How can digital collaboration capability boost service innovation? Evidence from the information technology industry

Digital collaboration capability, which refers to a company's ability to share and coordinate information with partners via digital channels, is one of the primary organizational capabilities that helps companies gain differentiation advantages. However, there is still no consensus on how companies should leverage digital collaboration capability to improve their services. To fill this gap, we develop a moderated mediation model from the perspective of absorptive capacity. Through the survey of 205 Chinese information technology (IT) companies, we find that potential absorptive capacity and realized absorptive capacity fully mediate the positive relationship between digital collaboration capability and service innovation, suggesting that digital collaboration capability can improve a company's services only when it is translated into absorptive capability. More interestingly, technological turbulence strengthens the mediation effect of absorptive capacity, implying that a high-level technical environment better facilitates companies to absorb information and knowledge from different digital channels and subsequently improves service innovation. We contribute to the existing digital innovation literature by articulating the moderated mediation mechanisms through which digital collaboration capability influences service innovation. Our study also provides managerial implications for companies on how to boost service innovation in the digital era.