On Evolution of Digital and Organizational Capability Configurations: Toward a New Theory and Preliminary Evidence

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How do the configurations of key organizational capabilities evolve over time to yield and sustain high performance? What is the role of information analytics capability, together with other capabilities, in the evolving configurations? To answer these relatively understudied but important questions, we assemble and use a rare and unique dataset of 606 organizational-level cases from 1999-2019 in the manufacturing and service sectors. From a theoretical perspective, we propose a novel way of conceptualizing organizations in terms of configurations of key capabilities, borrowing from the Quantum Mechanical Model of Atom (QMMA) that revolutionized chemistry about a century ago. Using QMMA as a metaphor, we outline some contours and principles for what we call a Theory of Evolution of Capability Configurations (TECC) to understand how firms evolve their capability configurations to sustain both high financial and customer performance. We adopt a relatively new longitudinal qualitative comparative analysis (QCA) that embraces both notions of complex causality and configuration change to empirically examine how a firm's isomorphic capability configurations change over time to sustain both high financial and customer performance. Our analytic approach focuses on changes in the overall configuration of organizational digital and nondigital capabilities over time, a sharp departure from much of the existing research, which focuses on the static effects of levels of individual capabilities or capability configurations on firm performance. This approach enables us to document novel, interesting, and distinct evolutionary patterns in configurations of capabilities for the manufacturing and service sector for the 1999-2007, 2008-2012, and 2013-2019 periods to derive novel propositions. We discuss the implications of the new findings documented in this study related to the evolutionary trajectory of capability configurations to inform further research and practice.