Digital Innovation, Entrepreneurship, and New Business Models

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Paper Number

2194

Paper Type

short

Description

In this study, we argue and show that firms’ and industries’ digital transformations follow an institutional logic. In particular, we suggest that the information technology portfolios of firms within an industry and among industries will become more similar over time, as firms seek to secure legitimacy among stakeholders. We introduce institutional intuition as the critical attribute of firms that enables them to successfully depart from the industry’s information technology portfolio. To test our theorizing, we conducted a textual analysis of the 10k filings of all S&P 1500 firms from 1993 to 2018 building quantitative, longitudinal measures for different facets of digital transformation. We find that firms with greater industry similarity achieve higher performance. Yet, firms that diverge from the industry and have the right institutional intuition can break out of this logic and achieve superior performance.

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15-Innov

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Dec 12th, 12:00 AM

An Institutional Perspective on Digital Transformation

In this study, we argue and show that firms’ and industries’ digital transformations follow an institutional logic. In particular, we suggest that the information technology portfolios of firms within an industry and among industries will become more similar over time, as firms seek to secure legitimacy among stakeholders. We introduce institutional intuition as the critical attribute of firms that enables them to successfully depart from the industry’s information technology portfolio. To test our theorizing, we conducted a textual analysis of the 10k filings of all S&P 1500 firms from 1993 to 2018 building quantitative, longitudinal measures for different facets of digital transformation. We find that firms with greater industry similarity achieve higher performance. Yet, firms that diverge from the industry and have the right institutional intuition can break out of this logic and achieve superior performance.

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