Digital Transformation, Strategic Alignment Capability, and Sustainable Competitive Advantage: The Case of the UAE

Abstract

Firms globally are transforming digitally to enhance performance through building differentiated organizational capabilities within their digital ecosystem to maximize value. Drawing from the dynamic capability theory, this study aims to investigate the sources of sustainable competitive advantage, based on data from the UAE, by examining the impact of strategic orientations on firms’ survival through integrated strategic capabilities, adaptive marketing capability, and market ambidexterity. The choice of the UAE was based on two rational reasons. First, the adoption of new technologies is excelling in the UAE’s competitive environment especially AI, cloud, and data solutions across services industries, e.g., ICT, Telecom, Aviation, etc. Second, the government drives the digital economy to enhance the country’s positioning globally. Following a quantitative approach with a sample size of 185 service firms operating in the UAE, the study identifies how strategic orientations enable service firms’ long-term survival. Moreover, it assesses the moderating role of digital transformation between strategic orientations and sustainable competitive advantage through integrated strategic capabilities. Thus, it provides a better understanding of the dynamic capabilities of firms transforming digitally. The study revealed that strategic orientations positively enable the development of integrated strategic capabilities. The latter mediate significantly between strategic orientations and sustainable competitive advantage. It confirms that digital transformation is strengthening the relationship between strategic orientations and sustainable competitive advantage through the integrated strategic capabilities. The study contributes to evolving new forms of integrated strategic capabilities as sources for sustainable competitive advantage. It confirms the adaptive marketing capability and market ambidexterity integration and thus enriches the dynamic capability theory and ambidexterity theory body of knowledge.