Conceptualization of Digital Opportunities for Incumbents

Digital technologies are driving socio-technical change on an individual, organizational, and societal level. Examples include changes to the nature of products – an ever-increasing number of which are connected to the Internet of Things (IoT) – and the sharing of digital data across industry boundaries, enabling companies to deliver an increasingly diverse range of services and develop new business models. However, incumbents often struggle to identify and leverage digital opportunities – i.e., action possibilities leading to new products, services, or business models – and current literature fails to provide the necessary guidance. To address this need, the central question in this thesis relates to the identification and leveraging of digital opportunities for incumbents, in general, and digital opportunities enabled by the IoT, in particular. In addition, the thesis involves a method deep-dive on taxonomy design, a method that supports the understanding of novel phenomena such as digital opportunities. In taking a generalized view of digital opportunities for incumbents, the thesis offers two conceptual perspectives that help to structure and clarify the solution space for identifying and leveraging such opportunities. Research article #1 presents a novel design theory comprising a taxonomy of digital opportunities for incumbents and related heuristic mechanisms for opportunity-led ideation. Building on and extending the resource-based view of the firm as justificatory knowledge, the thesis contributes to descriptive and prescriptive knowledge on digital innovation. Research article #2 complements this theory-focused approach by providing empirical evidence from an exploratory case study of an Australian utility provider, which proactively developed a strong opportunity focus despite operating in a low-competition and regulated environment. As a result, two facets of opportunity exploration are distinguished (i.e., core and new business opportunities) that require diverging capabilities. This thesis goes on to present detailed perspectives on the structure and value of digital opportunities enabled by the IoT. Research article #3 proposes a taxonomy of business-to-thing (B2T) interaction patterns which accounts for smart things that transform the relationship a firm has with its products and customers. Drawing on weak and strong sociomateriality theory as justificatory knowledge, the B2T interaction patterns provide support to academics and practitioners making theory-led design decisions related to IoT-enabled opportunities. As the commercialization of IoT-solutions remains a critical barrier to market success, research article #4 develops and evaluates a model for assessing the customer value of IoT-solutions, which needs to be understood as a crucial pre-requisite for effective monetization. The model consists of a framework and corresponding value levers that support practical applicability, emphasizing the need to include both the frontstage and backstage value of processes and products and services. Research article #5 also takes an economic perspective, in this case with an internal focus, presenting a model that supports algorithm selection for predictive maintenance by full-service providers in industrial contexts. Fast-changing environments require support for analysing and understanding novel phenomena, such as digital opportunities. Hence, this thesis concludes by contributing a close examination of taxonomy design, a method that aims at conceptualizing phenomena based on the classification of objects. After identifying and analysing taxonomy articles from leading IS journals, research article #6 finds that the taxonomy design process often lacks transparency and that taxonomies are hardly evaluated. To address these shortcomings, an outlook to the article’s prescriptive extension is provided in the form of an extended taxonomy design process that specifically covers the evaluation phase and that is complemented by corresponding taxonomy design recommendations. In summary, this thesis contributes a conceptualization of digital opportunities for incumbents relying on a broad portfolio of qualitative and quantitative research methods (i.e., taxonomies, explorative case study research, Design Science Research, and data analytics) and different forms of empirical evidence (i.e., primary and secondary data sources). Further, this thesis builds upon and extends relevant theory, such as the resourcebased view of the firm, organizational ambidexterity, dynamic capabilities, and sociomateriality.