Front Cover Harnessing Digital Enterprise Transformation Capabilities for Fundamental Strategic Changes: Research on Digital Innovation and Project Portfolio Management D I SSERTATION zur Erlangung des Doktorgrades „Dr. rer. pol.“ der Fakultät für Wirtschaftswissenschaften der Universität Duisburg-Essen vorgelegt von David Hoffmann aus Krefeld, Deutschland Betreuer: Prof. Dr. Frederik Ahlemann Lehrstuhl für Wirtschaftsinformatik und Strategisches IT-Management Essen, 2019 Gutachter: Prof. Dr. Frederik Ahlemann, Universität Duisburg-Essen Prof. Dr. Nils Urbach, Universität Bayreuth Tag der mündlichen Prüfung: 05.12.2019 Diese Dissertation wird über DuEPublico, dem Dokumenten- und Publikationsserver der Universität Duisburg-Essen, zur Verfügung gestellt und liegt auch als Print-Version vor. DOI: 10.17185/duepublico/71025 URN: urn:nbn:de:hbz:464-20191219-151007-5 Alle Rechte vorbehalten. Dedicated with great respect and deep affection to my parents, my wife, and those loved ones who are no longer with us. Abstract Abstract Digital enterprise transformations refer to the shifts in digital technologies, market structures, and customer demands that are fundamentally reshaping organizational structures, strategies, cultures, and business models. As a result of the rapid technological changes over the past years, the focus of decision makers has moved increasingly from cost reductions and business- IT alignment to the usage of digital technologies for developing new revenue-generating op- portunities. Despite the high relevance of digital technologies in practice, many organizations lack an understanding about the capabilities and the building blocks required for successful digital enterprise transformations. This thesis identifies digital innovation management and IT project portfolio management as the two key building blocks for effective digital enterprise transformation capabilities. The objective of this thesis is to develop a comprehensive understanding of the capabilities re- quired to perform successful digital enterprise transformations. In the introduction paper, the goal of this thesis is decomposed into three individual yet interrelated research papers, each addressing specific sub-objectives and research questions. First, this thesis develops a more comprehensive understanding of digital enterprise transformations using an exhaustive litera- ture review on the role of internal and external forces that effect business strategies today. Second, the thesis identifies archetypes of effective digital innovation management using a quantitative study. Third, based on a case study, this thesis identifies issues that impede effec- tive project-based organizations in practice; specifically, the thesis develops design goals and principles for an IT project portfolio management configuration that is aligned and efficient yet agile. Finally, this thesis concludes by discussing the overarching main findings as well as its limitations and future research opportunities. Overall, this thesis deepens our understanding on the microfoundations required for effective digital enterprise transformation capabilities. This thesis contributes to research, since it pro- vides novel theoretical and empirical accounts on a prevailing problem. Decision makers and IT managers may profit from this thesis’s results in that they can provide insights and recom- mendations into how firms can design innovation management and project portfolio manage- ment structures that are attuned to the context of digital enterprise transformations. Keywords: digital enterprise transformation, digital innovation, digital innovation management, project portfolio management i Preface Preface “The universe is change; our life is what our thoughts make it.” — Marcus Aurelius (121–180 AD) Change happens every day, and there is no way around it; our world will never stop changing, and neither will we. As we change, so do technologies. Our individual lives as well as the society at large will be what our beliefs and attitudes make of that change. This thesis is my humble attempt to express my thoughts on how organizations may seize the transformational opportunities brought by the staggering, digitally-enabled changes we are witnessing right now. However, before achieving this goal, it was necessary that I go through a strenuous yet exhilarating inner transformation myself—I needed to learn to move in uncharted scientific terrain and to deal with setbacks as I keep looking ahead with a positive mindset. Throughout this process, I was accompanied by many remarkable and well-disposed individuals—perhaps too many to enumerate one by one. Nevertheless, I would like to thank some of them explicitly. First, I am deeply indebted to my supervisor Prof. Dr. Frederik Ahlemann for giving me the chance to pursue my doctoral studies at the University of Duisburg-Essen. My thesis would not have been possible without his boundless support, fruitful suggestions, helpful guidance, and constructive feedback. I am very grateful for the demanding yet enlightening time at his chair and am pleased to have worked with him. My sincere thanks also go to Prof. Dr. Nils Urbach for kindly accepting to be the second supervisor of my thesis. Second, I also thank all my intelligent and humorous coworkers from the Chair of Information Systems and Strategic IT Management at the University of Duisburg-Essen for their support, feedback, and the delighting time. I am especially obliged to Andreas Drechsler for providing the initial impulse for starting my doctoral voyage, Florian Hesselmann for his advice during my first academic steps, and Kevin Rehring for making time in our shared office more enjoy- able. Third, I would also like to extend my gratitude to the Chair of Business Information Systems at the University of Hagen, the Chair of Information Systems and Strategic IT Management at the University of Bayreuth, and the colleagues from the IS department at the University of Duisburg-Essen for their valuable inputs during our research colloquia. In particular, I want to thank Sven Dittes for the helpful discussions about quantitative data analyses. Finally, and most importantly, I am incredibly grateful for the warm-hearted support of my family and especially my wife Yvonne, who made this thesis possible through her constant encouragement all the way throughout the journey. Her love, patience, and trust always gave me peace of mind in tough times. Krefeld, December 2019 David Hoffmann ii Table of Contents Table of Contents List of Publications iv Introduction to “Harnessing Digital Enterprise Transformation Capabilities for Fundamental Strategic A 1 Changes: Research on Digital Innovation and Project Portfolio Management” Beyond Business-IT Alignment - Digital Business Strategies I 41 as a Paradigmatic Shift: A Review and Research Agenda Enabling Digital Business Model Innovation: Organizational II 77 Design Configurations for Digital Innovation Management Balancing Alignment, Agility, and Efficiency – Toward III 291 Sustainable IT Project Portfolio Management O Critical Reflection and Conclusion 351 List of Abbreviations 368 Index 370 iii List of Publications List of Publications Preceding work or earlier versions of all research papers included in this thesis have either been published in conference proceedings or are currently under review for journal publica- tion. Research Paper I Research Paper II Research Paper III Title Beyond Business-IT Enabling Digital Balancing Alignment, Alignment – Digital Business Model Agility, and Efficiency Business Strategies as Innovation: – Design Principles for a Paradigmatic Shift: Organizational Design Sustainable IT Project A Review and Configurations for Portfolio Management Research Agenda Digital Innovation Management Related publications (Kahre, Hoffmann, (Böhl, Hoffmann, and (Hoffmann, Müller, and VHB JQ3 and Ahlemann, 2017) C Ahlemann, 2016) B and Ahlemann, 2017) B ranking1 (Hoffmann, 2018) B Method2 Literature analysis Quantitative survey Qualitative case study Co-authors Cathrin Kahre, — Frederik Ahlemann Frederik Ahlemann Assistance3 — — Data collection: Thomas Müller; data preparation: Stefan Reining Own contribution Framework Model development, Model development, development, literature measurement and data collection, data review and analysis, instrument analysis and coding, development of development, pretest, development of design research agenda, data collection, data goals and principles, manuscript analysis, manuscript evaluation, manuscript development development development 1 Outlet ranking according to http://vhbonline.org/VHB4you/jourqual/vhb-jourqual-3/ 2 According to the classification provided by Palvia et al. (2004, p. 529) 3 Refers to additional assistance that did not qualify for co-authorship in the dissertation’s included version (Deutsche Forschungsgemeinschaft, 2013, p. 29) iv List of Publications Publications related to this thesis Böhl, D., Hoffmann, D., & Ahlemann, F. (2016). The Structural Anchoring of IS/IT Innovation Management: Toward an Organizational Design Theory. In Proceedings of the 24th European Conference on Information Systems (ECIS). Istanbul, Turkey. Hoffmann, D. (2018). Shaping Wellsprings of Innovation: Towards Organizational Design Configurations for Digital Innovation Management. In Proceedings of the 26th European Conference on Information Systems (ECIS). Portsmouth, UK. Hoffmann, D., Müller, T., & Ahlemann, F. (2017). Balancing Alignment, Adaptivity, and Effectiveness: Design Principles for Sustainable IT