DIGITAL INNOVATION MAZE : A Case Study of a X-Reality Innovation Diffusion

Abstract: Digital innovation (DI) has enabled businesses to enhance their existing market offerings by integrating digital features. Despite advanced technologies, substantial marketing efforts, and global recognition, businesses can still struggle to convince customers to adopt their digital market offering. This process of spreading novel innovation is known as diffusion. In the fast-growing digital world, due to the unique characteristics of DI, traditional diffusion theories and models shows limited explanatory power, creating challenges for researchers and practitioners alike. With the aim to explore these challenges, we position our research within the IS literature with the following research question: "How and why do diffusion enablers and barriers emerge during digital innovation?". We conducted an interpretive case study of Company X, one of the world's largest consulting firms and an active DI practitioner. Our findings suggest that digital innovation diffusion can be enabled or hindered by several understudied interdependencies in its technological architecture. Furthermore, for successful diffusion, how DI distributed division of labor between layers must be effectively embedded and aligned for value in the clients' context. This study provides novel insights, exciting research avenues, and a diffusion strategy for DI practitioners.