digital transformation strategy in multinational companies

Digital Transformation Strategy in

Multinational Companies –

A Qualitative Analysis

Master Thesis

Dennis Fürst

– S3795446 –

MSc International Business & Management

Faculty of Economics and Business

University of Groningen

Wordcount: 15.733

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Abstract

Although digital transformation is one of the most discussed topics among leaders in the 21st century,

yet academic scholars have understudied the phenomenon. The resultant business innovations have

fundamentally altered consumers’ expectations and put enormous pressure on all types of companies.

Firms’ competitive advantage and survival are more and more dependent on digital transformation

and therefore, the successful implementation of its strategy is crucial. Although the importance of this

topic is clearly given, digital transformation is still a new topic for many managers who are leading the

process. Almost 70% of all transformation attempts are tending to fail which demonstrates the

necessity of academic insights and guidance. As with every innovation, a lot of uncertainty goes align

with the digital transformation. This research paper combines an academic literature review with a

multiple-case study and tries to shed light on this nebulous topic by providing academic and practical

insights. The data collection for the multiple-case study based on eight interviews with managers, from

four different multinational companies, who are involved in the digital transformation process and

occupy a leading role in their organization. The identified factors that are perceived to impose a

significant positive influence on the implementation success of a digital transformation strategy are

communication, employee engagement and organizational agility, whereas the first two factors are

presenting novel theoretical insights and the latter supports prior academic findings. On the other

hand, the analysis led further to the identification of factors, that are significantly negatively affecting

the implementation success of a digital transformation strategy. These factors are defined as internal

resource limitations, lack of management support and internal resistance. While the latter confirms

previous academical results, the other two factors introduce innovative aspects that have been

previously overlooked by scholars. Hence, this research paper delivers a comprehensive overview of

the main factors, that determine the successful implementation of a digital transformation strategy.

Thus, it provides supplementary managerial guidance about how to deal with this innovative

phenomenon.

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Table of Contents

Abstract ................................................................................................................................................... 1

List of Figures ........................................................................................................................................... 4

List of Tables ............................................................................................................................................ 4

List of Abbreviations ................................................................................................................................ 4

Introduction ............................................................................................................................................. 5

Literature Review .................................................................................................................................... 9

Definition of Digital Transformation ................................................................................................... 9

Relevance of Digital Transformation ................................................................................................. 10

Dimensions and Stages of Digital Transformation ............................................................................ 11

Success factors for a Digital Transformation ..................................................................................... 13

Obstacles in the Implementation Process ......................................................................................... 16

Methodology ......................................................................................................................................... 18

Research Design ................................................................................................................................ 18

Research Strategy .............................................................................................................................. 19

Data Collection .................................................................................................................................. 20

Research Sample ............................................................................................................................... 22

Data Analysis ..................................................................................................................................... 23

Validity and Reliability ....................................................................................................................... 24

Findings ................................................................................................................................................. 26

Frequency Analysis ............................................................................................................................ 26

Cross-Case Analysis ........................................................................................................................... 27

Positive Factors ................................................................................................................................. 29

Negative Factors ................................................................................................................................ 31

Discussion .............................................................................................................................................. 34

Communication ................................................................................................................................. 34

Employee Engagement ...................................................................................................................... 35

Organizational Agility ........................................................................................................................ 36

Internal Resistance ............................................................................................................................ 36

Internal Resource Limitations ........................................................................................................... 37

Lack of Management Support ........................................................................................................... 38

Conceptual Model ............................................................................................................................. 39

Conclusion ............................................................................................................................................. 40

Managerial Implication...................................................................................................................... 41

Scientific Contributions ..................................................................................................................... 42

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Limitations and Future Research Opportunities ............................................................................... 43

References ............................................................................................................................................. 45

Appendices ............................................................................................................................................ 50

Appendix A: Interview Guideline (English) ........................................................................................ 50

Appendix B: Interview Guideline (German) ...................................................................................... 51

Appendix C: Coding Framework Positive Factors .............................................................................. 52

Appendix D: Coding Framework Negative Factors ............................................................................ 54

Appendix E: Example Quotes ............................................................................................................ 56

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List of Figures

Figure 1 - Digital transformation framework ........................................................................................ 12

Figure 2 - Relation between digital transformation strategy and other corporate strategies ............. 14

Figure 3 - Conceptual Model ................................................................................................................. 39

List of Tables

Table 1 - Definitions of Digital Transformation ..................................................................................... 10

Table 2 - Extract from the Interview Guideline ..................................................................................... 21

Table 3 - Case Sample ............................................................................................................................ 23

Table 4 - Frequency Analysis Positive Factors ....................................................................................... 26

Table 5 - Frequency Analysis Negative Factors ..................................................................................... 27

Table 6 - Cross-Case Analysis ................................................................................................................. 28

List of Abbreviations

MNE Multinational Enterprise

DT Digital Transformation

IT Information Technology

CDO Chief Digital Officer

CEO Chief Executive Officer

KPI Key Performance Indicator

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Introduction

Due to innovative digital technologies, today’s business environment is encountering a sustainable

change. Recently, a survey conducted by North Carolina State University’s Enterprise Risk

Management Initiative and management consulting firm Protiviti Inc. indicated that Digital Readiness

dominates the top risk concern of managers in 2019 (Keller, 2018). However, an earlier study

conducted by McKinsey revealed that 70% of digital transformation attempts tend to fail (Bucy,

Finlayson, Kelly, & Moye, 2016). Even multinational companies, such as GE or Procter & Gamble failed

in their digital transformation (Westerman & Davenport, 2018) and demonstrate the urgent necessity

of both, a good formulation of a digital transformation strategy and its implementation. According to

the resource-based view, multinational companies usually have access to more and a wider variety of

resources which, has the power to facilitate the strategy formulation by exploiting a larger pool of

knowledge (e.g. Peng, 2001). Although the formulation might be facilitated, the implementation of a

strategy in an international realm encounters several challenges which are obsolete in their domestic

counterparts. For example, MNEs’ subsidiaries must achieve legitimacy in the host country in order to

operate successfully (Kostova & Zaheer, 2018). Since a digital transformation encompasses a radical

change in all levels of organizations, leaders of the transformation must be aware of the level of

institutional and societal acceptance in the host country to not possibly harm their reputation and

suffer from a loss in legitimacy (Hinings, Gegenhuber, & Greenwood, 2018).

Moreover, the concept of strategy had already been discussed broadly by a vast amount of scholars

(Peng & Pleggenkuhle-Miles, 2009; Porter, 2008). Although the field of strategy formulation has been

investigated a lot in the past and is well known among managers, scholars like Hrebiniak (2006) argue

that only a few know about its implementation and execution. Following the argumentation of

Mankins and Steele (2005), firms achieve only 63% of their strategies’ potential financial

performance and value. Grundy (1998) goes even a step further by considering the implementation

process as the strategy’s graveyard. Furthermore, scholars argue that the implementation of a

strategy is even a more challenging and difficult process than its formulation (Beer & Eisenstat, 2000;

Hrebiniak, 2006; Meskendahl, 2010). Obstacles such as overcoming employees’ resistance to change

or the lack of appropriate guidelines for the execution of the strategy can hinder its success

(Hrebiniak, 2006). Therefore, to generate the highest value out of a strategy, a suitable

implementation strategy is indispensable. Nevertheless, if an organization manages to close the gap

between a strategy’s formulation and its implementation, it can realize plentiful benefits and

increase its competitiveness. In addition to an increase in performance, it can result in an emerging

culture of overperformance, in which organizations’ employees boost their confidence and achieve

higher outcomes (Mankins & Steele, 2005).

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Furthermore, a well-formulated strategy and its efficient execution are also key determinants for a

successful digital transformation (DT). Generally speaking, DT refers to the modifications which take

place in society and industries by using new digital technologies (Majchrzak, Markus, & Wareham,

2017). Although there is a vast amount of definitions about digital transformations in the academic

literature available (Schallmo, Williams, & Boardman, 2017), this research paper follows the

conceptional definition by Vial (2019, P.118), which encompasses the key elements of a digital

transformation and classifies it as “a process that aims to improve an entity by triggering significant

changes to its properties through combinations of information, computing, communication, and

connectivity technologies”. Digital transformations turned from a business trend in the past into a

necessary adaption for companies to survive and stay competitive in the future. Therefore, a

tremendous number of firms realize the urgency of a digital transformation and make it their main

concern. The transformation process promotes a major organizational change since it encompasses

all business fields (Downes & Nunes, 2013). As recently reported by the consultancy International

Data Corporation, the forecast for the global digital transformation spending reached $1.18 trillion in

2019, which represents an increase of 17,9% over 2018 (Shirer & Smith, 2019). Indeed, some

researchers identified a positive relationship between the firm performance and the investments in

information systems (Barua, Konana, Whinston, & Yin, 2012; Barua, Kriebel, & Mukhopadhyay,

1995). If the digital transformation strategy and its implementation succeeded, the potential

benefits, such as an increase in sales or innovative forms of collaboration with customers, are

numerous (Matt, Hess, & Benlian, 2015).

Like every innovation, digital transformation comes along with a vast amount of uncertainty and

managers are struggling to find the right way to implement a satisfactory strategy. Consequently, they

fail to consider essential elements in their digital transformation strategy and disregard aspects that

are significant for its successful implementation (Hess, Benlian, Matt, & Wiesböck, 2016). However,

only a few researchers have yet indicated the necessity for further research on the implementation

process (Hess et al., 2016; Matt et al., 2015). The main distinguishing factor between digital

transformation and any other imminent innovation is that the concept of digital transformation rather

tackles entire organizations than single business departments. Moreover, it causes major industry

disruptions, involves new and innovative technologies and affects not only the organization itself but

also its communication with customers, competitors or suppliers (Hess et al., 2016). Therefore, its

implementation is far more complex than previously studied phenomenons. So far, academic literature

has focused mainly on the impact of DT within specific business disciplines whereas the comprehensive

influence on the company as a whole remains surprisingly understudied (Verhoef et al., 2019). The

new innovative digital technologies which are encompassed in the transformation process enable

cross-boundary industry disruptions and, thus, require new forms of business strategies (Bharadwaj,

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El Sawy, Pavlou, & Venkatraman, 2013). Therefore, the prior acquired theories about a successful

implementation are not applicable.

The purpose of this research paper is to provide insights about the main influences in the

implementation process of a digital transformation in multinational companies. By virtue of the

increasing amount of cross-border exchange of information and the international transfer of goods,

especially multinational companies have to face the digital transformation challenge to increase their

efficiency. Due to the novelty and extent of the concept of digital transformation, managers lack

academic guidance to face the implementation challenge (Fitzgerald, Kruschwitz, Bonnet, & Welch,

2013). Furthermore, previous studies focused mainly on digital transformations within a specific

business discipline whereas this research paper tries to provide a more comprehensive study about

digital transformations of multinational companies. Therefore, this research paper will focus on the

main factors that have to be considered while implementing a digital transformation strategy to

increase the likelihood of its success. Consequently, and based on the previous discussion, the research

question of this paper is defined as it follows:

“What are the main factors that determine the successful implementation of a digital transformation

strategy for an MNE?”

This research paper deals with an intra-organizational topic that hasn’t been studied in-depth yet.

Therefore, it is crucial to explore the intra-organizational forces, which push the digital transformation

further and ensure a successful implementation process. By acquiring valuable knowledge about the

driving forces, companies are able to strengthen those and, thus, conduct a smooth and successful

transformation. Nevertheless, to provide a comprehensive study, this paper deals further with the

negative influences and main obstacles during the implementation process. The relevance of studying

the main obstacles in the implementation process is clearly given by the previously mentioned lack of

guidance for managers, who are navigating through the transformation process. The creation of

awareness for the possible arising challenges and the provision of implications for managers can

significantly impact the success of the implementation process.

In line with the breadth of the previously mentioned research questions, an inductive approach was

chosen to derive a valuable answer. Since the research paper deals with an innovative and complex

phenomenon where the outcome itself is unknown, the chosen approach has the ability to deliver in-

depth information and comprehensive insights (Yin, 2014). Following the argumentation of Eisenhardt

and Graebner (2007), an inductive approach is most suitable to develop theories in understudied areas.

Furthermore, the qualitative approach allows the required flexibility to study the broadly formulated

research question, whereas a highly structured quantitative approach, aiming at the confirmation of

pre-formulated hypotheses, could not provide the results this research paper aims for (Starr, 2014).

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Hence, due to the scarcity of previous studies about the researched theory, a deductive approach is

not applicable. More precisely, an explorative multiple-case study was chosen to answer the research

question and to study the phenomenon. A multiple-case study enables a wider examination of the

research question (Eisenhardt & Graebner, 2007) and provides a clearer fundament for theory building

(Yin, 2014). The multiple case-study will be based on interviews with managers from multinational

companies, who are involved in the digital transformation process and occupy a leading position, to

determine the main factors that impose an influence on the implementation success of a digital

transformation strategy. Since the acquired data only contains information from large multinational

companies, the study is particularly interesting for international business studies. Additionally, to

derive generalizable results, this study will focus on multinational companies of different industry

types.

This research paper offers several contributions by extending the currently available literature. First, it

enriches the present available academic literature in the research stream of international business

strategy by exploring a new and innovative phenomenon. Second, by providing the main factors, that

determine the implementation success of a digital transformation, this research paper provides

valuable practical information for managers and multinational enterprises. Last, by acknowledging the

limitations of this paper, other scholars receive implications and recommendations for further

investigations in this particular field of research.

The next chapter presents the literature review of the relevant academic literature about the digital

transformation strategy and its implementation and provides the theoretical background for the

following chapters. The third chapter presents the methodology, which was applied to answer the

research questions. Chapter four provides an analysis of the results of the case studies. The fifth

chapter presents a discussion of the analysed data. The last chapter delivers concluding remarks,

managerial implications, scientific contributions, limitations of the study and finally,

recommendations for future research.

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Literature Review

This section focuses on the review of the relevant literature, starting with the definition of digital

transformation, followed by its relevance. Furthermore, this chapter concentrates on the various

dimensions and stages which are encompassed in a digital transformation. Last, this section is going to

deal with the typical success factors and critical obstacles MNEs possibly encounter during the

implementation process.

Definition of Digital Transformation

Digital transformation is one of the hottest topics in the current business environment. Although it is

introducing a new era of businesses, only a few researchers have recently started to scrutinize the

development (Verhoef et al., 2019). Referring to Sebastian et al. (2017), the new technologies which

are encompassed in the digital transformation process can be described with the acronym SMACIT,

which refers to social, mobile, analytics, cloud and internet of things. However, there is no consensus

about the appropriate definition of the term digital transformation in recent literature. Extracted

from the study by Vial (2019), the following table (Table 1) presents a few examples of different

types of definitions which can be found in the academic literature and their conceptual issues, that

were additionally identified by the author:

Definition Source(s) Conceptual clarity challenge(s)

Use of digital technologies to radically

improve the company’s performance

Bekkhus,

(2016)

Unclear term: “digital

technologies”. Conflation between

the concept and its impacts.

Digital transformation strategy is a blueprint

that supports companies in governing the

transformations that arise owing to the

integration of digital technologies, as well as

in their operations after a transformation.

Matt et al.

(2015)


technologies”.

Circularity (“transformation”).

Digital transformation is concerned with the

changes digital technologies can bring about

in a company’s business model, which result

in changed products or organizational

structures or in the automation of processes.

These changes can be observed in the rising

demand for Internet-based media, which has

led to changes of entire business models (for

example in the music industry).

Hess et al.

(2016)


technologies”.

Conflation between the concept

and its impacts. Lack of parsimony.

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Moreover, Vial (2019) used a semantic decomposition between 23 unique definitions to identify

parallels and the essential properties of a digital transformation definition. His resultant definition

describes digital transformation as “a process that aims to improve an entity by triggering significant

changes to its properties through combinations of information, computing, communication, and

connectivity technologies” (Vial, 2019, P.118) and will be used as the leading definition for this

research paper.

Relevance of Digital Transformation

Digital transformation and the consequential innovations of business models have a significant impact

on every field in a company (Downes & Nunes, 2013). Business leaders have to face the transformation

challenge and formulate an adequate strategy to remain competitive in their business field (Hess et

al., 2016). Consequently, digital transformation has a significant impact on the competitive

environment firms are operating in (Verhoef et al., 2019). Hence, traditional firms and MNEs have to

obey to the transformation pressure to survive as a company. Moreover, the new information

technologies have the possibility to affect the company’s cost structure by replacing expensive

manpower with digital tools or by making processes more efficient (Verhoef et al., 2019). Also, digital

technologies enable the recombination of existing business products and services to create new types

of digital products (Yoo, Henfridsson, & Lyytinen, 2010) which can increase a firm’s competitiveness.

Additionally, digital technologies promote the generation of data, which can be analysed and used by

companies to perform business procedures more efficiently or react clearer to the demands of their

customers and, thus, increase their competitive advantage (Günther et al., 2017).

Furthermore, new technologies have deeply changed and influenced consumers’ expectations and

perceptions. More and more customers are switching their purchases to an online environment and a

company’s digital appearance is affecting both, offline and online deals (Kannan & Li, 2017). Hence,

scholars like Verhoef et al. (2019) argue, that firms, that are not able to adapt to the new digital norms

are becoming less attractive to the customer and replaced by companies, which are able to do so.

Fitzgerald et al. (2013) claim that according to their conducted survey, an improvement of customer

relationships was the most successful area for companies that faced the digital transformation

challenge. The innovative digital technologies are changing consumer perception and, thus, the

The use of technology to radically improve

performance or reach of enterprises.

Westerman et

al. (2011)


and its impacts.

Digital transformation describes the changes

imposed by information technologies (IT) as a

means to (partly) automatize tasks.

Legner et al.

(2017)


and its impacts.

Table 1 - Definitions of Digital Transformation (Vial, 2019)

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utilization of the technologies can become the new norm and defy traditional business rules in terms

of customer relationship (Hoffman & Novak, 2018). Usually, companies, that are conducting a digital

transformation with an impact on the customer relationship, aim for an overall increase in the

customer experience (Fitzgerald et al., 2013). In order to be successful and achieve that goal, firms

have to acquire a deep understanding of their customers prior to the digital transformation

(Westerman et al., 2011). Nevertheless, this in-depth understanding can be increased by the use of

digital technologies (Westerman et al., 2011).

In addition, it is undeniable that new digital technologies have a disruptive impact on the overall

environment the company operates in (Downes & Nunes, 2013; Mithas, Tafti, & Mitchell, 2013). In

such a disruptive and turbulent environment, scholars argue that a firm’s survival is determined as a

result of its ability to remain agile (Wilden et al., 2013). IT capabilities, which are defined as the ability

to use and implement IT-based resources to support or enhance business strategies and work

processes (Bharadwaj, 2000), facilitate operational adjustment and organizational agility (Mikalef &

Pateli, 2017). Moreover, through the improvement of organizational agility, IT-enabled capabilities

increase the realization of firms’ competitive performance gains (Mikalef & Pateli, 2017). Moreover,

firms that are in possession of a strong IT capability can respond to changing market requirements

more quickly and accelerate decision making (Prahalad & Krishnan, 2002). Therefore, the successful

implementation of a digital transformation strategy enhances companies’ dynamic capabilities and

agility, which are in turn required to remain competitive.

Dimensions and Stages of Digital Transformation

Fitzgerald et al. (2013) argue that digital technologies fundamentally facilitate business

improvements. However, the uncertainty about the implementation of the strategy and the

capabilities of the new innovative technologies results in companies, failing their digital

transformation (Westerman & Davenport, 2018). Following the argumentation from Berghaus and

Back (2016), one possible reason for the failures of digital transformations is that they seem rather

intuitively managed than strategically planned. According to Matt et al. (2015), strategies in digital

transformation are resulting from a business-centric perspective and focus on the transformation of

various elements within a business environment by using innovative technologies. Since the digital

transformation involves different functional areas such as marketing, operations management or

information system, rather a cross-disciplinary approach needs to be applied than studying a single

field to not ignore relevant aspects of the interdisciplinary intersections (Tarafdar & Davison, 2018).

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Dimensions of Digital Transformation

Matt et al. (2015) argue that four dimensions in a digital transformation strategy, independent of the

industry type, are recurring in almost every transformation process (see Figure 1). Those factors are

similar to digital transformation frameworks from other scholars (e.g. Tabrizi, Lam, Girard, & Irvin,

2019). The first dimension is the use of technologies, which refers to the choice, which technologies

companies want to use, how companies could benefit from them and what the exact expectations

are (Matt et al., 2015). This dimension indicates the approach and ability of a firm to discover and

utilize new digital technologies (Hess et al., 2016). Moreover, firms can establish the objective to

become the market leader in a specific technology, which has the ability to increase its competitive

advantages (Earley, 2014) but goes align with a higher risk and requirements in technological skills

(Matt et al., 2015). Therefore, managers have to formulate a concrete use-case and step away from

the intuitive transformation management which often results in failures (Berghaus & Back, 2016).

The use of technologies leads to changes in value creation, which refers to the impact of a digital

transformation strategy on organizational value chains and firms’ value creation. Furthermore, this

dimension claims that the use of new digital technologies deviates from a firm’s classic core business

and, hence, has the ability to enlarge the product portfolio of a company. Next, structural changes

reflect the changes of companies’ structures, procedures and capabilities that are required to deal

with and utilize new technologies. Structural modifications are necessary to provide a fundamental

basis for new procedures, induced by new digital technologies. Furthermore, they refer to the

adaption of the organizational culture and the acceptance of the transformation. Nevertheless, the

previous mentioned dimensions are only realizable if a firm takes the financial aspect into

consideration, which reflects the core dimension of the framework. A digital transformation can only

be performed, if a firm possesses the ability to finance the transformation attempt. Furthermore, it

refers to the urgency to act due to a declining core business. Hence, the dimension is both, a driving

force and a limiting influence for the transformation.

Figure 1 - Digital transformation framework (Matt et al., 2015)

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All four dimensions have to be aligned in order to receive full exploitation of the aspired effects.

Although this framework remains still at the conceptual stage (Nwaiwu, 2018), its elements are

representing the fundament of a digital transformation. Moreover, it is not providing a managerial

guideline for the transformation but rather an understanding of the critical factors.

Stages of Digital Transformation

To understand the digital transformation better, academic scholars differentiate between three

stages in the transformation process: Digitization, digitalization and digital transformation (Hess et

al., 2016; Parviainen et al., 2017; Verhoef et al., 2019). Moreover, researchers argue that the first two

stages are requirements to reach the last and most prevalent phase of digital transformation (e.g.

Parviainen et al., 2017). Digitization refers to the conversion of analogue information into a digital

format to enable computers to save and transfer this information (Loebbecke & Picot, 2015). It

mainly affects the internal and external documentation processes but has no influence on value

creation activities (Verhoef et al., 2019). Next, digitalization illustrates how digital technologies can

be applied to modify existing business processes (Li, Nucciarelli, Roden, & Graham, 2016). In

digitalization, information technologies are the key drivers that enable new business opportunities by

changing existing business processes. Therefore, it is not only focussing on cost reduction but also on

improvements in existing business processes and the aligning possible enhancement of customer

experience. The last stage, digital transformation, goes a step further than digitalization by

fundamentally altering business processes, process logic, routines and capabilities of a firm

(Fitzgerald et al., 2013). The transformation process is related to company-wide strategic changes by

implementing new digital technologies into business processes (Iansiti & Lakhani, 2014). It causes

major industry disruptions and affects not only the organization itself, but also its communication

with customers, competitors or suppliers (Hess et al., 2016). The new innovative digital technologies,

which are encompassed in the transformation process, enable cross-boundary industry disruptions

and thus require new forms of business strategies (Bharadwaj et al., 2013).

Success factors for a Digital Transformation

Matt et al. (2015) argue that the digital transformation strategy has an impact on other business

strategies and should, therefore, be coordinated to them (Figure 2). Furthermore, managers are

required to formulate concrete objectives rather than intuitively handling the transformation process

to be successful. However, this strategic coordination of the specific implementation process requires

the consideration of certain factors, that are going to be explored in the following.

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Figure 2 - Relation between digital transformation strategy and other corporate strategies (Matt et al., 2015)

Verhoef et al. (2019) claim that capabilities ordinarily consist of a firm’s specific human, information

or organizational capital and enable the successful deployment of assets and resources. Matt et al.

(2015) enhance the literature about the required capabilities by introducing essential qualities that are

required to be successful in the digital strategy process. The authors argue that the responsibilities in

the transformation process should be clearly allocated and that the responsible managers should have

enough transformational experience. Hence, to deal with potential intracompany resistance and

employees’ scepticism, transformational leadership skills are essential. Furthermore, support from the

top management level is required. The management has to create a vision and promote the urgency

of the digital transformation among its employees (Fitzgerald et al., 2013). The organizational

leadership has to emphasize a digital mindset in their organizations while at the same time, being able

to respond to the disruptions which may be caused by the use of digital technologies (Vial, 2019).

Senior executives have to make the employees aware of the fact that a digital transformation is not in

the responsibility of a single business department but is a process that has an impact on the entire

enterprise. Additionally, a transparent and flexible top management leadership support is critical for

formulating the digital transformation strategy and for supporting the required investment in

resources (Sia, Soh, & Weill, 2016). Firms face the challenges of modernizing to constantly stay at the

cutting edge of innovative technology (Sia et al., 2016). Thus, senior executives have to acquire new

digital competencies. It is crucial to employ digital-savvy leaders and have them in the right place to

exploit their full knowledge (de la Boutetière, Montagner, & Reich, 2018). To achieve all the previously

mentioned benefits that are associated with leadership, academic research has been discussing the

establishment and implementation of new leadership roles, linked to the digital transformation (e.g.,

Haffke, Kalgovas, & Benlian, 2016). One often mentioned example of a new leadership role in the

literature is the creation of a chief digital officer (CDO) role, who is responsible for the strategic

approach of a digital transformation in the entire organization (Singh, Klarner, & Hess, 2019).

15

Matt et al. (2015) claim that another important aspect resided in constant evaluation and adaptation

of the transformation. Continuous exchange, monitoring, and intervention from the digital leaders

ensure that all employees, involved in the transformation, push the process forward (Westerman &

Davenport, 2018). Furthermore, to guarantee an appropriate evaluation and monitoring process, firms

need to define key performance indicators (KPIs). In their study, Fitzgerald et al. (2013) report that

only a quarter of their surveyed companies indicated that they have established KPIs to monitor the

process. The residual companies claimed that they failed to define suitable KPIs, lacked management

skills or required cultural changes to make KPIs work.

Furthermore, to successfully conduct a digital transformation, requirements about the organizational

capabilities demand structural changes. The academic literature in this field of research highlights the

importance of cross-functional collaboration as an important element (Earley, 2014). Therefore, it is

essential that organizational structure enables and ensures collaboration between different functional

departments in order to fully exploit the benefits of a digital transformation. Additionally,

organizations have to develop and improve internal employees’ skills to undertake digital

transformation (de la Boutetière et al., 2018). Firms employees’ have to acquire the required skills to

utilize the new digital technologies, induced by the digital transformation and take full advantage of

them. Moreover, the entire organizational culture has to adapt to the disruptive changes which are

induced by the quickly changing environment due to innovative technologies (de la Boutetière et al.,

2018; Hartl & Hess, 2017). Thus, to respond to the challenge of a constant digital change, firms have

to increase their organizational agility. Furthermore, they have to become digitally agile, which refers

to the ability to be aware of and capture market opportunities that are provided by innovative

information technologies (Lee, Sambamurthy, Lim, & Wei, 2015). Because of the nowadays

unpredictable and dynamic markets, Verhoef et al. (2019) argue that organizational flexibility is a

crucial requirement to increase firms’ digital agility. Additionally, digital agility endorses the

recombination of digital technologies with traditional organizational resources to shift the approach

of doing business. By constantly identifying and capturing market opportunities, digital agility fosters

the recombination and growth of innovative products, services, and business models which in turn

increase the value creation for the purchaser (Karimi & Walter, 2015; Teece, 2010).

Although different scholars claim the importance of different elements, overlapping aspects are clearly

identifiable. Nevertheless, organizations’ have also to deal with possible obstacles in the

transformation process, that are going to be scrutinized in the following section.

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Obstacles in the Implementation Process

The path to a successful digital transformation is paved with difficulties, which managers have to deal

with. Since overcoming obstacles significantly increases the implementation success of a digital

transformation strategy, it is important to have an in-depth look at those factors, that are frequently

mentioned in the academic literature. According to Parviainen et al. (2017), there are many obstacles

in practice related to a digital transformation. The authors claim the lack of an effective strategy as a

critical obstacle. This argumentation is supported by Matt et al. (2015), who point out that a digital

transformation strategy has to be well formulated and align with other corporate strategies to be

successful. Furthermore, Bharadwaj et al. (2013) emphasize researchers to scrutinize the fusion

between traditional, organizational strategy and information system strategy. They argue that the

separation between the two strategy concepts leads to a lower exploitation of the possible benefits

than would be achieved by aligning the concepts.

Another often mentioned challenge refers to the employees’ lack of digital competencies (e.g.

Verhoef et al., 2019). In the context of a digital transformation, employees often have to adapt to

roles that are outside their initial function. The literature highlights circumstances, in which the

digital transformation emphasizes employees, who are part of the IT department to become

business-savvy participants and vice versa (Yeow, Soh, & Hansen, 2018). According to a survey

conducted by Kane et al. (2015), 81% of employees from companies that are in an early stage of

digitalization claimed, that their organizations don’t provide them with the right resources or

opportunities to receive the required skills to benefit from the transformation. Therefore, internal

investment and employees’ skill development is crucial for MNEs to take advantage of digital trends.

Additionally, Watson (2017) points out the increasing relevance of digital skills for future workers to

exploit the full potential of novel business processes, enabled by digital technology.

An additional obstacle that is often referred to in the context of strategy execution is the inability to

manage a change effectively in order to overcome the possibly emerging organizational resistance

and organization’s inertia (e.g. Hrebiniak, 2006). Digital transformation is able to disrupt an entire

business environment and change traditional habits (Downes & Nunes, 2013). Therefore, a clear

structure in the transformation process is required to minimize organizational resistance (Fitzgerald

et al., 2013). Furthermore, the approach and the rate at which technologies are introduced into the

company have to be taken into consideration. Moreover, if implemented in a company, the position

of the CDO plays an important role in how to deal with organizational resistance. The CDO has the

capability to ensure that digital technologies are consistent with the organizational culture and thus,

increase the acceptance among the employees (Singh et al., 2019). Svahn et al. (2017) argue that

organizational resistance can arise from a lack of visibility regarding the benefits of digital

17

technologies. By executing workshops, that involve employees, who are influenced by the digital

transformation this issue can possibly be mitigated.

To sum up the literature review, there is no consensus about the definition of digital transformation

among scholars. Moreover, there are many factors that promote the relevance of digital

transformation, such as the increase of competitiveness or the change in consumer perception.

Furthermore, the different dimensions and stages of digital transformation were presented. Finally,

in the form of key-value drivers and obstacles, the literature review presented a variety of factors

that are possibly determining the success of a digital transformation strategy. The following section

presents the methodology of this research paper and explains how a multiple-case study can help to

close the introductory mentioned research gap and extend the academic literature.

18

Methodology

The following section discusses the methodology of the research paper. First, the research design and

the research strategy for the study will be presented. Furthermore, this section will elaborate on the

procedure for the data collection. Next, the chosen method for the analysis of the data will be revealed,

followed by the presentation of the research sample. Finally, the section will finish by explaining how

the reliability and validity of the data are ensured.

Research Design

To conduct the research, a qualitative approach was chosen to answer the earlier mentioned research

questions. Qualitative research is used to receive a more in-depth understanding of a complex

phenomenon (Yin, 2014). As the research question is openly and broadly formulated, the outcome

itself is unknown. In this case, applying qualitative research reveals its strengths, since it is more flexible

and explorative than quantitative research (Yin, 2014). Furthermore, the qualitative approach allows

the required flexibility to study the broadly formulated research question, whereas a highly structured

quantitative approach, aiming at the confirmation of pre-formulated hypotheses, could not provide

the results this research paper aims for (Starr, 2014). Following the argumentation of Starr (2014), one

of the main conditions that promotes a qualitative research method results from an understudied

researched topic for which a broad, exploratory research is required to determine the fundamental

characteristics. Furthermore, due to the flexibility of the exploratory research design, it is adaptable if

necessary, allows the researcher the possibility to ask questions and investigate a broader issue more

detailed (Saunders, Lewis, & Thornhill, 2008).

To be more precise, an inductive approach was chosen to conduct the research, which is even more

open than the deductive approach (Yin, 2014). This approach uses the available and gathered data to

derive the analysis and is applied the best, if there is little known about the explored field of study

(Burnard, Gill, Stewart, Treasure, & Chadwick, 2008). Furthermore, Eisenhardt and Graebner (2007)

support the idea that an inductive approach is most suitable to develop theories in understudied areas.

Since the influential factors regarding the success of a digital transformation strategy need to be

explored first, it is not feasible to commence with the theory and establish a hypothesis, as indicated

by the deductive approach (Saunders et al., 2008). Hence, due to the scarcity of previous studies about

the researched theory, a deductive approach is not convincingly applicable. Consequently, as the

factors that determine the implementation success of a digital transformation strategy are currently

underexplored, the open approach of inductive qualitative research corresponds well to the research

question.

19

Research Strategy

The purpose of this paper is to explore a relatively unexplored field of research and find real-world

practices that support the theoretical implications, which were developed in the literature review.

Furthermore, this research paper aims to extend the currently available literature. Therefore, the

exploratory study approach is used, which is helpful to understand and clarify specific issues (Saunders

et al., 2008). The aim of this method is not only referring to the validation of existing theory but more

concerned with the extension of the available literature (Eisenhardt, 1989). Due to the understudied

field of the current research, there are opportunities given to extend the existing theory.

In order to derive a valuable answer to the research questions of this paper, a case study research is

applied. Referring to Saunders et al. (2008), the research strategy of a case study is defined as “a

strategy for doing research which involves an empirical investigation of a particular contemporary

phenomenon within its real-life context using multiple sources of evidence” (P.145). The application of

a case study provides deeper insights into the character of a specific phenomenon (Eisenhardt, 1989).

According to Yin (2014), a case study is the most appropriate way to investigate an explorative

research. Furthermore, a case study can involve a single case or multiple cases (Yin, 2014). In contrast

to the single case study, which is used to explore a unique phenomenon, a multiple-case study is used

to examine general theories. Following the argumentation of Yin (2014), if a researcher has the

possibility, a multiple case study should always be the preferred method since the outcome is more

generalizable and reliable than in a single case study. Additionally, Eisenhardt and Graebner (2007)

claim that results from a multiple case study are more convincing, which indicates higher reliability in

the results and delivers more robust data for theory building. Furthermore, a multiple case study can

mitigate the risk of a unique phenomenon or fortuitous conditions in the surrounding of a case, leading

to a specific outcome (Yin, 2014). Hence, results which are based on a single case study are more likely

to be vulnerable, compared to the outcome of a multiple case study, which provides presumably better

results. Last, the application of a multiple case study allows researchers to compare cross-cases to

enhance the knowledge of a preliminary unexplored field (Saunders et al., 2008).

Based on the foregoing discussion, the research strategy of a multiple case study was selected. The

aim of this study is to investigate the factors that determine the success of a digital transformation

strategy. Therefore, a variety of reasons support the idea of a multiple case study. First of all, different

firms can follow different digital transformation strategies. Therefore, a single case study is not likely

to be able to capture all important factors concerning the digital transformation and, thus, multiple

cases are required to derive a valuable answer. Second, it is crucial to investigate multiple cases to

mitigate the risk of arriving at an outcome, which is based on a unique phenomenon or specific

circumstances of a particular digital transformation. Last, to acquire knowledge about the whole

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phenomenon of a digital transformation strategy, it is important to analyse multiple case studies to

compare the most influential success factors and obstacles among them. Consequently, a multiple case

study is more likely to capture all important aspects of a digital transformation and leads to a more

valuable outcome.

Data Collection

The analysis and data collection depends on the methodological approach which is used to conduct a

research (Saunders et al., 2008). The data source of case studies can be based on quantitative data or

qualitative data such as questionnaires, interviews or observations (Eisenhardt, 1989). The primary

data collection of the multiple case study will be conducted by doing in-depth interviews. More

precisely, the interviews will have a semi-structured form, because it allows researchers to explore

respondents’ opinions on sensitive topics and the clarification of relevant issues (Louise & Alison,

1994). Referring to Saunders et al., (2008) semi-structured interviews have an ideal fit into an

exploratory research approach. Furthermore, a semi-structured interview provides the flexibility to

adjust the research questions during the interview, based on the information which is provided during

the data collection and, thus, the answers of the respondents have an impact on both, the direction of

the data collection and the subsequently asked questions (Saunders et al., 2008). Therefore, an in-

depth interview allows researchers to better understand the perspective of the managers involved in

the study and provides a more comprehensive study of a specific issue. Encouraging the interviewees

to provide broad and comprehensive responses, the interviews are based on open and investigative

questions. Hence, the interview provided a higher degree of flexibility and latitude, compared to the

choice of possible, predetermined answers, as it is done in quantitative studies (Saunders et al., 2008).

The data collection based on interviews with digital transformation experts, that were conducted with

the help of a beforehand created interview guideline (see Appendix A for the English version and

Appendix B for the German version). The first part of the questionnaire asks the participant to present

himself/herself, including the academic and professional background, to ensure and assess the

availability of the necessary knowledge that is required for a valuable contribution to this study. The

next part of the guideline includes several main questions, that are leading the conversation to the

aspired insights. The main questions pursue the intention to identify both, the main positive and

negative factors that determine the successful implementation of a digital transformation strategy.

The key questions are openly formulated and provide the participants with the necessary latitude to

respond to the questions as freely and uninfluenced as possible. The following table (Table 2) presents

an extract of those:

21

Topic Number Question

Experience-

Assessment 2.1.

What is the current transformation process the

interviewee is working on? If there is no current

transformation project, what was the latest

transformation about?

Negative Factors 2.3. What are the challenges in the implementation process?

Positive Factors 2.4. What are the drivers that ensure and facilitate a

successful implementation?

Factors'

Reliability

Assessment

2.5. How is the success or potential failure of the digital

transformation monitored?

Table 2 - Extract from the Interview Guideline

The third part of the interview guideline consists of a variety of possible follow-up questions that allow

the researcher to anticipate and adjust the interview to each conversation individually and were, if

applicable, investigated throughout the interview. These questions follow the purpose to clarify

possible ambiguities, depending on the responses that were given in the second part. Nevertheless,

the attention was placed on the main questions since they dealt with and explored the main focus of

this research. Therefore, the interview guideline provided a necessary latitude while maintaining a

structured and systematic core. The last part of the guideline offers the participants the possibility to

ask remaining open questions about the study. Moreover, based on publicly available information

about the cases, additional information was collected prior to the interview to achieve a better

knowledge about the given information, presented by the interviewees.

To receive relevant responses, the interviews were conducted with managers who are involved in the

implementation process of a digital transformation and occupy a leading position. These managers are

presumed to be experts in their field with a better view of the most important factors that determine

the success of a digital transformation. Furthermore, the sample will consist of only managers from

large multinational companies to acquire results that are particularly interesting for international

business studies. The interviews are expected to last approximately 45 minutes. With the allowance of

the interviewees, the interviews will be recorded and transcribed to receive a complete understanding

of the discussion and identify possible influences during the conversation. Furthermore, the recording

allows the interviewer to completely focus on the responses of the interviewee and challenge relevant

follow-up questions.

22

Nevertheless, interviews have several limitations that have to be taken into consideration. Since the

participants of the study know that they are recorded, their responses are vulnerable to be biased and,

thus, possibly deviate from the real scenario. Additionally, interviews represent ”a complex social

interaction process, which can be defined and framed in highly different ways by the involved actors”

(Keller, 2018, P.300). Therefore, it is crucial to develop a certain degree of empathy with the

participant. Furthermore, the involved actors of the interview need an ability to interpret and identify

the actions and motives of their counterparts correctly to avoid unintended misunderstandings or

accidental mistakes (Keller, 2018). To increase the degree of objectivity and to decrease the risk of

research bias, the interviews were conducted without any detailed form of leadings. Therefore, the

participants were able to express their views about the most important factors that determine the

success of a digital transformation as complimentary as possible.

Research Sample

This research paper contributes to the strategy literature by focussing on the digital transformation of

MNEs. Qualitative research focuses on small samples and in-depth investigations rather than on a

variety of samples, as it is common in quantitative research (Saunders et al., 2008). Since there is no

common agreed-on guideline about the sample size for multiple case studies, the data collection

follows the approach from Yin (2014), who points out the importance of a sample variation rather than

the sample size. Moreover, the primary data collection of this study will be based on semi-structured

interviews. Therefore, eight managers of four companies from different industries were interviewed

to examine the factors that determine the implementation success of a digital transformation strategy.

The detailed research sample is provided in Table 3 (P.23). Taking into consideration the limitations of

time and the difficulties to get access to interviewees, the sample size is determined as being adequate.

Furthermore, Ritchie et al. (2013) claim that in qualitative research, the sample size remains

comparatively small and it is common to investigate only a few participants. Additionally, Eisenhardt

(1989) indicates that a number of cases between 4 and 10 is assumed to be optimal.

The selection of the cases relied on theoretical sampling, which is defined as “sampling on the basis of

the emerging concepts, with the aim being to explore the dimensional range or varied conditions along

which the properties of concepts vary” (Strauss & Corbin, 1998, P.73). The idea of theoretical sampling

is to consciously select cases, that are more likely to extend the current literature, which is in contrast

to statistical sampling, where the cases are chosen randomly (Eisenhardt, 1989). First, to achieve

valuable results for international business studies and provide comparability between the cases, only

large multinational companies were selected. Consequently, the company assessment was based on

both, the size (i.e. number of employees) and the multinationality (i.e. number of operating countries).

23

Next, to achieve a higher degree in generalizability, the selected companies are all operating in

different industries. Last, to obtain useful information and comprehensive insights, only managers,

who have a leading role in the digital transformation process were interviewed.

Company Industry Type Number of Employees

Number of operating countries

Interviewee Position of Interviewee

Case 1 Fast Moving Consumer Goods

53000 120

1 Corporate Senior Manager Digital Transformation

2 Senior Manager Digital Transformation

Case 2 Chemicals 120000 80

3 Head of Digital Transformation Management

4 Manager Digital Transformation

Case 3 Luxury Fashion 15000 120 5

Senior Manager Corporate Digital Development

6 Manager Digital Strategy

Case 4 Global Supermarket Chain

315000 29

7 Digital Strategy Manager

8 Senior Manager Digital Transformation

Table 3 - Case Sample (source: author)

Data Analysis

The aim of this research paper is to identify the factors that determine the implementation success of

a digital transformation strategy and, thus, extend currently available literature. The data source that

is going to be analysed consists of interviews with digital transformation experts, that were conducted

with the help of a beforehand created interview guideline (see Appendix A for the English version and

Appendix B for the German version). After having gathered the necessary data in the form of semi-

structured interviews, the obtained information needs to be analysed. Hence, to narrow down the big

amount of data, identify critical common patterns between the cases and consequently derive a

valuable response to the research question, the recorded interviews were transcribed and coded.

The first step in the analysis to identify cross-case patterns is the development of codes. Hence, the

interviews were separately analysed, and an initial coding framework was applied to codify the data.

In order to manage the large amount of information, the codes are used to trace words, sentences or

sections in the transcripted interviews (Miles, Hubberman, & Saldana, 2013). Next, all potentially

important factors in the different cases were analysed, examined and assembled to identify patterns

in the codes. Then, the identified pattern codes were fine-tuned and altered by three summarising

techniques, which are generalization, fact rejection, and word compression. Generalization expresses

the process of identifying synonyms in the interviews, which express success factors of a digital

24

transformation strategy and are expressed by a single word or phrase. Fact rejection leads to an

exclusion of irrelevant information or unimportant factors (Thomas, 2003). Last, sentence compression

is the technique to shorten the sentences while still preserving the essential information. The focus

while processing the interview coding was set on the factors that are presumably influencing the digital

transformation. Hence, the generalization and word compression techniques are therefore applied to

assemble and combine the success factors in the final coding framework (Eisenhardt, 1989). The final

coding framework is presented in the Appendix C and Appendix D. After having completed the coding

procedure, a frequency analysis was conducted to ascertain the most frequently mentioned factors by

the digital transformation experts. Furthermore, the frequency analysis enabled the possibility to omit

the least mentioned and, therefore, insignificant factors. Finally, a cross-case analysis was conducted

in order to determine the comparability between the different cases (Miles et al., 2013; Yin, 2014). The

cross-case analysis enables an understanding of factors, which are relevant not only for one, but for

multiple cases and, therefore, allows to develop new theory. Hence, the cross-case analysis is essential

to determine common factors across the cases and, thus, derive a valuable answer to the research

question.

Validity and Reliability

Case studies are often criticized for several reasons. For instance, because of the possible influence the

researcher imposes on the observation or due to a vague approach of data collection (Yin, 2014).

Hence, it is crucial and extremely important for case studies to maintain and ensure a high-quality

research. Thus, to ensure the quality of the outcome, two elements, that are reliability and validity,

have to be taken into consideration.

Reliability is a quality indicator that describes the issue of whether the outcome or result of the study

is replicable if other researchers would use the same methods (Saunders et al., 2008; Yin, 2014). Hence,

it deals with the consistency of the outcome. Following the argumentation of Ritchie et al. (2013),

reliability can be ensured if other researchers are able to reconstruct the data, its interpretation, and

the research process. Therefore, it is crucial to precisely specify the methodology of the research and

explain the choices that were made. To ensure the reliability of this study, the applied research strategy

was described as detailed as possible. The interview guideline, which is provided in the appendices,

was consistently applied for every interview that was conducted. Furthermore, the analysis of the data

followed a specific coding scheme, which is provided in the Appendix C and Appendix D.

Nevertheless, interviews come along with several difficulties that have to be considered. Maintaining

a high degree of objectivity, asking the right questions at the appropriate time, overcoming language

barriers and the utilization of an adequate language can impact the outcome of the research (Saunders

25

et al., 2008; Thomas, 2003; Yin, 2014). Furthermore, the interviewer can unintendedly influence the

focus of the interview in a certain path through verbal or non-verbal behaviour, which leads to an

interviewer bias (Saunders et al., 2008). To avoid biases, the participants of the study were approached

professionally, and the purpose of the study was clearly explained. The confidentiality of the shared

knowledge was guaranteed at the beginning of the interview to decrease the participant’s concern

about anonymity, which could result in a provision of incorrect answers (Saunders et al., 2008).

Moreover, with the allowance of the participants, the interviews were recorded, which enables the

researcher to completely concentrate on the conversation while conducting the interview and

additionally, to discover potential interview influences in the aftermath. Finally, the questions, which

were developed prior to the interviews, were clearly and neutral formulated to avoid the interviewer

bias.

Furthermore, to ensure a good quality of research, validity needs to be considered. Moreover, there

are two concepts related to validity, that are internal validity and external validity (Saunders et al.,

2008). Internal validity refers to the plausibility and internal consistency of the study (Saunders et al.,

2008). To increase internal validity, multiple sources of evidence have to be exploited, as it is often

done in case studies (Yin, 2014). The collection and combination of multiple data sources, such as

additional interviews, documents or observations, is defined as triangulation and is used to improve

the richness of the data per case (Eisenhardt, 1989; Saunders et al., 2008). The triangulation in this

research paper is partly attained through the combination of multiple interviews per case. Taking into

consideration the limitations of time and the difficulties to get access to companies’ internal strategic

documents, that undermine the by the participants claimed arguments, the utilization of additional

sources was unattainable. However, to ensure the internal validity, the different interviews per case

were compared and examined for inconsistency and deviations regarding the provided information.

External validity refers to the transferability or generalizability of the results (Saunders et al., 2008).

The degree of generalizability is increased by using a multiple-case study, including companies from

different industries. According to Yin (2014), a multiple-case study provides a more factual and

generalizable outcome than a single-case study.

26

Findings

The purpose of this chapter is to provide the results of the conducted interviews. The goal is to

explore the main factors, that are determining the implementation success of a digital

transformation strategy. Therefore, in the first step, the raw data was narrowed down by coding the

interviews. Next, the developed codes were analysed and grouped into summarising terms in a

sensemaking way. The final coding frameworks for both, positive and negative factors, are provided

in the Appendices C and D. In the next step, a frequency analysis was conducted to explore the most

influential factors, followed by a cross-case analysis to compare the prior identified factors between

the cases and derive comprehensive results. Last, the most frequently mentioned factors were

further explored and analysed.

Frequency Analysis

While analysing and coding the interviews, several factors were identified, that were repeated

frequently by most of the participants whereas, on the other hand, some factors were mentioned

only by a few interviewees. To discover the most influential factors, according to the interviewees,

that determine and influence the implementation success of a digital transformation strategy, a

frequency analysis was conducted. Following the approach of Saunders et al. (2008), the developed

codes were combined under summarising terms, followed by an analysis in which the most

frequently mentioned codes were identified. The frequency analysis for the positive factors is

presented in Table 4 (P.26) whereas the frequency analysis for the negative factors is shown in

Table 5 (P.27). For both types of factors, the three most frequently mentioned aspects were

considered and defined as the most influential factors and, consequently, further explored in the

following section.

Interviewee Positive Factors

1 2 3 4 5 6 7 8 ∑

Communication x x x x x x x x 8

Employee Engagement x x x x x x x x 8

Organizational Agility x x x x x x x 7

Leadership Support x x x x x x 6

Long-Term Vision x x x x x x 6

Project Planning x x x x x 5

Project Controlling x x x x 4

External Orientation x x x x 4

Honour Milestones x x 2 Table 4 - Frequency Analysis Positive Factors (source: author)

27

The results for the positive factors present several aspects that were mentioned by the majority of

the participants. Two out of the nine identified factors were mentioned by all of the participants,

and, thus, perceived as the most important positive factors that determine the implementation

success of a digital transformation strategy. Those two factors are reflected in the summarising terms

communication and employee engagement. The third factor, that was mentioned by seven out of

eight participants is defined as organizational agility.

Interviewee Negative Factors

1 2 3 4 5 6 7 8 ∑

Internal Resistance x x x x x x x x 8

Internal Resource Limitation x x x x x x x x 8

Lack of Management Support x x x x x x 6

Technical Barriers x x x x 4

Insufficient DT Understanding x x x x 4

Transformation approach x x x 3

Prioritization Issue x x x 3

International Differences x 1 Table 5 - Frequency Analysis Negative Factors (source: author)

Equal to the positive factors, all the participants mentioned two negative factors, that are,

consequently, recognized as the most influential negative factors. The two most frequently

mentioned negative factors are presented in the combining terms internal resistance and internal

resource limitation. The third negative factor, that is perceived to have a significant influence on the

implementation success of a digital transformation strategy is the lack of management support,

which was mentioned by six out of eight participants.

Cross-Case Analysis

The cross-case analysis is an approach to facilitate the comparison of similarities between different

cases (Miles, Huberman, & Saldana, 2015). The fundament for this analysis is based on the most

frequently mentioned and influential factors, that were identified in the prior section. Consequently,

the cross-case analysis, which is presented in Table 6 (P.28), compares the factors communication,

employee engagement, organizational agility, internal resistance, internal resource limitation, and

lack of management support between the four cases and eight participants of this study.

Furthermore, Appendix E presents illustrative quotes for the identified factors for each participant.

28

Factor Interviewee

(+) Communication

(+) Employee Engagement

(+) Organizational

Agility

(-) Internal Resistance

(-) Internal Resource Limitation

(-) Lack of Management

Support

1 Shared

understanding

Digital upscaling of workforce

Flexible strategy open minded and fearless

team

Organizational Culture

Small digital transformation

team

Deviant management

priorities

2 Transparency

towards people Skilled people

„Trial & Error“ process

(experimenting)

Change management

culture

Digital transformations

are costly

Lack of board support

3 Demonstrate

acquired benefits

Create enthusiasm

among workforce

Agile processes and

development of flexibility

Mentality towards agile

working methods

Lack of capabilities and

digital competencies

4 Regular

communication events

„Bottom-Up“ idea collection

Cross-functional collaboration

Mentality and mindset change

Budget restrictions

Insufficient amount of

attention on DT

5 Regular Townhall

meetings to inform employees

Early employee engagement

Organizational change to a more agile enterprise

Resilience to change

Employees critical attitude

Lack of skills No clear

allocation of responsibilities

6 Explain change

Involvement to approach

complaints early

„Learning by doing“ mentality

Hesitation towards

innovation

Financial limitations

Reluctance to invest

7 Communication

(People Business)

Creation and allocation of

responsibilities

Traditional thinking

prevalent

Scarce resources such as

hardware

Lack of IT knowledge in

the board

8

Information about upcoming

transformation projects

Increase of internal digital competencies

Flexibility in projects

People are resistant and sticking to old

habits

Insufficient amount of

qualified people

Table 6 - Cross-Case Analysis (source: author)

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Positive Factors

Communication

The first factor that is going to be discussed is defined as communication. The factor was mentioned

in all of the interviews and is therefore considered as one of the most influential factors, that is

imposing a significant positive influence on the implementation success of a digital transformation

strategy. Specific codes such as organizational transparency and employee events are grouped in this

term. The interviewees mentioned the importance of communication and transparency to create

awareness among the workforce and increase the acceptance for upcoming digital transformations.

Participant 6 claimed, that “it is crucial to make sure that everybody knows what's going on -

especially for their own department” 1. This argumentation is supported by interviewee 5, who

pointed out that they “conducted a lot of town hall meetings to inform the employees” 2 and that

they “have a lot of communication within the departments” 2. Next to the town hall meetings,

participant 3 stated that they also “use different channels, such as a variety of events or the intranet,

to communicate changes to the employees”3. Thus, the creation of a shared understanding of the

digital transformation is essential to increase its potential success. Moreover, the participants

claimed, that since a digital transformation is considered to impact the entire organization, it is

crucial to inform the employees as soon and as sufficient as possible to increase the employees’

support for the transformation.

Employee Engagement

Next to communication, the factor employee engagement was also mentioned by all the

interviewees and, consequently, is considered to have an equally significant impact on the

implementation success. This term combines codes such as employee training or the digital upscaling

of the workforce. Following the argumentation of participant 2, "it is […] important to involve the

affected people" in the entire transformation process. Furthermore, the participants frequently

mentioned that employees are likely to be afraid to lose their job as a consequence of the digital

transformation. According to the third interviewee, involving the employees in the transformation

process can help to overcome this issue. Participant 7 goes a step further and claims that “without

the active engagement of the people, it is impossible to conduct any transformation in the

1 Original: „Meiner Meinung nach ist es sehr wichtig sicherzustellen, dass jeder weiß was gerade da passiert, insbesondere auch für deren Abteilung“. 2 Original: „Um die Mitarbeiter zu sensibilisieren wurden viele Town Hall Meetings durchgeführt. Außerdem haben wir sehr viel Kommunikation innerhalb der Abteilungen und auch vom Vorstand top-down getrieben“. 3 Original: „Daher haben wir verschiedene Kommunikationskanäle eingerichtet …sowas wie verschiedene Events oder das Intranet, um den Mitarbeitern anstehende Veränderungen sachgerecht zu kommunizieren“.

30

company"4. Furthermore, the interviewees claimed, that they provide regular training for the

workforce to increase their digital competencies. The “digital upscaling of the workforce”, as it is

defined by participant 1, receives high importance for all the participants.

To increase the employees’ involvement, a strategy that is often applied by several participants is a

bottom-up approach, which enables employees to provide their ideas into their company’s digital

strategy. Therefore, the employees are also involved in the decision-making process which, in turn,

increases their enthusiasm and overall likelihood to participate in and support a digital

transformation. Finally, the employees are usually considered as being experts in their departments

and, consequently, they have the ability to increase the successful implementation of a digital

transformation strategy with their valuable insights.

Organizational Agility

According to the interviewees, the third aspect that has a positive significant impact on the success

of the implementation of a digital transformation strategy is organizational agility. This factor was

mentioned by seven out of eight participants and encompasses aspects such as project flexibility or

agile processes. As highlighted by the participants, agility increases the ability to respond faster to

the quickly changing demands of the digital environment. Furthermore, the respondents claim that

the utilization of agile work methods promotes the implementation of a learning environment, that

adapts rapidly to changes. In contrast to traditional practices, several interviewees mentioned, that

they established a “better done than perfect” culture, which refers to the process of launching a

digital innovation, even if it is not considered to be completely developed in order to improve and

adapt it afterward. Interviewee 6 supports this approach by pointing out that based on his

experience, “it is sometimes better to introduce programs earlier and make changes after the

launch”5. He defended this idea by claiming that “this flexibility allows us to respond to specific

challenges which were unknown in the beginning”5. Moreover, the fifth participant claimed that his

organization is “switching more and more from a silo-oriented company to a more process-oriented

company”6 to increase organizational agility. Since digital transformations impose a disruptive and

unknown challenge on the organizations, the participants claimed that organizational agility,

including the creation of flexible structures and the implementation of innovative learning methods,

4 Original: „Ohne ein aktives Engagement der Leute ist es unmöglich eine Transformation im Unternehmen durchzuführen“. 5 Original: „Ich habe die Erfahrung gemacht, dass es manchmal besser ist ein Programm frühzeitig einzuführen und Veränderungen bzw. Anpassungen noch nach dem Launch zu machen. Die dadurch gewonnene Flexibilität erlaubt uns auf bestimmte Probleme, die womöglich zu Beginn des Projektes noch völlig unbekannt waren, besser zu reagieren“. 6 Original: „Um die Agilität und Flexibilität zu erhöhen, hat sich das Unternehmen von einem mehr Silo-orientierten bzw. Silo-denkenden Unternehmen zu einem mehr Prozessorientierten Unternehmen gewandelt“.

31

can increase the likelihood of a successful implementation. Furthermore, the interviewees claimed

that the use of agile methods has a positive influence on the implementation success.

Negative Factors

Internal Resistance

Internal resistance was mentioned by all the interviewees and several participants claimed that it is

the most compelling challenge and hurdle to overcome in order to successfully implement a digital

transformation strategy. The term combines various aspects such as organizational culture or

employees’ resilience to change. Several reasons can cause internal resistance in the context of a

digital transformation. Since the topic is unknown and new to the majority of the workforce, the

employees do not know how to assess its consequences adequately. For example, participant 6

confirms this argumentation and claims that due to the fear of losing their job as a consequence, the

“employees don’t support the digital transformation”7. Furthermore, interviewee 8 states, that the

resilience to change is “deeply rooted in people’s mindset”8 and, thus, the internal resistance is a

critical and difficult issue to overcome. Participant 7 specifies this concern by pointing out that the

employees are usually hesitant to participate in a digital transformation because they don’t realize

the urgency and necessity for the change. He further explains that the employees prefer their

traditional working methods and processes as they had been working properly in the past. The

internal resistance towards innovative working practices further impedes the utilization of agile

working methods, which are perceived as a critical success factor for the digital transformation’s

implementation. Furthermore, as previously mentioned, the participants insist on the importance of

employees’ participation in a digital transformation in order to be successful. Therefore, it is crucial

to induce a cultural shift in companies to overcome internal resistance.

Internal Resource Limitations

The next factor that is considered to harm the implementation success of a digital transformation

strategy is defined as internal resource limitations. Every participant mentioned that they encounter

in their digital landscape a scarcity of resources such as financial limitations, like budget restrictions,

7 Original: „Manchmal haben die Leute einfach Angst vor den durch die Digitalisierung hervorgerufenen Veränderungen. Beispielsweise haben die Angst Ihre Arbeit zu verlieren, weil Sie fürchten durch eine Technik ersetzt zu werden und unterstützen daher die Transformation nicht“. 8 Original: „Menschen sind generell nicht begeistert von Veränderungen. Das ist tief verwurzelt im menschlichen Mindset und daher bin ich der Meinung, dass Organisationskultur, und der dazugehörige Widerstand, die größte Herausforderung ist“.

32

or limitations related to the internal human capital, like the lack of skills or insufficient digital

competencies. Participant 2 describes financial limitations as a recurring issue since “budget

limitations is something we encounter in almost every transformation project”. Interviewee 4

characterizes the financial limitations as more critical by claiming that “sometimes, projects can't be

realized because of financial restrictions”9. But not only the monetary aspect imposes an essential

challenge on the digital transformation process but also non-monetary factors, such as the lack of

qualified people and insufficient digital capabilities in the workforce. According to participant 1, the

small size of the digital transformation department in his organization limits its ability to realize

specific digital projects. Interviewee 3 further insists on the urgency to increase their internal non-

monetary resources because they “clearly lack qualified IT employees”10 which consequently limits

their digital transformation capabilities. The participants recurrently mention the difficulty to hire

qualified people. As the job-market is claimed to be highly competitive in the digital environment,

competent employees are scarce. The respondents further indicate the challenge to maintain highly

qualified IT employees in their company. As pointed out by participant 2, “competent IT employees

receive constantly job offers from other companies” and, thus, have high expectations in the

conditions of their workplace. Following the argumentation of the participants, the limited number

of qualified employees and the possible financial restrictions create a critical challenge for the

implementation of a digital transformation strategy and impose a significant influence on its success.

Lack of Management Support

The lack of management support is the last factor that is considered to impose a significant influence

on the success of the implementation of a digital transformation strategy, with six out of eight

participants claiming its relevance. The factor compromises various aspects such as the missing

allocation of responsibilities and the lack of management attention. Interviewee 4 specifies the

importance of managerial attention and claims that several years ago when digital projects were not

relevant for her company’s management “not many things were happening in the field of digital

transformation"11. Furthermore, participant 5 supports managerial relevance and describes the

situation of the chief digital officer’s exit in his company with an aligning “short-term loss of vision for

digital projects”12. Moreover, several participants stressed the continuous justification for digital

9 Original: „Manchmal können wir aber auch aufgrund von finanziellen Einschränkungen Projekte nicht realisieren“. 10 Original: „Wir versuchen interne Ressourcen aufzubauen da wir definitiv zu wenig qualifizierte IT-Mitarbeiter haben“. 11 Original: „Vor ein paar Jahren, also vor 6-7 Jahren, war die Relevanz und die Unterstützung des Managements noch nicht so gegeben. Daher ist auch nicht viel passiert im DT Bereich“. 12 Original: „Leider muss ich sagen, dass wir diese Person leider nicht mehr haben. In dem Zusammenhang war haben wir kurzzeitig die Vision hinsichtlich unserer digitalen Projekte verloren“.

33

transformations towards the management as a draining factor. For example, participant 2 desires a

wider scope to act individually and, consequently, a higher level “of management support in that

area”. Therefore, the participants perceive the lack of management support as a significant hurdle in

the implementation process.

34

Discussion

In the following section, the discussion of the results is presented. The findings are compared to prior

results, based on the academic literature. Moreover, this section presents the newly identified

factors and discusses how, and to what extent they are providing contributions to the currently

available literature. Finally, the discussed factors lead to the development of several propositions

and a conceptual model.

Communication

The first factor that is going to be discussed and that is perceived to impose a significant and positive

influence on the successful implementation of a digital transformation strategy is communication.

Transparent communication and the corresponding creation of a shared understanding for the

upcoming transformational challenges is one of the fundamental principles in the traditional change

management literature (e.g. Kotter, 2007; Tracey, Kanter, Stein, & Jick, 1994). This is supported by

several respondents, highlighting the importance of a continuous exchange of information as an

essential element for a successful change management process. Moreover, scholars have beforehand

discovered the positive influence of communication on the implementation success of a digital

transformation strategy (e.g. Parviainen et al., 2017; Singh et al., 2019; Verhoef et al., 2019), which is

also claimed by the participants of this study. As pointed out by the first interviewee, “digital

transformation is currently an extremely hyped term” and encompasses a lot of insecurity and

unclarity about what it is specifically about. Consequently, employees might use the same term for

different meanings and, thus, create misunderstandings or possibly increase the insecurities among

themselves. Hence, managers and leaders of the digital transformation realized the importance of

disentangling the concept of digital transformation through constant communication.

Furthermore, this study extends currently available literature and stresses the importance of not only

briefing the by the digital transformation directly affected employees but the entire organization.

Whereas the predominant academic literature refers to the relevance to create a cross-functional

and shared understanding among the departments, that are undertaking a digital transformation

(Hess et al., 2016; Verhoef et al., 2019; Vial, 2019), the interviewees claimed the importance to

exchange information with the entire workforce. As described by participant 5, the possible transfer

of incomplete and not validated information through unreliable information channels within the

company, such as the grapevine, could increase the already inhered insecurity, which is associated

with a digital transformation, among the employees. Consequently, interviewees pointed out the

utilization of different communication channels, such as regular information events, town hall

35

meetings or notifications on the intranet, to reach out to as many employees as possible. Henceforth,

the foregoing discussion leads to the development of the following proposition:

Proposition 1: The higher the level of communication regarding upcoming digital transformation

activities throughout the entire company, the higher the likelihood of a successful implementation of

a digital transformation strategy.

Employee Engagement

Next, employee engagement was identified as a positive factor that influences the implementation

success of a digital transformation strategy. The interviewees pointed out the importance of

increasing the digital competencies in the workforce and the authorization for the employees to

participate in digital transformation projects. In order to enable the effective engagement of the

workforce in such projects, Hess et al. (2016) stressed the necessity of the digital skill development.

Nevertheless, the respondents not only insisted on the relevance of sufficient digital skills but also on

the involvement of the workforce in the digital transformation projects. The interviewees recurrently

claimed that employees’ engagement has a significant positive influence on the successful

implementation of a digital transformation strategy. Participant 7 concludes that “without the active

engagement of the people, it is impossible to conduct any transformation in the company”4.

Furthermore, the participation of different hierarchy levels enables the accumulation of a variety of

innovative ideas since employees are perceived to be specialists in their department. Additionally,

the interviewees claimed that the involvement of employees in the decision-making process leads to

an increase in their motivation to participate in the digital transformation and to a decrease,

regarding the insecurity about the digital transformation’s consequences. Hence, if employees

proactively engage in the digital transformation, the success of its implementation is increased.

Although the disruptive impact of digital transformations on an organization has already been widely

discussed in the academic literature (e.g. Fitzgerald et al., 2013; Kane et al., 2015; Singh et al., 2019),

scholars have overlooked the beneficial aspects of the employees’ pro-actively engagement in a

digital transformation to increase the likelihood of its successful implementation. Consequently, this

study leads to new insights and directs to the creation of the second proposition:

Proposition 2: The higher the level of the employees’ active engagement in a digital transformation,

the higher the likelihood of its successful implementation.

36


The increase of the likelihood of the implementation success of a digital transformation strategy by

using agile methods and the development of an agile organizational structure was stressed by the

majority of the interviewees. According to the participants, agility is perceived as one of the main

factors, that is determining the digital transformation’s success. This claim is supported by a variety

of scholars, who scrutinized the importance of agility within a digital environment in their papers

(e.g. Karimi & Walter, 2015; Lee et al., 2015; Verhoef et al., 2019). In consensus with the academic

literature (e.g. Earley, 2014), the respondents highlighted the importance of cross-functional

collaboration across different business units and the breaking of functional silos. Particularly,

participant 5 supports this assertion by declaring that in order “to increase agility, the organization

switched more and more from a silo-oriented company to a more process-oriented company”6.

Furthermore, digital agility enables a quicker reaction to the fast-changing conditions in the setting of

a digital transformation. The constant adjustment to both, market and customer demands and the

seizure of opportunities in a fast manner is fundamental to stay competitive in today’s business

landscape (Matt et al., 2015). Additionally, the interviewees described the implementation of a “trial-

and-error” process, which enables quick project adjustments in the aftermath of the roll-out phase

that are not only applicable to technical requirements but also to market demands. This procedure

enables managers to alter digital projects in order to swiftly discover solutions to challenges, that

were possibly unknown in the beginning. Hence, regarding organizational agility, the findings of this

study confirm previous academic results.

Internal Resistance

The issue of internal resistance has widely been discussed in the academic change management

literature (e.g. Tracey et al., 1994; Waddell & Sohal, 1998). As the results from a research, conducted

by Maurer (1996) indicate, many corporate change efforts fail, whereas resistance is the “little-

recognized but critically important contributor” (P.56) that leads to a failure. In consensus with the

academic literature, the interviewees of this study perceived internal resistance as one of the most

critical factors, that has a significant influence on the implementation success of a digital

transformation strategy. Furthermore, this significant barrier, that employees can reveal as soon as

the disruptive technologies are implemented within an organization, has been widely examined by

scholars in the context of digital transformation (e.g. Fitzgerald et al., 2013; Kane et al., 2015; Singh

et al., 2019). Internal resistance can emerge due to different reasons. As claimed by respondent 6,

resistance can occur due to the perceived insecurity about the consequences that are connected to

the digital transformation. Fitzgerald et al. (2013) argue, that internal resistance is a consequence of

37

employees’ general resilience towards innovation. To overcome resistance, the participants and the

academic literature highlight the importance of a change of a traditional organizational culture into a

more digital-savvy convention (Vial, 2019). Organizations have to increase the acceptance of their

employees towards digital innovations in order to successfully implement a digital transformation.

Furthermore, additional challenges regarding the emergence of internal resistance possibly occur

due to the innovative working methods and the new agile way of working. As described by

interviewee 7, employees usually prefer their traditional working methods and demonstrate

resilience towards innovative ways of working. Consequently, the participants of this study agree

with the academic literature and confirm prior discovered results.


In line with previous academic literature, internal resource limitations were identified as another

critical factor, that is determining the success of a digital transformation strategy. Regarding the

resource limitations, the participants mentioned financial restrictions, the shortage of a sufficient

amount of digital skills and the lack of plentiful digital-savvy employees as the most critical factors. As

described by Matt et al. (2015), digital transformations can only be conducted after considering the

financial aspect, since it imposes resource boundaries on the aspired projects. This argument is

confirmed by the interviewees, who claimed that they encounter recurrent budget restrictions while

planning a project. Furthermore, a few participants pointed out, that several digital transformations

are unrealizable, not only because of financial restrictions but also because of limitations regarding

the availability of employees with adequate digital competencies. Hence, the respondents

highlighted the importance of regular training to increase the digital competencies in the existing

workforce. As implicated by Dremel et al. (2017), the dependence on the employees’ digital and

analytical capabilities to figure out complex business issues is continuously increasing. Furthermore,

the literature stresses the fact that even employees, who are not primarily part of the IT department,

need to develop digital skills to work on technology-intensive projects (Yeow et al., 2018).

Additionally, the participants emphasized the difficulty to acquire qualified people on the job market.

Since digital transformations require specific and contemporary competencies, the perfect fitting

employees are scarce. Consequently, the war for talents (Beechler & Woodward, 2009) is highly

competitive in the digital environment. Furthermore, the respondents stressed the fact that not only

acquiring the right employees is a critical issue, but also retaining them as employees for their

company. Since the current literature is mainly focusing on the internal development of employees’

skills and digital competencies, this study extends the issue by introducing the difficulty of acquiring

and retaining adequate employees. Hence, the following proposition is developed:

38

Proposition 3: The greater the lack of digital competencies and digital-savvy employees within the

company, the lower the likelihood of a successful implementation of a digital transformation

strategy.


Although all participants of this study claim that digital transformation has a high priority in their

organization’s strategy, several respondents mentioned the lack of management support as an

influencing factor that harms the successful implementation of a digital transformation strategy. This

argumentation is in consensus with Hess et al. (2016), who claim that the success of a digital

transformation strategy depends on top management support. Particularly, the authors stress the

ideal scenario in which the chief executive officer (CEO) or another member of the board is fully

responsible for the digital transformation strategy and, thus, adds authority to the endeavour. Due to

the fact that the number of implemented CDOs in the top management of companies is continuously

increasing (Rickards, Smaje, & Sohoni, 2015), organizations have acknowledged the relevance of

establishing a senior executive, who is responsible for the digital transformation. Furthermore,

strategic change literature implicates that CEOs and the top management team have a positive

influence on the initiation of a strategic change (Cannella, Finkelstein, & Hambrick, 2009). Even

though digital transformations were given a relatively high priority in the participants’ organizations,

several interviewees complained about the lack of concrete managerial support to undertake digital

projects. In particular, a few participants pointed out that instead of receiving top-down support,

they rather experienced a process of constant bottom-up justification for required resources

regarding the aspired digital transformation towards the top management. Furthermore, the

interviewees perceived the constant justification as a draining and time-consuming factor which

interferes with the successful implementation of a digital transformation strategy. Consequently, this

study extends the current literature by not only confirming the previous academic results, regarding

the positive aspects of managerial support but also focusing on the counterpart. Henceforth, the

previous argumentation leads to the development of the following proposition:

Proposition 4: The lower the level of managerial support for a digital transformation strategy, the

lower the likelihood of its successful implementation.

39

Conceptual Model

The relationship between the implementation success of a digital transformation and the influencing

factors is visualized in the following conceptual model (Figure 3). Based on the previous discussion,

the identified factors that are extending the currently available literature are defined as

communication and employee engagement, with a positive effect on the implementation success of a

digital transformation strategy whereas internal resistance and the lack of management support are

considered to impose a negative influence. Furthermore, the factors organizational agility and

internal resource limitations were identified as important influences and, thus, are confirming

previous academic results. The implementation success of a digital transformation strategy reflects

the dependent variable and the factors that are influencing its success refer to the independent

variables.

Figure 3 - Conceptual Model (source: author)

40

Conclusion

Innovative technologies and the corresponding disruptive impact of digital transformations on the

business environment impose novel challenges to managers and companies from every industry. By

virtue of the increasing amount of cross-border exchange of information and the international

transfer of goods, especially multinational companies have to face the digital transformation

challenge to increase their efficiency. However, not only the formulation of a digital transformation

strategy is a relevant factor, but also the success of its implementation is essential in order to exploit

its full potential and, thus, increase the firm’s competitiveness in today’s business environment.

Although the concept of strategy has already been extensively scrutinized by scholars, digital

transformation strategy and its corresponding implementation remains rather unexplored.

Consequently, although an increasing number of firms are investing considerable amounts of money

into digital transformation endeavours, the majority of transformation efforts tend to fail. Due to the

scarcity of available academic resources and guidance, the following research question was

established and aimed to extend the current academic status-quo:

“What are the main factors that determine the successful implementation of a digital transformation

strategy for an MNE?”

To derive a valuable and qualified answer to the research question, an explorative multiple-case

study was conducted, whereas only multinational companies and their respective managers, who are

involved and leading a digital transformation process, were considered to be part of. With the help of

a cross-case analysis, the most relevant factors, that were considered to impose a significant

influence on the implementation success of a digital transformation strategy, were identified and

further analysed.

Hence, the identified positive factors are communication, employee engagement and organizational

agility. Communication refers to the creation of a collective understanding and the sharing of

sufficient information regarding the digital transformation. While scholars focus primarily on the

communication with the directly affected people, this study extends the literature by also pointing

out the relevance of communication among all the employees. Employee engagement implies the

involvement of the workforce in digital transformation endeavours. By highlighting the importance of

the active engagement of the employees, the factor provides innovative academic insights.

Furthermore, the participants support previous academic results by indicating the significance of

organizational agility and the creation of flexible organizational structures.

On the other hand, the cross-case analysis led further to the identification of negative factors,

whereas the most relevant ones were defined as internal resource limitations, lack of management

41

support and internal resistance. Internal resource limitations refer to financial limitations and the

lack of sufficient digital competencies, while the latter extends the academic literature by pointing

out the importance and difficulty of hiring and retaining digital-savvy employees. The lack of

management support refers to the negative aspects that come along with the absence of managerial

guidance. Since scholars have been particularly focusing on the beneficial aspects of management

support, this study provides additional insights by highlighting the counterpart. The last negative

identified factor refers to internal resistance, that can emerge due to several reasons, such as a

general resilience to change or the fear of the unknown consequences of digital transformation.

Hence, the participants supported previous findings by claiming the importance of overcoming the

internal resistance to increase the likelihood of a successful implementation of a digital

transformation strategy.

Managerial Implication

As previously argued, digital transformations have a disruptive impact on the entire business world.

Thus, companies’ managers demand for guidance to navigate through this new and unique

challenge. By providing a comprehensive study about the main factors, that are determining the

implementation success of a digital transformation strategy and, additionally, discovering several

new aspects that have been previously overlooked in the academic literature, this research paper

contributes to the required managerial instructions. Due to the complexity of a digital

transformation, the managers who have the responsibility for this endeavour, bear a significant

impact on the likelihood of its success. Therefore, the factors, that were identified and further

discussed in this paper, should be taken into consideration, while planning and conducting a digital

transformation. Consequently, managers have the ability to increase the success and efficiency of

digital transformations.

Nevertheless, managers have a higher influence on some factors than on others. The level of internal

resistance, which is perceived as a critical barrier in the implementation process, can be significantly

decreased by managerial involvement. To reduce the internal resistance, managers have to focus on

the level of acceptance among the employees towards digital innovations and disentangle the

uncertainty, that is associated with digital transformations. To increase the level of acceptance for

innovative technologies, managers have not only to implement a more digital-savvy organizational

culture but also establish a sufficient communication throughout the entire company, regarding

upcoming projects. To decrease the lack of internal resources, managers can increase the internal

digital competencies through a higher provision of training for the employees. Furthermore, the

development of digital competencies among the workforce has the ability to boost the employees’

42

engagement for digital transformations. As the pro-active engagement of the employees in a digital

transformation project is considered to be a crucial factor for its success, managers have to increase

the enthusiasm of the workers for innovation and recurrently promote the participation in such

projects. Last, although managers have to bear a critical attitude as a virtue of their job, they should

not only accept promising digital transformation projects but also demonstrate their support for

them.

Scientific Contributions

Although scholars have extensively studied strategy formulation and its implementation, the

available resources about digital transformation strategy remain still scarce. Due to the fact that it is

a relatively innovative and new subject, that became recently increasingly relevant, more and more

scholars have lately started to scrutinize the topic. However, since the phenomenon is still

immensely understudied and no comprehensive study, that is exploring the intra-organizational

factors that are determining the successful implementation of a digital transformation strategy is

feasible yet, this study provides several valuable contributions to the currently available literature.

First, since there is currently no comparable study available, this paper contributes to the literature

stream of strategy research by exploring the phenomenon of a digital transformation strategy.

Moreover, by including the international focus on the case-study, this study contributes in particular

to international business research. Second, by identifying a total of six unique factors, that are

perceived to impose a significant influence on the implementation success of a digital transformation

strategy, and through the creation of the corresponding conceptual model (see Figure 3), this study

contributes to the understanding of the innovative implementation process. In particular, four

factors were discovered, that were previously overlooked by scholars and, hence, are extending the

academic literature.

The level of communication regarding upcoming digital transformation activities was identified as a

significant factor, that positively influences the implementation success of a digital transformation

strategy (Proposition 1). In contrast to previous academic results, the study extends the literature by

not only focusing on the communication with the by the transformation directly affected people, but

also on the communication activities throughout the entire organization. The second factor that was

discovered in this study and that is perceived to positively affect the implementation success of a

digital transformation strategy is defined as employee engagement (Proposition 2). Although

employee engagement is generally perceived as an indispensable aspect of any transformation, this

study enriches previous findings by highlighting particularly the importance of an active employee

involvement. Next, this research paper scrutinized the lack of digital competencies within the

43

company and its corresponding negative influence on the implementation success of a digital

transformation strategy (Proposition 3). In particular, this study contributes to previous results by

pointing out the difficulty to hire qualified employees and retain them in the company. The last

factor that is perceived to impose a significant negative influence on the implementation success of a

digital transformation strategy is classified as the lack of managerial support (Proposition 4). Whereas

previous literature primarily focussed on the beneficial aspects of managerial support, this study

extends academic literature by demonstrating the counterpart and highlighting the harmful

consequences that are connected to its absence. Furthermore, this research paper not only extends

the literature but also supports and confirms previous findings. Regarding the relevance of the

factors organizational agility and internal resistance, the study supports the perception about the

importance of the factors’ influence on the implementation success and, thus, strengthens the

scientific relevance of previous results. Hence, this study also provides additional managerial

guidance about a widely unknown and underexplored topic. Last, by acknowledging the limitations of

this paper, other scholars receive implications and recommendations for further investigations in this

particular field of research.

Limitations and Future Research Opportunities

Although this research paper provides several contributions to the literature and additional managerial

implications, it also contains several limitations. First, due to the time constraints for this research

paper, only eight interviewees from a total of four cases have been interviewed. Although the findings

were congruent between the cases, the generalizability and transferability are disputable as a

consequence of the virtue of the number of participants. Moreover, because of the time limitation and

the difficulty to get access to companies’ internal strategic documents, the presentation of additional

sources, that would have supported the participants’ arguments, was unattainable. Next, since the

fundament of this research paper is qualitative data, that was generated through semi-structured

interviews, the results are based on the researcher’s interpretation and, consequently, are afflicted

with a modest level of subjectivity. Following the argumentation of Eisenhardt (1989), due to the

incorporation of a large amount of data in qualitative studies, the lack of qualitative measures can lead

to its mismanagement. Last, since the participants claimed that their digital transformation strategy

has a high relevance for their companies, the possibility is given that the respondents did not

contribute all their relevant insights. Although confidentiality was assured in the beginning of each

interview, a residual risk is still present.

Based on the previous discussion, the limitations and implications provide several opportunities for

future research. First, since the time was constrained for this study, a higher level of generalizability

44

and transferability regarding the outcomes can be generated by conducting a longitudinal study.

Moreover, by conducting a long-term research, additional insights could possibly be generated, that

contribute to previous findings regarding the implementation process of a digital transformation

strategy. Next, this study could possibly be complemented by not only observing the managerial

perspective but also including the employee’s viewpoint. Since the workforce is the primarily affected

party within a company, employees have a significant contribution to the implementation success of a

digital transformation strategy. Furthermore, the introduction of several relevant factors that impose

a significant influence on the success of the implementation process and the corresponding extension

of academic literature provide additional research opportunities. By using deductive research, scholars

could test for the existence of a positive correlation between the level of communication in the entire

company and the likelihood of a successful implementation of a digital transformation strategy and,

hence, confirm statistically the first proposition of this study. In order to acquire additional insights

that are related to the second proposition, subsequent research could deal with the question of how

to promote a pro-active participation of the workforce in digital transformation endeavours. Regarding

the third proposition, future research could statistically verify its relevance by applying a deductive

research method and test for the relationship between the available digital competencies within a

company and its likelihood to implement a digital transformation strategy successfully. As the fourth

proposition deals with the negative effects of managerial support on the implementation success of a

digital transformation strategy, future research could elaborate this factor by conducting a follow-up

study, that is primarily focusing on this factor.

Nevertheless, not only the novel factors but also prior scrutinized factors demand for additional

insights. For example, as internal resistance imposes a significant barrier to the digital transformation

endeavour, additional research should focus on the question of how to properly deal with it, especially

with respect to the digital environment. Regarding the relevance of organizational agility, future

research could deal with the question of which organizational structure provides the highest level of

organizational agility and, hence, is the most effective for the digital transformation endeavour.

Furthermore, the participants and the academic literature highlight the importance of digital

transformation in order to remain competitive in today’s business environment. Consequently, further

research could focus on the question of whether a competitive business environment increases

companies’ motivations to innovate.

45

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Appendices

Appendix A: Interview Guideline (English)

Part 1: Introduction to the research and general questions about the interviewees' background in

order to understand his or her expert status

1.1. Asking the interviewee to present himself (Academic experience, work experience, specific

experience in the digital transformation process).

Part 2: Specific questions related to the research about digital transformation processes and their

implementation in multinational companies

2.1. What is the current transformation process the interviewee is working on? If there is no

current transformation project, what was the latest transformation about?

2.1.1. Will this transformation be implemented national or multinational?

2.1.2. What is the transformation’s status of completion?

2.2. How does the transformation influence business processes in your company?

2.3. What are the challenges in the implementation process?

2.4. What are the drivers that ensure and facilitate a successful implementation?

2.5. How is the success or potential failure of the digital transformation monitored?

2.6. Where there any unsuccessful transformations earlier? If yes, why?

2.6.1. How did the unsuccessful transformation alter your strategy/further procedures?

Part 3: Additional possible questions, depending on the answers given in Part 2

3.1. What is your company’s digital strategy?

3.2. What is the relevance of digital transformation for your company?

3.3. What is the relevance (in general) of digital transformation for companies?

3.4. Is your company digital mature?

3.5. What are the benefits for your company of the digital transformation?

3.6. How does your company make its employees aware of the necessity to transform?

3.7. What would you say are the different stages in the transformation process? (Starting from

the formulation and ending in the successful implementation)

3.8. Who is involved in the transformation and implementation?

3.9. What are the critical points while implementing a transformation?

3.10. What is the main challenge in the transformation process?

3.11. What is the main driving force to ensure a successful transformation?

Part 4: Finalizing the Interview

4.1. Clarification about remaining open questions

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Appendix B: Interview Guideline (German)

Teil 1: Einführung in die Forschung und allgemeine Fragen zum Hintergrund der Interviewpartner.

1.1. Den Interviewpartner bitten, sich vorzustellen (Akademische Erfahrung, Berufserfahrung,

spezifische Erfahrung im digitalen Transformationsprozess).

Teil 2: Spezifische Fragen zur Forschung zu digitalen Transformationsprozessen und deren

Umsetzung in multinationalen Unternehmen

2.1. An welchem digitalen Transformationsprozess arbeiten Sie aktuell? Wenn es kein aktuelles

Transformationsprojekt gibt, worum ging es bei der letzten Transformation?

2.1.1. Wird diese Transformation national oder multinational implementiert?

2.1.2. Wie ist der Status der Transformation?

2.2. Wie beeinflusst die Transformation die Geschäftsprozesse in Ihrem Unternehmen?

2.3. Was sind die Herausforderungen im Umsetzungsprozess?

2.4. Was sind die treibenden Kräfte, die eine erfolgreiche Implementierung gewährleisten und

erleichtern?

2.5. Wie überwachen Sie den Erfolg oder das potenzielle Scheitern der digitalen

Transformation?

2.6. Gab es in der Vergangenheit erfolglose Transformationen? Wenn ja, warum?

2.6.1. Wie hat die erfolglose Transformation in der Vergangenheit ihre gegenwärtige

Strategie beeinflusst?

Teil 3: Weitere mögliche Fragen, abhängig von den Antworten in Teil 2

3.1. Wie sieht die digitale Strategie Ihres Unternehmens aus?

3.2. Welche Bedeutung hat die digitale Transformation für Ihr Unternehmen?

3.3. Welche Relevanz hat die digitale Transformation (im Allgemeinen) für Unternehmen?

3.4. Ist Ihr Unternehmen digital ausgereift?

3.5. Was sind die Vorteile der digitalen Transformation für Ihr Unternehmen?

3.6. Wie macht Ihr Unternehmen seine Mitarbeiter auf die Notwendigkeit einer Transformation

aufmerksam?

3.7. Was sind Ihrer Einschätzung nach die verschiedenen Stufen des Transformationsprozesses?

(Von der Formulierung bis zur erfolgreichen Umsetzung)

3.8. Wer ist an der Transformation und an der Umsetzung beteiligt?

3.9. Was sind die kritischen Punkte beim Implementieren einer Transformation?

3.10. Was ist die größte Herausforderung im Transformationsprozess?

3.11. Was ist die größte treibende Kraft für eine erfolgreiche Transformation?

Teil 4: Abschluss des Interviews

4.1. Klärung der noch offenen Fragen.

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Appendix C: Coding Framework Positive Factors

High Priority/Relevance Top-Down

Cross-Functional Collaboration

Support from Management/Board

Open Minded and Fearless Teams

Flexible Structures

Implementation of Board Roles


Leadership Support

Strategic Roadmap

Importance of Vision

Long-term planning tools

Long-term Vision

Organizational Transparency

Regular Townhall Meetings

Employee Events

Communication

Employee Training

Digital Upscaling of the Workforce

Employee Involvement

Employee Engagement

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Visualization of small benefits

Incremental Progress Honour Milestones

Formulation of Milestones

Clear Project Formulation

Clear Objectives

Project Planning

Project Monitoring

Implementation of KPIs

Project Controlling

Insights from non-competing companies

Comparison to competitors

External Orientation

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Appendix D: Coding Framework Negative Factors

Capabilities of Employees

Lack of Skills (Digital Competencies, Agile)

Budget-Restrictions


Organizational Culture

Resilience to Change

Employees‘ Critical Attitude

Internal Resistance

Technical Realisation

Definition of concrete Use-Case

Timing of Innovation

Technical Barriers

International Differences

Different conditions in subsidiaries

Variation in Customer Expectations

Market Differences

Lack of Vision

Lack of Strategy

Transformation Approach

Distraction (Other Projects)

Variety of different tasks Prioritization of Work

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Allocation of Responsibilities

Management Attention


Digital Transformation Hype

Digital Transformation Terminology

Insufficient DT Understanding

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Appendix E: Example Quotes

Factors Representative Quotes Participant - 1

(+) Communication “We are constantly training and informing the employees about what is currently going on.”

(+) Employee Engagement "We are constantly digitally upscaling our workforce."

(+) Organizational Agility "What is also important is an open-minded and fearless team. We use also a lot of try-and-error to identify good projects."

(+) Leadership Support "Digital transformation has a high priority for top management. It has an high embeddedness in the strategy."

(+) Long-Term Vision "We created a strategic roadmap."

(+) Project Planning "I think it is important to set priorities and strategies, but at the same time: Keep it flexible."

(+) External Orientation "Furthermore, we are in exchange with other companies to receive insights."

(-) Internal Resistance "Internal resistance is probably the most crucial challenge."

(-) Internal Resource Limitation "We are just a small team that is dealing with digital transformation."

(-) Lack of Management Support "We also have to justify our projects towards the management."

(-) Technical Barriers "Of course there are also some technical limitations that we encounter."

(-) International Differences

"There are also regional differences. Just because we have the required infrastructure in the home country, doesn't mean we have the same infrastructure in all our subsidiaries."


(+) Communication "We have several meetings with employees to ensure that everybody understands the ongoing transformation"

(+) Employee Engagement

"Of course, at the top, there has to be somebody who starts the transformation and pushes the project forwards. But to be successful, it is at least equally important to involve the affected people"

(+) Organizational Agility "We tried to change most of our processes towards a more flexible and agile process"

(+) Leadership Support "Luckily, the management is aware of the importance of digital transformation, and therefore, we have their support for our projects."

(+) Project Planning "Our planning involves always the entire project duration but also includes certain flexibility as well."

(+) Project Controlling

"After a transformation started, we establish meetings with the different departments to check if the use-case is clearly given and the aspired benefits are realizable".

(-) Internal Resistance "It's not only the digital aspect that creates resistance, but it is also because of the new way we work."


"Budget limitations is something we encounter in almost every transformation project."

(-) Lack of Management Support

"Constant justification for the manpower and the budget is exhausting. I wish we would receive more management support in that area."

(-) Insufficient DT Understanding

"The moment you talk more with people and employees, you start to realize that many have a wrong picture of digital transformation."

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(+) Communication "Our department uses different channels, such as a variety of events or the intranet, to communicate changes to the employees"

(+) Employee Engagement "With the bottom-up approach, we get the people involved. By involving the people, they lose their fear for innovation"

(+) Organizational Agility "Agile methods such as SCRUM helped us a lot to face the digital transformation challenge."

(+) Long-Term Vision "Agility became really important for us but we created also a picture for the people about the future."

(+) Project Planning "The project management also depends on its planning. We always clarify the aspired benefits, set milestones, and work step by step."

(+) Honour Milestones

"Demonstrate the benefits! That's how we create enthusiasm. If you manage to achieve a certain point of development during a transformation - let the people know."


"Challenges? In my opinion, the most relevant challenge is the human being itself. People not only disklike change, but they are also sometimes afraid of it."


"We try to build up internal resources since we clearly lack qualified IT people."

(-) Transformation Approach "A clearer strategy that is aligned with the top management is required."

(-) Prioritization Issue

"We challenge the costs, the benefits, and also non-monetary aspects before we decide which project we take next. But I still think we sometimes don't prioritize right."


(+) Communication

"Our team has several tasks, such as the organization of an event which is called the "Digital Day", in which we inform our employees and create awareness for upcoming digital transformations"

(+) Employee Engagement "We are establishing new training concepts to increase the digital competencies among our employees"

(+) Organizational Agility "We are trying to push the organization into a more agile direction"

(+) Leadership Support

"We established a 'digital champion community' in which every department nominated a digital champion leader who supports the rest of the department in digital transformations"

(+) Long-Term Vision "Our strategy is manifested in a long-term strategic roadmap. Furthermore, we have a separate Digital Roadmap"

(+) Project Controlling

"We defined different development phases for a project and at a certain point, KPIs have to be defined. These KPIs also assist the project guidance."

(-) Internal Resistance "I would say one of the main challenges is the general mindset change: How do I work in a digital project?"

(-) Internal Resource Limitation "Sometimes, projects can't be realized because of financial restrictions"


"Around six to seven years ago, the relevance and the management support wasn't there. Therefore, not many things were happening in digital transformation"

(-) Technical Barriers "In my opinion, the most important project phase is the technical validation because most of the projects that fail do so at this point"

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"We did not establish a concrete process like 'how to tackle a digital transformation challenge' since the topic is extremely broad"


(+) Communication

"To create awareness, we conducted a lot of town hall meetings. Furthermore, we have a lot of communication within the departments and also from the board"

(+) Employee Engagement "We developed tools, in which the employees have the ability to hand in their ideas - bottom-up."

(+) Organizational Agility "To increase the agility, the organization switched more and more from a silo-oriented company to a more process-oriented company".


"In 2016, we recruited a Chief Digital Transformation Officer, who had a significant impact on the digital transformation by pushing the processes forward"

(+) Long-Term Vision "Digital Transformation is deeply rooted in the group's general long-term strategy"

(+) External Orientation "We conducted a maturity assessment that was challenged also with competitors to receive information about ours and their current status"

(-) Internal Resistance "In my opinion, the organizational culture and the accompanying internal resistance is the biggest challenge"


"Another big challenge was the provision of a sufficient amount of laptops"


"Unfortunately, we lost our CDO. Consequently, we faced a short-term loss of vision for digital projects.”

(-) Technical Barriers

"For example, it is a challenge to enable people from the product development, who are used to design the product physically, to design the product now on a computer"

(-) Transformation Approach

"Currently, we don't have a general roadmap concerning our digital strategy"


"I think sometimes it would be better to define concrete use-cases first to ensure the choice of appropriate projects"


(+) Communication "In my opinion, it is crucial to make sure that everybody knows what's going on - especially for their department"

(+) Employee Engagement "The main focus has to be on the employees - transformation only works with their acceptance"

(+) Organizational Agility

"I made the experience that it is sometimes better to introduce programs earlier and make changes after the launch. This flexibility allows us to respond to specific challenges that were unknown in the beginning."

(+) Project Controlling "We don't use strict measurements to determine the success of a transformation. But project monitoring is definitely important."

(+) External Orientation "We work also with external consultants or go on specific conferences to get impressions about upcoming trends."

(+) Honour Milestones "The visibility of achievement is also important in my opinion. It keeps the employees motivated".

(-) Internal Resistance "Sometimes people are afraid of the digitally induced change. For example, they fear to lose their jobs. Hence, they don't support the transformation"

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"Don't get me wrong, we already got a good amount of qualified people. But to push the change faster and more efficient forward, we still lack a lot of qualified people."


"Especially in higher hierarchical levels, performance goals limit the ability to support a digital transformation"


"The moment we roll out a certain project, affected people in the departments have to test it and provide feedback. Since this is next to their normal tasks, we lose a lot of time at this point."


(+) Communication "Furthermore, it is important to explain to the people that what we are doing will increase the competitiveness of the company"

(+) Employee Engagement "Without the active engagement of the people, it is impossible to conduct any transformation in the company"


"Our leadership has a lot of requirements but on the other hand offers a lot of support which helps us realizing the benefits of the transformation."

(+) Long-Term Vision "Where are we today? Where do we want to be in five years? That's the question we have to deal with as soon as possible."

(+) Project Planning "A transformation is as successful as it is planned. Moreover, all internal and external factors should be considered"

(+) Project Controlling "Monitoring ongoing projects is important for us. Not only to avoid potential failures but also to learn for following projects."

(+) External Orientation "We also look at other competitors and companies in our industry to check for their innovations."


"The first thing we usually hear when we try to promote our idea is: "Why do we have to change something - it has been working for the past 20 years?""


"The monetary factor plays an essential role. You have to justify your budget for your projects."


"Unfortunately, some projects just did not fulfil the management requirements where we have seen a lot of potential."

(-) Transformation Approach

"We work project for the project towards a more digitalized company but we miss sometimes a clear vision."


"I would say that we try too hard sometimes. We see the potential of technologies a try to implement them as fast as possible. It would be better to focus on a specific task sometimes."

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(+) Communication

"Communication is the key to success. Change is always accompanied by resistance. This issue can be dealt with by communicating every aspect of the transformation to the affected people"

(+) Employee Engagement "Moreover, it is important to create something for the future. This is only possible if the entire organization works together"

(+) Organizational Agility

"Learning by doing - that's the approach we use for most of our projects. The moment we reach a certain point of development we release the project to the affected people and ask them about their opinion"

(+) Leadership Support "We receive a lot of support from the management because they are aware of the potential benefits."

(+) Long-Term Vision "I think it is important to provide a long-term perspective if you're leading a transformation"

(+) Project Planning "Before we "go live" with a project, we also think about all the people that are affected"


"People are resilient to change. That is deeply rooted in people’s mindset and therefore, I consider the organizational culture - overcoming the resistance - as the main challenge."


"For specific projects, we just don't have the right competencies and people in our organization."

(-) Technical Barriers

"From what I heard, the IT landscape also imposes several barriers on us. The infrastructure – e.g. Servers - don't have enough capacities sometimes."


"We talked a lot about digital transformation today but even I am asking myself sometimes - what is it concrete about? Where does it start and where does it end?"

digital transformation strategy in multinational companies

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