Understanding mechanisms of digital transformation in state-owned enterprises in China: An institutional perspective

Abstract

In recent years, organizations across myriad industries have begun adopting novel digital technologies and, in doing so, fostered their digital transformation. This study examines the digital transformation in state-owned enterprises (SOEs) in China. We conducted comparative case studies on China Mobile and China Unicom, two typical and leading SOEs in China's telecommunications industry, to identify the company's transformation characteristics and how key factors impact the transformation process. This research also contributes to digital transformation literature and to the institutional theory. We develop a conceptual framework for analyzing enterprise digital transformation, and generate some theoretical prescriptions. The research findings conclude that, based on innovation in digital technology by generations, enterprise digital transformation on strategic positioning, value proposition (services and products), and value creation (assets and organizational structure) presents a process by stages; both institutional pressures and technological attraction impact how SOEs carry out digital transformation; different SOEs with different characteristics in value creation present different transformation process. Future research could use the framework as an analytical tool and draw upon the theoretical prescriptions to examine digital transformation in different kinds of organizations. At last, this research also offers practical insights for SOEs to carry out digital transformations and for governments to offer supportive institutional environment for this process.