Finding the Digital Shortcut: A study on digital acquisitions as a means of acquiring digital capabilities for non-digital businesses

Abstract: The purpose of the study was to provide a foundation to understand the potential implications of performing digital acquisitions and its effects on digital capabilities for traditionally non-digital businesses. A two-way, time and entity, fixed regression model was adopted to investigate this relationship in the electric utility industry, between the years 2010-2021. The theoretical framework of the study is based on the theory about resources and capabilities and in extension, dynamic capabilities and digital capabilities. Current research into digital acquisitions in relation to digital capabilities is found to be scarce and a mostly an unexplored area. The foundation used for this study builds upon the existing research by Hanelt et al. (2021) and Tang, Fang & Jiang (2022). This study found that digital acquisitions have a statistically significant correlation with digital capabilities. The correlation is further found to be positive in the short term and negative in the long term, suggesting that digital acquisitions may not be the most effective way for firms to increase their digital capabilities.