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From Experimentation to Strategy: The Role of Digital Technologies in Strategy Renewal

Jacques Bughin, Tobias Kretschmer and Nicolas van Zeebroeck

No 2019-031, Working Papers TIMES² from ULB -- Universite Libre de Bruxelles

Abstract: With the increasing availability of digital technologies, many firms strive to embrace and develop new business models. A change in business model typically involves a renewal of a firm’s strategy, not a trivial endeavor. We therefore ask how far firms renew their strategy as they adopt new technologies (as opposed to mainly cosmetic changes to the value proposition)? We study this question empirically by assessing if the adoption of new digital technologies is associated with changes to firm strategy using a detailed survey-based dataset on firms’ adoption and strategy renewal for a wide range of digital technologies and firms. We observe a strong positive association between the degree of strategy change and the stage of adoption of advanced digital technologies overall, suggesting a tight coupling between (technological) structure and strategy. This result is robust to various specifications and across industries, even controlling for the stress from digitalization perceived by the firm. However, we notice substantial differences across technologies, potentially pointing at heterogeneity in their strategic nature or maturity level.

Keywords: Digital transformation; Strategic Organization Design; Technology adoption; Strategic renewal; Digital strategy; Big data; Artificial Intelligence (search for similar items in EconPapers)
Pages: 45 p.
Date: 2019-01
New Economics Papers: this item is included in nep-bec, nep-big, nep-knm and nep-pay
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