Digital Capability and Business Model Reconfiguration : a co-evolutionary perspective

While IT-enabled innovations continue to disrupt long-lasting industries, emerging concepts and theories seek to explain implications of digitalisation on its value, competition and organisation. Over the past two decades, the notions of digital capability and business model reconfiguration as antecedents of organisational performance have become increasingly influential in the Information Systems literature. Appreciation of the role of strategic agility, external resources and interorganisational collaborations on IT-enabled value propositions has shaped the core logic and fundamental assumptions of the two aforementioned concepts. Nevertheless, the relationship between digital capability and business model reconfiguration remains underinvested and largely elusive. In order to reconcile such fragmented literature, the aim of this study is to investigate the coevolutionary dynamics of digital capability and business model reconfigurations. Digital capability reflects on the organisational ability to identify IT-enabled opportunities and deploy IS/IT to mobilise resources and structures in order to exploit those opportunities. Business model reconfiguration encapsulates management agenda to elevate value propositions for customers, partners and other stakeholders in order to create and capture value. It entails altering organisational resources and processes to enable such value propositions. Empirical data that is used in this thesis is gathered from an insurance company and contains information about the internal and external contexts, decisions, actions and performance between 2008 and 2016. There are four major phases during this time period. As identified, during each, the company revised its strategic intentions, invested in new IS/IT and human resources and reconfigured its business model. Results of this study illustrate that organisational digital capability drives strategic intentions for co-exploration and co-exploitation of value with partners. Such emerging strategies shape the configuration of the firm’s business model, which in turn leads to investments for generating the required IS competencies. This process increases the organisational digital capability, which affects the future cycles. Development of each IS competency is a result of co- exploration strategies. It is likely that such IS competencies are leveraged for co-exploitation in the future phases. In addition, Business-to-Business (B2B) IS competencies are instrumental in operationalising business models: however, as the number of partners grow and configuration of business models change, dyadic connections are likely to be replaced by standard ones. Strategies of co-exploration and co-exploitation could lead to innovative, adoptive or evolutionary business model reconfigurations. However, for incumbent organisations, business model innovation seems to follow several business model adaptations and evolutions. That is, a great deal of organisational learning and tinkering with business models, strategic intentions and technological backbone is needed to innovate business models. The final contribution of this research is the analytical model devised for exploring the essence of strategic decision making in dynamic environments. Based on the Appreciative Systems Model, the model illustrates how the perception of the constant flux of events and ideas leads to strategic intentions based on value and reality judgments, which in turn triggers action to operationalise those understandings. Both formulating the intentions and executing them will change future events, perceived ideas and emerging intentions based on evolving values and standards