Digital innovation and transformation: An institutional perspective

In this conceptual piece we suggest that the institutional perspective is a prolific lens to study digital innovation and transformation. Digital innovation is about the creation and putting into action of novel products and services; by digital transformation we mean the combined effects of several digital innovations bringing about novel actors (and actor constellations), structures, practices, values, and beliefs that change, threaten, replace or complement existing rules of the game within organizations and fields. We identify three types of novel institutional arrangements critical for digital transformation: digital organizational forms, digital institutional infrastructures, and digital institutional building blocks. From this vantage point, an institutional perspective invites us to examine how these novel arrangements gain social approval (i.e. legitimacy) in the eyes of critical stakeholders and their interplay with existing institutional arrangements. Questioning the disruptive talk associated with digital transformation, we draw on the institutional change literature to illustrate the institutionalization challenges and that existing institutional arrangements are pivotal arbiters in deciding whether and how novel arrangements gain acceptance. We close this essay with discussing the implications of an institutional perspective on digital transformation for policy, practice and research.