How Can Firms Unlock Successful Implementation of Digitalisation? Firm-Level Evidence from Manufacturing Companies

Abstract

Although starting the process of digitalisation is not difficult for many global companies, successful implementation of digitalisation is much more elusive. Our study thus addresses the following research question: How can companies manage and sustain the positive outcomes of digitalisation, particularly in a volatile environment? We developed a new framework based on dynamics capability theory. Through an investigation of 203 Chinese manufacturing companies that have achieved varying degrees of digitalisation, we found that two primary types of strategic flexibility—resource and coordination flexibility—fully mediated the positive relationship between digitalisation and firm performance. Moreover, market turbulence enhanced the positive mediation effects of strategic flexibility (i.e. resource and coordination flexibility) on the digitalisation–performance relationship. This result suggests that when a company faces a highly uncertain market environment but seeks to maintain the performance boost resulting from digitalisation, it needs to place increased emphasis on the flexibility with which it manages and updates its resource portfolios. Our proposed moderated-mediation mechanisms contribute to strategic IS research on digitalisation by elucidating how companies can manage and sustain successful digitalisation outcomes. Our findings also provide insights managers can use to unlock successful implementation of digitalisation.

Keywords: digitalisation; resource flexibility; coordination flexibility; market turbulence; performance