EXPLORING DIGITAL TRANSFORMATION: The Role of Business Model Innovation in Manufacturing Firms

Abstract

Recently, technological innovation has brought about new digital technologies that substantially challenge the rationale behind so far established economic fundamentals. Adopting digital technologies, firms can realize concrete business improvements that are not only limited to product and process innovation, but can also imply the reinvention of their entire business model. This digital transformation offers especially manufacturing firms with multiple options to create new business models. Nevertheless, the extant literature reveals little about the concrete appearances of these new business models. Thus, we develop a typology of business models for manufacturing firms that undergo digital transformation and investigate what drives digital transformation in particular. We build a conceptual framework that connects key drivers of digital transformation with the different appearances of business model archetypes. Our framework matches different combinations of four digital transformation drivers (namely ubiquitous connectivity, functional virtualization, relational decentralization, and flexible scalability) with four business model archetypes (lighthouse supplier, service enthusiast, data scientist, and platform owner). On that basis, combined with reported cases from the literature to illustrate its findings, this conceptual paper presents four propositions that depict the concrete relationships between different combinations of digital transformation drivers and the corresponding business model manifestations in manufacturing firms.