Survival and Growth of Digital Innovation Units: A Case Study Analysis

Striving to overcome the digital capability gap in digital innovation (DI), incumbents in industrial-age contexts establish DIUs, which deliver new digital technology-related skills and working procedures to their main organizations (MOs). However, DIUs face integration hurdles and internal competitiveness that hinder their survival and growth. Although prior research considers DIUs as vital initiatives to overcome digital capability gaps and is rich on the objectives and outcomes of DIUs, research to date can only insuf-ficiently explain how DIUs can master their continuous struggle for survival and growth. To better understand the evolution of DIUs, we followed a case study approach based on evolutionary theory, in which we observed 16 DIUs within one of the world’s leading automotive OEMs and identified three evolutionary stages in a DIU’s develop-ment and three mechanisms driving its evolution. We synthesized these mechanisms into an evolutionary process model and derived implications for DI research and practice.