Digital technology-enabled capability development pathways

Production firms are increasingly rushing to develop digital-technology-enabled capabilities. However, little is known whether companies show consistent capability development pathways, how these pathways vary among firms, and how they affect firms’ revenue enhancement through digitalization. Using a survey data study of 506 production companies, we aim to reveal how companies develop Horizontal integration, Real-time data accumulation, Process automation, and Process virtualization digital technology-enabled capabilities, invoking a combination of PLS-SEM and process mining algorithms, which allows clustering capability development pathways and identifying their duration. The study revealed that 49.04 % of the firms that have introduced all four capabilities have followed the Integration->Real-time->Automation->Virtualization capability development pathway. The subsequent quantitative analysis shows that companies that follow this path develop their capabilities on average faster than companies that follow other capability development pathways. We also found that the number of introduced capabilities positively affected revenue enhancement through digitalization. Our results contribute to the capability dynamics and digital transformation literature, revealing that while some degree of equifinality manifests, companies tend to follow particular capability development pathways determined by the sequential complementarity of capabilities.