Managing Digital Transformation: Evidence from Hidden Champions and Measurement Approaches (Innovation und Entrepreneurship)

The digital transformation of the business environment and its impact on firm performance is of central interest in economics and management. However, it is still an open question how firms should optimally align their business models and strategies for the digital era. Daniel Wittenstein investigates this question by generating novel insights from hidden champions and by developing a machine learning-based approach for measuring firm-level digitalization. About the author Daniel Wittenstein studied international management in Lyon, Munich and Birmingham. He completed his dissertation under supervision of Prof. Dietmar Harhoff, Ph.D. at the Max Planck Institute for Innovation and Competition Foreword 6 Preface 8 Chapter 1: Miracle or Myth? 10 Chapter 2: Champions of Digital Transformation? 12 Chapter 3: Measuring Firm-Level Digitalization 14 Acknowledgements 16 Contents 18 Abbreviations 20 List of Figures 22 List of Tables 24 List of Supplementary Information 28 1 Miracle or Myth? 29 1.1 Introduction 29 1.2 Hidden Champions—A Literature Review 31 1.3 Hidden Champion Identification Strategy 37 1.3.1 Identification Steps and Thresholds 38 1.3.2 Description of the Hidden Champions 42 1.4 Data and Methodology 46 1.4.1 Panel Data 46 1.4.2 Summary Statistics 47 1.4.3 Empirical Strategy 50 1.5 Results and Discussion 52 1.5.1 Hidden Champions and Innovation Performance 52 1.5.2 Hidden Champions and Financial Performance 56 1.6 Conclusion 59 2 Champions of Digital Transformation? 63 2.1 Introduction 63 2.2 Digital Transformation and Challenges for Hidden Champions 65 2.3 Theory and Hypothesis 68 2.3.1 The Dynamic Capabilities View 68 2.3.2 Determinants of Dynamic Capabilities 70 2.3.3 Dynamic Capabilities of Hidden Champions 72 2.4 Key Variables, Data and Methodology 75 2.4.1 Hidden Champions and Control Group Firms 75 2.4.2 Firm Digital Readiness 78 2.4.3 Outcome Variables and Summary Statistics 84 2.4.4 Instrumental Variable Estimation (2SLS) 86 2.5 Results and Discussion 88 2.5.1 Digital Readiness and Innovation Performance Indicators 89 2.5.2 Digital Readiness and Economic Performance Indicators 93 2.5.3 Comparison of Digital Readiness Index Levels 96 2.5.4 Robustness Tests 99 2.6 Conclusion 100 3 Measuring Firm-Level Digitalization 102 3.1 Introduction 102 3.2 Data Collection 105 3.2.1 Websites and Firm Data 105 3.2.2 Website Text Data 108 3.2.3 Firm-Level Digitalization 112 3.3 Keyword-Based Prediction Approaches 116 3.3.1 Keyword Groups 116 3.3.2 Prediction Models and Results 117 3.3.3 Discussion of the Results 120 3.4 Automated Feature-Based Prediction Approaches 124 3.4.1 Semi-Supervised Models 124 3.4.2 Prediction Models and Results 127 3.4.3 Prediction Assessment 131 3.5 Discussion and Conclusion 134 Appendix 137 Appendix to Chapter 1 137 A.1 Supplementary Information 137 A.2 Supplementary Figures 149 A.3 Supplementary Tables 152 Appendix to Chapter 2 160 B.1 Supplementary Information 160 B.2 Supplementary Figures 164 Appendix to Chapter 3 183 C.1 Supplementary Information 183 C.2 Supplementary Figures 188 C.3 Supplementary Tables 198 Bibliography 214