DEVELOPING A MODEL FOR DYNAMIC DIGITAL TRANSFORMATION CAPABILITIES BASED ON THE TECHNOLOGY-ORGANIZATION-ENVIRONMENT FRAMEWORK TO ENHANCE BANKING PERFORMANCE: INSIGHTS FROM THE INDONESIAN CONTEXT

• Main Author: Abdurrahman
• Format: Dissertations
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/80952
• Institution: Institut Teknologi Bandung

The primary focus of current research is on the application of dynamic capabilities theory (DC) in the study of digital transformation (DT). This is driven by the recognition that DT, as a complex strategic initiative, necessitates various well-structured company capabilities to enhance overall performance. A key challenge in researching DC within the context of DT is defining the necessary capabilities for organizations, taking into account technological, organizational, and environmental aspects (the TOE framework). This is founded on the understanding that DT is a socio-technical initiative that requires integration beyond just technological aspects. Existing literature indicates a limited concentration on integrating DC and the TOE framework, creating an opportunity for research to contribute to the development of company capabilities essential for successful DT management and performance improvement. Thus, this study is crucial in offering diverse perspectives on integrating DC and TOE to formulate dynamic capabilities for digital transformation, particularly within the Indonesian banking industry, currently undergoing DT to meet societal needs and regulatory requirements. This research employs a mixed-method explanatory sequential approach, commencing with a literature review to identify TOE-based dynamic capabilities for DT implementation. From the literature, six company capabilities necessary for digital transformation were identified, covering technological capabilities (representing technology aspects), strategic, organizational, and innovation capabilities (part of the organizational dimension), as well as ecosystem and governance-risk-compliance (GRC) capabilities (representing the environmental dimension). Subsequent to quantitative study results, this research conducts a quantitative study to validate these capabilities through a survey involving 325 respondents from 53 banks in Indonesia, analyzed using structured equation modeling (SEM). Following this, a qualitative study employing semi-structured interviews with 18 banking professionals is conducted to explore details not covered in the quantitative study. The integration of quantitative and qualitative studies culminates in the proposal of a model of dynamic capabilities for digital transformation based on the TOE framework. This model comprises five components: managing challenges and drivers of DC for DT, routine activities required by technological, strategic, organizational, innovation, ecosystem, and GRC capabilities. These routine activities are mapped with the primary activities of DC (sensing, seizing, transforming). Additional components in this model include formulating DT roles and themes of bank performance achieved through DT. The theoretical contribution of this research lies in the development of capabilities for TOEbased digital transformation by formulating capability themes based on TOE framework dimensions and linking them with main DC activities based on managing challenges and drivers of DC for DT. From a managerial standpoint, this model provides guidance to Indonesian banks in managing company capabilities for DT to improve performance, considering challenges and drivers influencing the success of digital transformation. Moreover, this study has implications for various regulations from the Indonesian Financial Services Authority (OJK) related to the implementation of digital transformation in the Indonesian banking sector. For future research, this model can serve as a reference in developing a measurement model for the maturity of company dynamic capabilities in managing digital transformation.