Dynamics of related and unrelated digital diversification in established firms: Strategies, programs, process, and outcomes

Abstract

Research on digital transformation focuses on business models and technological innovation but it often lacks a detailed exploration of how firms develop, execute, and evaluate related and unrelated digital diversification strategies. To address this gap, this study employs a multiple case study approach to uncover the varied processes and outcomes of implementing digital diversification programs in established firms. The findings reveal that established firms frequently refine and adjust their digital diversification strategies to achieve desired results. Specifically, related digital diversification strategies benefit from well-defined market segments, clear technological focus, and robust senior management support. In contrast, unrelated digital diversification strategies thrive through extensive exploration and experimentation with novel digital technologies and markets, reduced senior managerial intervention and increased middle- and lower-level management involvement. Semi-related digital diversification strategies, which incorporate elements of both related and unrelated approaches, often encounter tensions owing to conflicting traditional and new program execution methods, posing significant realization challenges. Key factors identified as instrumental in the success of digital diversification strategies include technology, markets, management & organization, and program execution. The study concludes by discussing the managerial and academic implications and offers recommendations for future research in this domain.