Overcoming the Digital Dilemmas: How Do Enterprises Develop Digital Transformative Capability?

In the context of enterprises actively pursuing digital transformation to seek new value creation activities, they inevitably confront intricate digital dilemmas stemming from sophisticated transformation requirements. However, the existing literature offers limited insights into the specifics of these dilemmas and the vital capabilities for managing them, failing to guide enterprises to navigate digital transformation effectively. This study conducts a qualitative study to investigate the specific digital dilemmas and how enterprises develop the necessary capabilities to address digital dilemmas. A novel framework outlining the pathways of developing the digital transformative capability to cope with digital dilemmas is proposed based on the interview data from 70 elites of 3 enterprises. Drawing on the proposed framework, we argue that four digital transformative capabilities, including organizational change, strategic orchestration, data governance, and business innovation, help enterprises cope with organizational inertia, develop digital structure dynamically, support data-driven operations, and reinvent business logic. By adopting the digital transformative capability lens, this research enriches the digital transformation literature by offering a nuanced understanding of the specific digital dilemmas and the underlying mechanisms that enable enterprises to break organizational barriers and embrace digital disruption. The findings are highly relevant for enterprises pursuing digital transformation, aiding them in overcoming digital dilemmas and advancing transformative endeavors.