Conceptualising Digital Transformation Through Recursive Capability Constriction: Evidence from Australian NDIS Providers

Digital transformation is a strategic priority across care-intensive service sectors, yet many organisations struggle to realise its intended benefits. Existing research often examines technological, organisational, and environmental barriers separately, offering limited insight into their interconnections within organisational systems. Drawing on Systems Theory and Sociotechnical Systems (STS) Theory, this study investigates digital transformation among small and medium providers within Australia’s National Disability Insurance Scheme (NDIS). Using an interpretive qualitative design, semi-structured interviews were conducted with 15 participants from 15 distinct NDIS provider organisations in Sydney, Australia, followed by reflexive thematic analysis and systems-oriented interpretation. Participants described recurring associations among technological misalignment, fragmented software, adaptive workarounds, increased administrative demands, and constraints on organisational capacity for digital improvement, with regulatory and resource pressures interacting with these technological and organisational conditions. Building on these cross-sectional patterns, this study develops Recursive Capability Constriction (RCC), a systems-based conceptual framework that proposes how technological misalignment, compensatory adaptation, administrative expansion, and constrained organisational capability for digital improvement may become interconnected through reinforcing relationships. Rather than representing an inevitable or empirically established causal sequence, RCC provides a conditional explanation of how local adaptations may become associated with constraints on subsequent digital improvement. By shifting attention from isolated implementation barriers to interconnected sociotechnical relationships, RCC extends digital transformation research and provides practical guidance for managing digital change in regulated care environments.