Development of dynamic managerial capabilities to facilitate an automotive company’s digital transformation : A case study at Volvo Group

Abstract: Background: IT has been reshaping competition and strategy for decades. However, the current wave of IT-driven competition is distinct from previous ones. As new digital technologies have a disruptive effect, organizations must adapt to remain competitive. Digital transformation particularly affects the automotive industry as digitalization has become the most important phenomenon since the creation of the industry. Managers in automotive companies need to thus become active in implementing strategic changes and utilize digital opportunities. For this, managers must apply their dynamic managerial capabilities to sense and seize digital opportunities and to transform the company. Research Problem: Despite the wide literature on dynamic capabilities, dynamic managerial capabilities, and digital transformation, research on these three concepts’ interlinkages is underdeveloped. There is furthermore little evidence on how the interaction of the underpinnings of dynamic managerial capabilities at an organizational level affect strategic change and performance in a changing environment. Research Purpose: The purpose of this study is to deepen the understanding of an automotive company’s development of dynamic managerial capabilities to facilitate its digital transformation. It aims at showcasing how managerial cognition, social capital, and human capital are relevant to sense, seize, and transform for digital transformation. A framework is developed to visualize the respective interlinkages. Research Question: How can dynamic managerial capabilities facilitate an automotive company’s digital transformation? Research Method: This study uses a qualitative approach. An in-depth case study aiming for theory-elaboration was conducted at Volvo Group. Data was purposefully collected through interviews, observations, and internal documents, and then analyzed through a thematic analysis. Conclusion: This paper’s main contribution lies in the application of dynamic managerial capabilities in the context of digital transformation. Our findings suggest that all dynamic managerial capabilities are important for sensing, seizing, and transforming for digital transformation. We find managerial cognition to be vital throughout all the dynamic capabilities steps, whereas managerial social capital has strong influence on the sensing stage. Managerial human capital in terms of industry experience plays a major role for the seizing and transforming stages of digital transformation. Our results indicate that it is important to build teams with complementing dynamic managerial capabilities to facilitate organizational digital transformation.