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Characterizing Approaches for the Implementation of Digital Business Strategies

Written by Daniel Richter

Paper category

Master Thesis

Subject

Business Administration>Management

Year

2015

Abstract

Master Thesis: This chapter lays the theoretical foundation for this article and shows the results of the literature review. Chapter 3.1 explains the concept of digital business strategy that is the motivation for this article. Chapter 3.2 explains the business incubator based on the results of the literature review and presents the characteristics found. Chapter 3.3 explains the results of the literature review of the IT organization and describes the characteristics of the findings. 3.1 Digital business strategy The digital business strategy thought explained by Bharadwaj et al. (2013) is the main motivation of this paper. Information technology or IT enables companies to improve their business and even create opportunities for entirely new business models. The increasing importance and value of IT to the company's business has also changed the company's organizational structure (Bharadwaj et al., 2013); Weill & Woerner, 2015; Xu, 2014). Due to the importance of the organization, the role of IT in the company has changed. According to Bharadwaj et al. (2013), this has had an impact on the IT alignment field. IT consistency is defined as "the degree to which business strategies and plans and IT strategies and plans complement each other" (Chan and Reich, 2007). The idea behind IT consistency is to align IT strategy with business strategy. This represents the hierarchy within the company, where IT supports the business. With the emergence of emerging technologies, IT often disrupts the business (Nylén & Holmström, 2015). It does not seem feasible to use a hierarchical structure, so Bharadwaj et al. (2013) proposed integrating business and IT strategies into digital business strategies. They define digital business strategy as "an organizational strategy formulated and executed by using digital resources to create differentiated value." The definition emphasizes three things (Bharadwaj et al., 2013): 1. By talking about “organizational strategy”, it outlines the universality of digital resources in functional areas such as operations, supply chain, and marketing. 2. The term "digital resources"' is not subject to technology and system constraints, but includes a resource-based perspective. 3. The goal of "creating differentiated value" includes the use of IT to generate a competitive advantage. By adapting the understanding of strategy to changes that occur as the value of IT resources increases, the company's strategy implementation must also change. The design and realization of products and services required to implement digital business strategies is a new challenge for traditional companies. A key challenge is to build products and services that are interoperable, leveraging the capabilities of digital resources and other complementary platforms. 3.2 Existing business incubator literature This chapter analyzes the relevant characteristics of business incubators in order to implement new products and services and form a digital business strategy. First, Chapter 3.2.1 introduced the terms related to business incubators, and selected the most feasible disciplines related to business incubators for this article. Chapter 3.2.2 developed a working definition based on the literature review conducted. Finally, in Chapter 3.2.3, the characteristics of the incubator are explained. 3.2.1 Terminology related to business incubators This chapter determines the scope of business incubation, which is feasible for implementing digital business strategies. The incubator initially provided services for low-tech and non-technical companies, and its main goal was to revitalize the manufacturing industry. The first incubator was established in the United States in 1959. The first incubation program was launched in the 1970s, so in the early 1980s, there were approximately 200 business incubators. Today, there are more than 7,000 incubation projects worldwide, of which approximately 1,250 are located in the United States (Aernoudt, 2004; NBIA, 2012). Due to the establishment of incubators and related incubation research in the past 30 years, many terms related to business incubators have been introduced in the literature. Figure 5 summarizes the most common terms. Business incubators support new companies in their business and provide them with various services as support (eg Gassmann & Becker, 2006; NBIA, 2012; Ratinho, Harms, and Groen, 2013). In contrast, business accelerators are a new phenomenon that have not been fully researched and supported by young companies that have been established. Accelerators have a short support period and focus on the growth of young companies rather than initial startups (Cohen & Hochberg, 2014; Isabelle, 2013). Since the company's life cycle is in the late stage and there are few existing documents, this article will focus on the incubator, but in the hypothesis assessment will include accelerator and venture capitalist employees as supporters for the creation of a new company. In addition, whether there is a difference in business incubators has for-profit or non-profit purposes (for example, Barbero, Casillas, Ramos, and Guitar, 2012; Bergek and Norrman, 2008). Non-profit incubators focus on economic development by supporting local businesses. According to data from the National Business Incubation Association (NBIA), the association is an organization that promotes business incubation and entrepreneurship in more than 60 countries/regions. Most business incubators (93%) in North America are non-profit organizations (NBIA, 2012) . For-profit incubators are usually set up to obtain shareholder investment returns. According to NBIA, only 7% of North American incubators. Read Less