Upgrading adaptation: How digital transformation promotes organizational resilience

Abstract

Research SummaryThis study explores how digital transformation can promote organizational resilience when incumbent firms face crises. We examine the intersection of digital transformation and resilience‐seeking processes through two longitudinal case studies of incumbent firms designated as “essential businesses” during the COVID‐19 pandemic. We analyze 72 crisis adaptations the firms implemented during the crisis to understand how previously underutilized digital capabilities upgraded each firm's ability to adapt to mitigate stakeholder risks and engage in resilience‐seeking rather than advantage‐ or opportunity‐seeking. We identify five digital capabilities—virtual access, virtual collaboration, data‐driven decision‐making, algorithmic reprogrammability, and assisted decision‐making—that arose from technologies acquired to enable digital transformation before the crisis. We discuss the concept of resilience opportunities and contribute to the literatures on digital transformation and organizational resilience.Managerial SummaryWhile studying the digital transformation of incumbent firms, we found that digital capabilities helped firms adapt during the COVID‐19 pandemic in ways that crisis management plans did not anticipate. As a result, these adaptations accelerated digital transformation initiatives that years of strategic planning had failed to achieve. We explain why the quantum leap in digital transformation helped these firms not only adapt during crisis, but digital adaptation also enabled them to bounce back more resilient and competitive than before the crisis. We show how the pursuit of organizational resilience can be a vital justification for investments in digital transformation. Strategic leaders play a critical role in not only adopting new technologies, but also in helping firms become more adaptive by combining new and legacy technologies.

Leading digital transformation in incumbent firms: A strategic entrepreneurship framing

“…Recognizing these unique aspects of digital transformation as distinct from other transformations, we conceptualize three common types of changes that digital transformation engenders for incumbents-strategic, organizational, and ecosystem transformation. By strategic transformation, we refer to new ways of creating and capturing value enabled by digital technologies, involving creating new business models and/or strategies, developing new capabilities, and/or upgrading existing capabilities (cf., Browder et al, 2024). Such strategic transformation varies along three underlying dimensions-the focus of transformation (whether the focus of transformation is business models, the broader strategy, or underlying capabilities), the centrality of transformation (whether the changes are core or peripheral to the organization), and the disruptiveness of transformation (whether they enhance or destroy existing assets, knowledge, and relationships).…”

“…Externally, digital transformation has implications for the firm's ecosystem (i.e., Adner, 2021). Reuter and Floyd (2024), in this special issue, suggested that digital transformation entails an ecosystem challenge, requiring firms to complement their value proposition with partners' offerings. Thus, a key strategic choice is whether firms will choose to compete independently or deepen and/or widen their participation in external ecosystems.…”

“…Clearly, then, it is a core task of strategic leaders to form and execute a vision for ecosystem development strategically. In this regard, the Special Issue article by Reuter and Floyd (2024), entitled “Strategic leaders' ecosystem vision formation and digital transformation: A motivated interactional lens ,” makes a valuable contribution by developing novel theory about why and how strategic leaders differ in the digital ecosystems they envision. The authors conceptualize ecosystem visions as mental models of the firm's multilateral complementarities with (prospective) partners, which are developed through leaders' social interactions with the ecosystem.…”

“…Indeed, digital transformation entails not only the development of new digital resources and capabilities but also leveraging and linking these capabilities with non‐digital resources and capabilities. The paper in our Special Issue entitled “Upgrading adaptation: How digital transformation promotes organizational resilience ” by Browder et al (2024) offers novel insights into this process.…”

Strategy for sustainable supply chain transformation: a resource orchestration perspective

“…As defined by the Development Research Center of the State Council of PRC, digital transformation refers to the building of closed loop of data collection, transmission, storage, processing and feedback, using new generation of information technology. Many studies have emphasized the positive role of digital transformation in organizational change (Hanelt et al, 2021), knowledge management (De Bem Machado et al, 2022), enterprise performance (Liu et al, 2023a, b), organizational resilience when facing crises (Browder et al, 2024), corporate green innovation (He and Chen, 2024) and other aspects. For sustainable development, Schilling and Seuring (2023) emphasized that digital transformation is now of great significance for cultivating new drivers of sustainability and supply chain transformation.…”