Riding on the wave of digitization: insights how and under what settings dynamic capabilities facilitate digital-driven business model change

Abstract

Little is known what facilitates business model change in response to turbulent environments, particularly how firms can respond to digitization. This is noteworthy, since the emergence of digital technologies opens up the space for new business opportunities and at the same time creates numerous challenges. Motivated by the high practical relevance of the topic and following recent calls for investigating business model change from a dynamic capability lens, we show how and under what conditions firms successfully develop and implement digital business models. Our findings indicate, that firms need strong dynamic capabilities in order to respond to environmental dynamics. Further, we show first empirical insights about the role of organizational context as moderating variable on the relationship between dynamic capabilities and business model change. Dynamic capabilities are only effective, if there is an alignment between strategy, organizational design and appropriate leadership mindset. A further central outcome of the study is our contribution to an in-depth understanding related to the dynamic capability construct and their underlying mechanism. In doing so, we map overall 13 critical capabilities and various activities per case. We were also able to emphasize differences in the way of doing business in the digital age compared to the traditional view. First, we highlight the importance of relational capabilities. Internal networking, cross-divisional exchange and external partnerships increase the potential for a more efficient and effective implementation of digitization initiatives. Second, we distinguish between general and new digital capabilities. This specification allows managers to balance which capabilities to adapt, develop or build up in view of the given requirements on their road to successful digitization.