Digital Transformation in Asset-Intensive Industries: Systemic Constraints and Synchronized Change

Abstract

Digital transformation induces fundamental changes to a wide range of business operations. Prior research is abundant in cases from industries where digital transformation has emerged rapidly. This has led to the establishment of a shared notion of the promising future and impact of digital transformation. However, the slow progress of digital transformation in asset-intensive industries indicates that there are context-specific development patterns, and that the related challenges, opportunities, and capability requirements warrant a more comprehensive study. To fill this knowledge gap, this doctoral research included empirical inquiry in the metals and mining industry. The four original research articles included in the dissertation adopt a qualitative case study approach with a focus on understanding the common new requirements, challenges, and development patterns of the organizational capabilities. Both inductive and abductive methods are utilized to derive findings from 53 interviews which were conducted during 2015-2018 - the global respondents represented 35 firms that either operate within or supply technologies to the metals and mining industry. The critical realist perspective is adopted in the study. The findings show that firms operating in a stable business environment setting demonstrate limitations on their dynamic capabilities, and they consequently encounter market-specific digital transformation constraints. The outcome suggests the industrial firms shall develop and acquire new types of capabilities that organically connect the technological and social aspects of the transformation. For an individual firm, inter-organizational ambidexterity, which can be achieved by combining internal and network capabilities, is critical for unlocking the full potential of digital transformation. On the industry ecosystem level, this requires the connected firms to address the systemic constraints and to drive changes in a synchronized manner. Therefore, capability evolvement calls for a balance between developing internal capabilities and exploring for complementary capabilities through networks. This study adds understanding to the existing body of digital transformation and information system research, and contributes to the theoretical disciplines of dynamic capabilities and organizational ambidexterity. The study highlights the critical need for a synchronized transformation among the connected organizations, which in turn requires renewal of organizational capabilities. By introducing a novel terminology "boundary spanning dynamic capabilities", and by explicating organizational ambidexterity with network capabilities, this study attempts to shift the existing dynamic capabilities discussion towards a network perspective. The strong practical implications of this study reveal possibilities on how firms in the asset-intensive industries could overcome the recognized constraints and drive the digital transformation process.