Corporate Strategy and Value Creation in the Age of Digital Disruption

Abstract

Digital disruption has altered the playing field in such a manner that firms have been forced to alter their strategies by changing the way value is created through traditional strategic lenses. In this study, the strategies used by firms in industries that have been disrupted by digitalization have been examined with regard to how digital skills, business models that are platform-based, the use of artificial intelligence, and ecosystem orchestration can be used to create sustainable value. By applying a methodological approach that uses quantitative and qualitative analysis of the strategic decisions and performance of 331 publically traded firms in five industries and twelve firms that have strategically prominent positions, a digital strategy value creation framework has been developed. Results show that a company adopting a platform strategy achieves a growth in revenues of 22.4%, much higher than what firms using traditional hybrid strategy can do, which stands at only 6.1%. It has also been found that digital skills and the use of artificial intelligence are positive predictors of innovation and acquiring market share. In addition to this, the study also shows that ecosystem orchestration acts as a mediator in the association between digital investments and firm performance, giving an enhanced insight into the interrelationship of strategy, technology, and agility. This study offers many contributions, both theoretically and practically, in that it not only merges the resource-based view and dynamic capabilities theoretical perspectives but also helps understand how strategy is formulated within a digital environment. The results of this study can prove to be very useful for digital transformation and international competition.