Abstract

The rapidly changing business environment compels businesses to invest in digitalisation. Whilst the investment in digitalisation is growing, businesses struggle to realise the strategic benefits of digitalisation. To address this problem, this paper introduces a digital capabilities renewal framework. Drawing from the dynamic capability theory, we argue that to generate and sustain business value, organisational must be directed to the capability renewal process – a process of reconfiguring and realigning digital capabilities to develop higher-order dynamic capabilities. We present this argument in a nomological net that binds together the ordinary capabilities and managerial actions, the digital capability renewal process, and the dynamic capabilities and organisational value constructs. We further develop a set of propositions. The paper lays the foundation for investigating the behaviours and activities of the digital capability renewal process. Future research can test and validate the proposed framework in empirical settings.

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