Theoretical Background
Focal firms are frequently the most critical actors in inter-organizational relationships (IORs), and they play an essential part in the administration, coordination, and strategic utilization of digital capabilities. A company’s digital capabilities are the competencies that make it possible to use digital technologies to achieve better results. When applied to IORs, these capabilities can facilitate value-driven reconfiguration management (Nambisan et al., 2017). This management involves reshaping and adjusting the relationship structure to drive value creation and pie expansion. The value-driven configuration is heavily embedded in the Resource-Based View (RBV) and the Relational View (RV) of the firm (Nambisan et al., 2017). These views of the company posit that a firm’s one-of-a-kind resources and collaborative relationships are the essential elements in achieving a competitive advantage and producing value (Madhani, 2010).
As essential participants in Inter-Organizational Relationships (IORs), focal companies must manage and organize digital capabilities, which allow them to use digital technology to improve performance and outcomes (Madhani, 2010). These traits are crucial in intelligent supply chains where digital technologies improve efficiency, agility, and firm performance (AlMulhim, 2021). Value-driven reconfiguration management is a primary digital application in IORs. Pie expansion involves modifying and adapting inter-organizational interactions to enhance value output (Nambisan et al., 2017). The unique resources of each participating entity boost organizational effectiveness and provide a competitive advantage in this strategic strategy (Madhani, 2010).
The firm’s Resource-Based View (RBV) and Relational View emphasize value-driven configuration. According to Madhani (2010), RBV emphasizes the firm’s unique resources as a competitive advantage. It indicates that enterprises create value by exploiting their resources. The Relational View adds collaborative relationships to this strategy. RV claims that strategic alliances provide relational assets that give firms a competitive edge.
Manuj, Omar, and Yazdanparast (2013) emphasize IORs’ competitive advantage. Interorganizational learning in global supply networks can help firms innovate, improve performance, and gain insights. Leveraging digital capabilities, firms may manage complex IOR dynamics and proactively engage with partners for shared benefits. Thus, focal enterprises’ strategic IOR management relies on digital skills, RBV, and RV. It improves performance and value growth in complex inter-organizational networks by facilitating learning, innovation, and resource allocation.
Literature Review
Recent studies have focused on how focal firms can orchestrate and manage IORs by leveraging the capabilities afforded by digital technologies (Helfat & Winter, 2011). They realized that the company’s digital capabilities could assist it in recognizing, capturing, and reconfiguring its resources and relationships (Teece, 2007). The role of digital capabilities in dynamically reconfiguring resources across IORs is highlighted in the research on network dynamics (Ahuja et al., 2012) and digital platform ecosystems (Tiwana, 2014). In addition, Li et al. (2018) emphasized the role that digital capabilities play in enabling focal firms to drive pie expansion, which is the process by which the value created is distributed among all participants in IORs.
Arguments
Inter-organizational relationships (IORs) are essential in global business. They improve corporate cooperation, innovation, and efficiency. Digital capabilities enable value-driven reconfiguration in IORs (Bharadwaj et al., 2013). Digital capabilities improve transparency and information sharing among IOR partners. Transparency reduces control mechanisms and simplifies company operations, boosting confidence and lowering transactional costs. Real-time, precise information helps organizations coordinate (Teece, 2018).
Digital capabilities boost operational efficiency by improving coordination and creativity. Digitizing operational operations reduces redundancies and streamlines workflows, increasing productivity and lowering costs. IORs can increase shared value by integrating digital technology into organizational processes to generate creative business solutions (Nambisan et al., 2017).
Thirdly, digital capabilities allow focusing organizations to quickly notice business environment changes and flexibly restructure relationships and resource allocation. Monitoring and analyzing massive amounts of data helps understand environmental changes and enable strategic realignments. Artificial intelligence and blockchain can efficiently reallocate resources, giving businesses adaptability in a fast-changing business environment (Bharadwaj et al., 2013). Focal enterprises can increase IORs’ ‘value pie’ by dynamically reconfiguring to adapt to new circumstances and grasp new opportunities. These capabilities also enable firms to collaborate on value generation and solution development. Collaborative value co-creation grows the ‘pie,’ which increases each participant’s share (Vargo & Lusch, 2016).
Conclusion
An important step forward in our comprehension of strategic management is the discovery that the digital capabilities of focal firms play an essential part in the management of value-driven reconfiguration in IORs (Nambisan et al., 2017). These capabilities produce a conduit for transparent and efficient coordination, building trust, and continuous adaptation to changing circumstances, all of which contribute to an increase in value creation and pie expansion. The strategic orchestration of digital capabilities enables focal firms to dynamically reconfigure their relationships and resources, encouraging the co-creation of value and expanding the pie size. There is a high probability that the significance of digital capabilities for value-driven reconfiguration in IORs will increase as technology advances. This will present focal firms with opportunities as well as challenges.
References
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