Exploration of Dynamic Capabilities Needed for Digital Transformation and Business Model Innovation in the Swedish Automobile Industry.

Abstract: Background: Digital transformation has become crucial for success in the global automobile industry. Emerging digital technologies are imposing new challenges and offering new opportunities to automotive firms and are fuelling the business model innovation in the global automotive sector. This research study explored the nature of business model innovation during the digital transformation process and the dynamic capabilities that automobile organizations need to build for successful transformation. Research Question: How could digital transformation-driven business model innovation be successful by building dynamic capabilities, and what key lessons could be learned from Volvo- a Swedish automobile manufacturing company? Conceptual Framework: Dynamic capabilities theory provides a theoretical basis to understand how digital transformation-led business model innovation encourages automotive firms to build their dynamic capabilities to ensure survival and dominance in the quickly changing market. Methodology: A qualitative empirical research study is conducted on chosen case organization- Volvo. The thematic analysis of 10 interviews conducted with the Volvo managers yielded some interesting insights. Conclusion: Volvo is proactive in adopting emerging digital technologies (like IoT, big data, artificial intelligence, augmented reality, etc.) to keep pace with changing world. Volvo actively builds its dynamic capabilities to invest in the emerging business model innovations fuelled by the digital transformation, which enables the firm to maintain its digital dominance. When automotive organizations build dynamic capabilities, it lays a strong foundation for business model innovations. Dynamic capability framework can be a useful guidance tool for building organizational capabilities in a digital transformation context.