Digital new market creation by incumbent firms: A political lens on the effect of formalization on agility

Digital new market creation has several advantages for incumbent firms (hereafter referred to as ‘incumbents’) that they seek to exploit by using formalization and implementing agility in their new product development (NPD). We introduce the construct of NPD decision agility encompassing the dimensions of sensemaking, speed, and iteration. However, research reveals heterogeneous insights into formalization’s suitability for digital new market creation and NPD decision agility. In response to this research gap, we test our hypotheses by applying a behavioral lens to a sample of 129 incumbents. We reconcile these heterogeneous insights on innovation by showing that formalization increases digital new market creation, but has more fine-grained effects on NPD decision agility. Although improving sensemaking and reducing iteration, formalization has no effect on speed. Furthermore, political behavior increases formalization’s negative effect on iteration. We contribute to research digitalization and agility at the intersection of information systems and innovation management by reconciling these heterogeneous insights.     

Exploring the relationships between IT competence,innovation capacity and organizational agility

Business environments today are characterized as being very dynamic and hyper competitive. Organizations in these environments have to be agile in order to adapt their strategies and actions to be successful. While it is recognized that information technology can enable firms to be agile, there is a limited understanding of the mechanisms through and the contexts in which Information Technology (IT) enhances agility. This study examines two key antecedents of organizational agility, namely the IT competence of a firm and its innovation capacity and, examine their independent and joint effects on agility. We test our model using data collected from large firms in the US. The results provide strong support for our model. We found that firms with superior IS capabilities coupled with an aggressive IT investment orientation create digital platforms that enable them to be agile. We also found that the innovation capacity of the firm has a positive relationship with organizational agility and that firms with higher innovation capacity are better able to leverage their digital platforms to enhance agility. Our results indicate that organizational agility has a strong positive impact of firm performance. We interpret and discuss these results and their theoretical and practical implications.     

The role of IT application orchestration capability in improving agility and performance

This paper investigates how IT application orchestration – a dynamic capability encapsulating a firm’s ability to refresh its application portfolio through a process of building, buying, and retiring IT applications – impacts firm performance. We propose a conceptual model in which the effect of IT application orchestration on firm performance is mediated by process agility. We further propose that a firm’s strategic orientation moderates the effect of IT application orchestration capability on process agility. Analysis of data from an international survey of IT executives supports our proposed hypotheses. This research contributes to the emergent literature on dynamic capabilities by proposing and testing a theory of how IT application orchestration capability affects agility and firm performance.     

Enterprise agility and the enabling role of information technology

In turbulent environments, enterprise agility, that is, the ability of firms to sense environmental change and respond readily, is an important determinant of firm success. We define and deconstruct enterprise agility, delineate enterprise agility from similar concepts in the business research literature, explore the underlying capabilities that support enterprise agility, explicate the enabling role of information technology (IT) and digital options, and propose a method for measuring enterprise agility. The concepts in this paper are offered as foundational building blocks for the overall research program on enterprise agility and the enabling role of IT.     

Building novel capabilities to enable business intelligence agility: results from a quantitative study

The class of business intelligence (BI) systems is widely used to guide decisions in all kinds of organizations and across hierarchical levels and functions. Organizations have launched many initiatives to accomplish adequate and timely decision support as an important factor to achieve and sustain competitive advantage. Given today’s turbulent environments it is increasingly challenging to bridge the gap between establishing a long-term strategy and quickly adopting to the dynamics in market competition. BI must address this field of tension as it was originally used to retrospectively reflect an organization’s performance and build upon stability and efficiency. This study aims to understand and achieve an agile BI from a dynamic capability perspective. Therefore, we investigate how dynamic BI capabilities, i.e., adoption of assets, market understanding, and intimacy as well as business operations, impact the agility of BI. Starting from a literature review of dynamic capabilities in information systems and BI, we propose hypotheses to connect dynamic BI capabilities with the agility to provide information. The derived hypotheses were tested using partial least squares structural equation modeling on data collected in a questionnaire-based survey. The results show that the lens of dynamic capabilities provides useful means to foster BI agility. The study identifies that technological advancements like in-memory technology seem to be a technology enabler for BI agility. However, an adequate adoption and integration of BI assets as well as the focus on market orientation and business operations are crucial to reach BI agility.     

Inside the adaptive enterprise: an information technology capabilities perspective on business process agility

Recent innovations in utility computing, web services, and service-oriented architectures, combined with a growing array of IT skills, have improved firms’ ability to be more agile in responding to change. Using the resource-based view of the firm, prior research suggests that IT resources, in isolation, are unlikely to yield superior performance and so as firms try to boost their agility, the question becomes how to configure IT resources to prepare for, or react to, change. In this paper, we posit that managerial IT capabilities based on IT-business partnerships, strategic planning, and ex-post IT project analysis lead to the development of technical IT capabilities associated with a flexible IT infrastructure which in turn drives agility or a firm’s ability to react to change in its products and markets. Using data from matched surveys of IT and business executives in 241 firms, we find that managerial and technical capabilities affect agility. In further testing, we reveal that in a stable setting, technical IT capabilities are more important to agility than managerial IT capabilities, while in a dynamic setting, the opposite is true. Thus, for firms operating in volatile markets, effective models of managerial IT governance are essential for delivering superior agility or adaptiveness.

Achieving agility using business model stress testing

Business Model (BM) Innovations aim at making systemic changes in the business logic of companies when they are bringing innovative products and services to the market. Companies should be sensitive to changes in their business environment and able to modify their BMs in an agile way. To assess the agility of BMI during specific market entry situations, this paper uses a method that stress tests the value proposition and the components of a BM against contingent uncertainties. We present three qualitative case studies of companies that differ in their market entry approach. Starting from their strategic orientation, these case companies’ stress test their Business models and BM components, using a scenario-based identification of uncertainties. The BM Stress Test method contributes to a quick understanding of the components their BM needs to monitor, reconsider, or improve. Such stress testing helps enhance business agility. The research contributes to market strategy and business modelling research by introducing BM Stress Testing as a new method that can achieve and maintain agility regarding BM uncertainties.     

The role of information governance in big data analytics driven innovation

The age of big data analytics is now here, with companies increasingly investing in big data initiatives to foster innovation and outperform competition. Nevertheless, while researchers and practitioners started to examine the shifts that these technologies entail and their overall business value, it is still unclear whether and under what conditions they drive innovation. To address this gap, this study draws on the resource-based view (RBV) of the firm and information governance theory to explore the interplay between a firm’s big data analytics capabilities (BDACs) and their information governance practices in shaping innovation capabilities. We argue that a firm’s BDAC helps enhance two distinct types of innovative capabilities, incremental and radical capabilities, and that information governance positively moderates this relationship. To examine our research model, we analyzed survey data collected from 175 IT and business managers. Results from partial least squares structural equation modelling analysis reveal that BDACs have a positive and significant effect on both incremental and radical innovative capabilities. Our analysis also highlights the important role of information governance, as it positively moderates the relationship between BDAC’s and a firm’s radical innovative capability, while there is a nonsignificant moderating effect for incremental innovation capabilities. Finally, we examine the effect of environmental uncertainty conditions in our model and find that information governance and BDACs have amplified effects under conditions of high environmental dynamism.     

Information technology, operational, and management competencies for supply chain agility: Findings from case studies

Given the growing emphasis on the need for supply chain agility to sustain competitive advantage, this study explores the impact of the relationship between supply chain competence and supply chain agility on firm performance. Although the influence of supply chain agility on firm performance has been acknowledged, this study further articulates the relationship from the perspective of inter-organizational collaboration. We develop a conceptual model based on the resource-based view and employ a multi-case study method in this exploratory research. Our findings highlight the importance of distinguishing the difference between supply chain agility and supply chain competence and their impact on firm performance. This study contributes to the growing body of conceptual and empirical literature on supply chain agility and adds to the understanding of the complexity of supply chain competence.     

Impact of digital leadership capability on innovation performance: The role of platform digitization capability

Following a mixed-methods approach, we theorized that digital leadership influences innovation performance by digitalizing the firm's platform. A multiple case study of ten companies was deployed to derive a theoretical model relating digital leadership and innovation performance. The resulting model was empirically tested on a sample of 117 European firms. We find that digital leadership improves a firm's innovation performance by digitalizing the firm's platform. We contribute to IS research by theoretically developing the concepts of digital leadership capability and platform digitization capability and empirically analyzing the relationship of these two critical IT capabilities and their impact on innovation performance.     

Market orientation,restructuring and collaboration: The impact of digital design on organizational competitiveness

Design is commonly understood as a key element of products, contributing to their distinctiveness, usability and aesthetics. The success of a product is increasingly related to the user experience or the aesthetics of the user interface, meaning that design is increasingly important in the digital environment. The shift in competitive focus to the customer induced by digital design encourages companies to innovate and can also lead to changes in internal operations, market orientation and the reconfiguration of external collaboration procedures. This dimension of digital design-induced effects has to date seen very little research. The objective of this study is to investigate how digital design-induced changes in market orientation, internal restructuring and external cooperation affect firms' competitive orientation. The simultaneous equation framework was applied to a survey of 515 user interface and experience designers from France. Our results suggest that market orientation is not the only channel through which digital design influences firm competitiveness. Digital design leads to organizational change and the reconfiguration of external relationships that directly and indirectly help companies build competitive advantages and increase customer satisfaction.     

Pricing strategies for tied digital contents and devices

Media companies are increasingly offering digital content to consumers. Many of these companies are tying digital content with their proprietary digital devices. In this study, we develop a consumer demand model for digital device and digital content based on a constant elasticity demand function. In modeling consumer valuation of the digital device, we take consumer surplus on digital content into account. We further derive equilibrium prices for digital devices based on an oligopoly competition model with horizontal product differentiation. We analyze the equilibrium prices and how prices affect firm profits. We find product differentiation and the level of product substitutability affect prices. We also find that content price plays a significant role in affecting the price of the digital device. Content price can either increase or decrease the tied digital device price depending on the profit margin and demand elasticity of the digital content. We further analyze how content and device prices affect their respective profits and the overall profit of the firm. We extend our model to vertical product differentiation and find vertical product differentiation and the level of product quality affect prices.     

Resources,dynamic capabilities and performance in a dynamic environment: Perceptions in Taiwanese IT enterprises

This paper presents the results of an analysis of resources, dynamic capabilities and performance in a dynamic environment. The author used data from 244 Taiwanese information technology firms and found that, in an unstable environment, resources, whether from the firm itself or from associated support firms, did not directly influence performance. Instead, resources influenced performance through exercising dynamic capabilities. Furthermore, this effort showed that information technology firm performance can be directly assessed by examining the innovation speed, market response speed, production efficiency, and production flexibility of a firm.     

The dual role of IT capabilities in the development of digital products and services

Past research on the business value of information technologies (IT) has demonstrated the positive contribution of IT capabilities (IT-C) to product innovation performance. However, with the advent of digital technologies, a new kind of product innovations gained importance: digital product and service innovations (DPI). As a consequence of their idiosyncratic characteristics, the usefulness and validity of existing product innovation management concepts cannot be transferred to the context of DPI without further ado. Accordingly, this study reinvestigates the role of IT-C in the specific context of DPI. Therefore, we begin with a differentiation of DPI from traditional, non-digital product innovation. Then, we propose that IT-C affect the performance of DPI projects via two paths. First, based on the notion that DPI rely on the use of innovative IT, we assume that IT-C directly impact DPI performance. Second, following prior research that has argued that the performance contribution of IT-C is mediated by other organizational intermediaries, we assume that IT-C also indirectly contribute to DPI performance through their positive influence on other organizational capabilities. One such organizational capability that mediates the influence of IT-C on DPI performance is a firm’s DPI capabilities (DPI-C). DPI-C allow firms to deploy their digital resources for DPI purposes and, thus, are an important antecedent for DPI performance. To test our assumptions, we use partial least squares–structural equation modeling technique and analyze survey data collected from DPI projects across different industries in Germany, Austria, and Switzerland.     

Enterprise systems and demand chain management: a cross-sectional field study

Increased product variety, compressed cycle times, supply chain network based competition and the uncertainty in business environment are forcing organizations to shift their emphasis towards demand chain management. Though enterprise systems and supply chain management software solutions are well in place in most of the large enterprises in Australia, their ability to support demand chain management approach is not yet known. This paper investigates the adoption of demand chain management in Australian organizations using cross-sectional qualitative field study. It found that the adoption is limited despite the organizational capabilities and sound digital platforms. Standardization, integration, visibility and control of processes and information, enabled by enterprise systems, are helping the organizations in improving their ability to sense and shape market demand and customer needs, and build agility into their decision making processes. Attempts to synchronise operating and finance cycles and collecting market intelligence and sharing of that across the supply chain are some of the initiatives that have started showing benefits. Adopting the demand chain management initiatives such as establishment of market intelligence mechanism, building agility into decision making processes, sophisticated usage of optimization tools embedded in software solutions, and process frameworks such as Supply Chain Operations Reference are helping organizations to achieve both agility and control simultaneously.     

The relationship between work organization and workforce agility in small manufacturing enterprises

Organizational agility requires development of an adaptable workforce that is able to deal with unexpected and dynamic changes in the business environment. However, little research has been done on the attributes and characteristics of workforce agility. Even less is known about what organization characteristics are conducive to the agile performance of employees. The main goal of this study was to explore the effect of agile strategies on work organization and employees' performance. A total of 41 managers, 82 office workers, and 52 production workers from six small manufacturing companies participated in the study. Three questionnaires, including Agility Strategy Scale, Work Organization Scale, and Workforce Agility Scale, were used for the purpose of data collection. The results support a hypothesized relationship between management strategies focused on agility development, work characteristics, and workforce agility. The results also reveal that autonomy at work is one of the most important predictors of workforce agility. A combination of job demands and job uncertainty had a significant effect on workforce agility. The study also suggests that developing strong cooperative relationships within an organization and with customers and suppliers promotes workforce agility in small manufacturing enterprises.     

Digital at the edge – antecedents and performance effects of boundary resource deployment

With business ecosystems digitalizing by the force of digital innovation, the deployment of boundary resources (such as application programming interfaces: APIs) becomes a strategic option across contexts. We distinguish between boundary resources that provide access openness and those that provide resource openness, and theorize the antecedents and consequences of their deployment. Employing panel data regressions to a longitudinal cross-industry dataset, we find that the digital knowledge base of the focal firm and the existence of potential digital complementors drive boundary resource deployment. Such deployment benefits firm performance depending on the firm’s market power. From our empirical analysis, we reveal a differentiated perspective on the quality of the confined openness provided by boundary resources as well as the embeddedness of their deployment in the rationales and motivations of the associated actors in digital business ecosystems. We complement the existent theoretical framework on boundary resources and provide valuable insights to managers reflecting about deploying boundary resources in a beneficial way.     

Exploring characteristics and transformational capabilities of InsurTech innovations to understand insurance value creation in a digital world

Recent developments in the insurance industry embrace various “Insurance Technology” (InsurTech) innovations. To date, there is a lack of structured assessments of InsurTech. Prior research on FinTech fails (1) to clarify how InsurTech can be characterized and what capabilities are employed, and hence, (2) to reveal implications for value creation on firm and industry level. We address this by inductively building a model of InsurTech innovation adopting the grounded theory method. Our empirical data includes 208 InsurTech innovations from a market analysis based on Twitter data and a multiple-case study. The resulting model comprises 52 characteristics and 14 transformational capabilities and is integrated with extant value networks and intermediation literature. The former explains how InsurTech affects firm-level value creation and suggests that disruptive potentials emerge from aligning the transformational capabilities along three interdependent activities. The latter explains the entrance of digital intermediaries and their roles in the personal insurance market.     

Agility in responding to disruptive digital innovation: Case study of an SME

Disruptive digital innovation (DDI) often creates hypercompetitive market environment that forces firms to be agile to survive and remain competitive. Whereas most studies have focused on larger firms' effort to be agile, few have looked at how small‐ and medium‐sized enterprises (SMEs) respond to DDI. The study attempts to answer the research question of how SMEs achieve agility to respond to DDI. Drawing on a case study of an innovative SME, our study develops a framework on agility based on the processes of mitigating organizational rigidity, developing innovative capabilities, and balancing the tension of organizational ambidexterity. Specifically, our findings show that for SMEs, mitigating organizational rigidity is enabled by the mechanism of achieving boundary openness while developing innovative capability is enabled by the mechanism of achieving organizational adaptability. At the same time, given the inherent challenges of resource constraints, SMEs also need to balance the tension of organizational ambidexterity.     

IOS drivers of manufacturer-supplier flexibility and manufacturer agility

In today’s hypercompetitive environment, it is critical for manufacturing firms to be agile in responding to ephemeral opportunities in the marketplace. This agility often requires the collaboration with supply chain partners. However, how a manufacturing firm collaborates with its suppliers to achieve agility remains an understudied issue. This study holds that manufacturing firms and their suppliers need to develop manufacturer-supplier flexibility accompanied with well-built integrated information systems and associated analytical systems (such as business intelligence) to enable manufacturer agility. To deepen our understanding of the roles of manufacturer-supplier flexibility and IOS technologies in facilitating manufacturer agility, we build and test a model based on the real options theory and bounded rationality. Based on 141 matched-pair samples of Taiwanese manufacturing firms, our findings demonstrate the importance of manufacturer-supplier flexibility in achieving higher manufacturer agility, wherein IOS integration enables better flexibility. We also show IOS-enabled analytical ability can strengthen the effect of such flexibility on manufacturer agility. Implications of the results for practices and academics are provided.