Organizational Digital Agility: Strategic Imperative for Digital Transformation and Firm Performance

Abstract

A firm’s ability to achieve a competitive advantage through the creation of digital capabilities is affected by a firm’s organizational digital agility (ODA). At their heart, both the resource-based view and dynamic capabilities provide vehicles for describing the ‘what’ regarding the role of resources in executing firm strategy. However, these two theoretical foundations do not address the ‘how’ and the manager's role in deploying those resources to achieve a competitive advantage. Resource orchestration theory begins to address this gap and advocates for the manager’s role in deploying these resources. Yet, despite this theoretical foundation, little research has been conducted on the organizational factors that impact the delivery of digital capabilities and ultimately drive gains in competitive advantage. This study introduces the concept of ODA and establishes the impact of ODA on successful resource orchestration in digital transformation efforts. CIO level engagement is used to validate a survey instrument and then test the hypotheses. ODA and its constructs are significant predictors of digital capability creation as a proxy for digital transformation. The positive correlation between digital capabilities and firm performance is confirmed.