Growth paths for overcoming the digitalization paradox

• Published in: Business horizons Vol. 63; no. 3; pp. 313 - 323
• Main Authors: Gebauer, Heiko, Fleisch, Elgar, Lamprecht, Claudio, Wortmann, Felix
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01-05-2020; Elsevier Advanced Technology Publications
• Subjects: Business-model modifications; Digitalization; Digitalization paradox; Growth strategy; Growth traps; Innovation capability; Strategic partnerships; Digitalization; Strategic partnerships; Digitalization paradox; Growth traps; Growth strategy; Innovation capability; Business-model modifications
• ISSN: 0007-6813; 1873-6068; 1873-6068
• DOI: 10.1016/j.bushor.2020.01.005

Despite the demonstrated opportunities for revenue enhancement through digitalization, companies often experience a digitalization paradox. This paradox suggests that although companies may invest in digitalization, they often fail to achieve the expected revenue enhancement. In reporting research on 52 companies, we make the following four contributions: First, we focus on industrial companies in the business-to-business context, which largely have been neglected in previous research on digitalization. Second, we introduce the digitalization paradox as an important phenomenon in the discussion of revenue enhancement through digitalization. Third, we describe three growth paths: (1) commercializing digital solutions, (2) utilizing product connectivity, and (3) establishing an IoT-platform-based application business. For each growth path, the article takes a dynamic perspective on business models, highlighting triggers and modifications in business-model components (including value proposition, value-creation activities, and profit equation). Fourth, while the described modifications require initial investments to let these growth paths develop, we highlight how growth traps can prevent investments in business-model modifications from leading to revenue enhancement and how they can ultimately lead to the digitalization paradox.