The Impact of Digital Transformation on Business Strategy: A Closer Look on Success Determinants

Introduction

The age of globalization encourages companies to embrace and exploit the opportunities presented by digital strategies. The world seems limitless and scientific and technological development is unstoppable (Muafi, Grabara, Sudiyarto, & Siswanti, 2019). However, for organizations to succeed in digital transformation¹, they need to redesign and redefine their business strategies. To drive the digitization of business processes, products, and services, it is essential to develop a better understanding of digital business strategies (Yeow, Soh, & Hansen, 2018).

Business strategy has evolved significantly over the last twenty-five years. Organizations have learned to analyze their environment, define their position, develop business advantages, and understand the pressures to maintaining advantage in the face of challenging competitive threats (Casadesus-Masanell & Ricart, 2010). However, factors such as globalization, deregulation, and technological change, to name a few, are profoundly changing the business arena. As suggested by Li et al., (2016), digital technology is increasingly empowering organizations without boundaries in collaborative business environments and forcing new business strategies. Digital technology has changed the boundaries, economies of scale and strategic focus of companies, rules for value creation and supplier-customer interaction.

Being present in a national market without a digital strategy is just a survival approach, but it is almost impossible to penetrate the international market without digital leadership (Fosic, Trusic, & Sebalj, 2017). Overall, digital business strategies help transform markets and support innovation in modern economies by interfacing with customers, partners, and suppliers (Romanelli, 2018). Current digital trends are leading companies to redefine their product and business portfolio by digitizing products and services (Gutierrez-Leefmans, Nava-Rogel, & Trujillo-Leon, 2018).

According to (Romanelli, 2018), governments, businesses and communities need to leverage technology and adopt a digital strategy to improve, sustain growth and create social and public value together. In business, digitization is changing the competitive landscape in many industries. Digitization goes beyond the benefits companies derive from digital platforms, but also reflects the ways in which digital media and platforms influence the restructuring of business, society, and culture (El Sawy et al., 2016). Digitally savvy customers are demanding more, while the threat of digital disruption from new companies is increasing (Sia, Soh, & Weill, 2016). Digital platforms are enabling cross-border disruption in the industry, leading to new forms of business strategies (Bharadwaj, El Sawy, Pavlou, & Venkatraman, 2013). Since all businesses use digital technology in some form, no business is immune to digital disruption, and the evolution of digital technology will present unique opportunities and challenges to all leaders (Karimi & Walter, 2015), opening up new opportunities for knowledge sharing and value creation and emphasizes the concept of enterprise and digital ecosystem (Romanelli, 2018).