectories within product–service–software space

“…Third, the DS requires manufacturers to consider both endogenous and exogenous factors when designing PSSw systems. For instance, manufacturers are required to simultaneously develop internal digital capabilities (Warner and W€ ager, 2019;Sousa-Zomer et al, 2020) and navigate digital ecosystems (Datt ee et al, 2018). Yet, for many, the majority of softwarerelated knowledge lies outside of their organizations, increasing dependency on the surrounding digital ecosystems (Hanelt et al, 2020).…”

Understanding the influential and mediating role of cultural enablers of AI integration to supply chain

“…Finally, as illustrated, in terms of the methodological approach, this paper performs CFA and SEM. Several papers which have explored the themes of organisational culture and digital transformation have favoured the above approach, limiting the need for additional types of regression analysis (see for instance; Bortolotti, Boscari, and Danese 2015;De Sanctis et al 2018;Sousa-Zomer, Neely, and Martinez 2020).…”