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DOI: 10.1002/cjas.

1558

SPECIAL ISSUE ARTICLE

Digital innovations, impacts on marketing, value chain and


business models: An introduction

Jean‐Michel Sahut1 | Léo‐Paul Dana2 | Michel Laroche3

1
IDRAC Business School, France
2
Abstract
Université de Montpellier, France
3
Digital innovations are changing business models and industries and, in
Concordia University, Canada
today's world, effective mastery of digital innovations can be greatly advanta-
Correspondence geous, yet digital innovation literature suffers from major lacunae. We contrib-
Jean‐Michel Sahut, IDRAC Business
ute to this literature by providing definitions and analysing specificities of this
School, France.
Email: jmsahut@gmail.com emerging research stream. We then discuss the impact of digital innovation on
marketing, value chain, and business models, focusing on tensions and mar-
keting challenges, the value chain, and the evolutions of business models.
We conclude with suggestions for further research.

KEYWORDS
business models, digital innovation, marketing, value chain

JEL CLASSIFICATION
M31; O32

Résumé
Les innovations numériques modifient les modèles commerciaux et les indus-
tries et, dans le monde d'aujourd'hui, même si une maîtrise efficace des inno-
vations numériques peut être très avantageuse, la littérature managériale sur
l'innovation numérique souffre de graves lacunes. Nous contribuons à cette
littérature en fournissant des définitions et en analysant les spécificités de ce
courant de recherche émergent. Nous discutons ensuite de l'impact de l'innova-
tion numérique sur le marketing, la chaîne de valeur et les modèles
économiques, en nous concentrant sur les tensions et les défis marketing, la
chaîne de valeur et l'évolution des modèles économiques. Nous concluons avec
des suggestions pour des recherches futures.

MO TS C LÉS
modèles commerciaux, innovations numérique, marketing, chaîne de valeur

Can J Adm Sci. 2019;1–7. wileyonlinelibrary.com/journal/cjas © 2019 ASAC. Published by John Wiley & Sons, Ltd. 1
2 SAHUT ET AL.

1 | INTRODUCTION primarily signal trustworthiness and usability. Laïfi and


Josserand (2016) discuss the innovative business model
Around the world, major corporations are embracing dig- of a digital library in the field of publishing and show that
ital transformation and undergoing organizational digital innovations need to be legitimized by the actors of
change. Digital innovations, that is, new combinations the field in order to be fully accepted and successful.
of digital and physical components to produce novel Despite new trends, the digital innovation literature
products (Yoo, Henfridsson, & Lyytinen, 2010), allow suffers from two major shortcomings: from a theoretical
firms to reinforce their competitive advantage by differen- standpoint, the impact of digital innovations on market-
tiating themselves from their competitors. Digitalization ing, value chain, and business models are still largely
implies the implementation of digital technologies and analyzed through theories and concepts developed before
innovative business models in order to create value and the digital revolution (Elia, Margherita, & Petti, 2016);
improve organizational performance; thus, digital trans- and from a managerial standpoint, Lamberton and
formations change business models, as well as the value Stephen (2016) identify several points of disconnect
chain—and positively influence the company's reputation between practice and academia. Hence, CJAS invited
(Anderson, 2014). contributions to help better understand, analyze, and the-
The effective mastery of digital innovations can have orize how digital innovations emerge, create value,
three advantages: better customer experience; stream- improve customer experience, go to market, are adopted
lined operations; and new lines of businesses (Fitzgerald, by customers, and affect the value chain.
Kruschwitz, Bonnet, & Welch, 2013). Through automa-
tion, companies are having the most success in
implementing digital technologies in the area of customer 2 | D I G I T A L IN N O V A T I O N S : A N
experience and in operations. According to Fitzgerald EMERGING RESEARCH STREAM
et al. (2013), digital change can start with customers,
and the improvement of the customer experience repre- 2.1 | Definition and specificities
sents one the main drivers of a digital transformation.
The rise of the connected and tech‐savvy customer has In recent years, the concept of digital innovation has
changed the expectations that consumers have of compa- aroused much interest, among academics as well as prac-
nies. From the consumer side, digital innovations have titioners. With two keywords, Scopus identified 180 rele-
radically transformed the way consumers look for infor- vant articles in 2018, up from 10 in 2011. Yet, despite
mation, buy, consume, talk about, and share their experi- the growing interest in digital innovation, relevant aca-
ence about products and services. From a corporate demic research remains rather vague; what we have is
perspective, digital innovations offer new ways “to reach, an emerging corpus of theory and practice that draws
inform, engage, sell to, learn about, and provide service to on several social science disciplines. That said, there are
customers” (Lamberton & Stephen, 2016, p. 146). widely shared ambitions to progressively achieve theoret-
Digital innovations are changing business models and ical and conceptual coherence in digital innovation
industries (Zott & Amit, 2017). Contactless payments, (Nambisan, Lyytinen, Majchrzak, & Song, 2017) in order
for instance, have revolutionized banking. Smart, con- to better inform academic research and practice (Nylén &
nected objects are impacting the insurance sector with Holmström, 2015).
the introduction of personalized premiums. Furthermore, It is therefore necessary to deepen the theorization of
thanks to digital innovations, massive amounts of cus- digital innovation initiatives and to learn about the more
tomer data are collected. This raises privacy concerns, specific processes of this transformation. Referring to
since many innovative products can only fully deploy McKinsey's definition, digital is less about a process and
their value if they rely on consumers' personal informa- more about how companies run their businesses (Dörner
tion, and this issue challenges the confidence that con- & Edelman, 2015). From this follows three principles:
sumers have in new innovations and revolutionizes value creation; the optimization of processes that directly
marketing practices (Miltgen, Henseler, Gelhard, & affect customer experience; and the establishment of
Popovič, 2016). means to support all initiatives undertaken.
Since the adoption of digital innovations is associated Nambisan et al. (2017) specify that digital innovation
with high levels of uncertainty for potential customers, refers to the use of digital technology during the innova-
it is particularly critical is to understand how consumers tion process or the result of innovation. Many innova-
can adopt and accept digital innovation. Kuester, tions are based on digital technologies that increase the
Konya‐Baumbach, and Schuhmacher (2018) suggest that human capacity to acquire, produce, disseminate, and
the design of e‐innovation go‐to‐market strategies should consume information at an unprecedented level and
SAHUT ET AL. 3

value (Pournaras & Lazakidou, 2008); also, value creation objects (IoT), autonomous vehicles, and others. Innova-
for firms is increasingly done through the production of tions will continue to change human behaviour.
digital information. This numerical value can be strongly Customers go from status quo to evolution. Brandt and
or weakly connected to hardware products (Brynjolfsson Henning (2002) explain that digital trends, in society,
& McAfee, 2014). In this perspective, Henfridsson, have enabled individuals to communicate across bound-
Nandhakumar, Scarbrough, and Panourgias (2018) aries of time and space, to access an array of information
approach digital innovation as the result of activities by around the world and to make multiple real‐time transac-
which a set of digital resources are recombined in their tions. This breakthrough means that customers are not
design and use through connections between valuable just downloading or searching for static data but are able
spaces; specifically, they propose the conceptual frame- to create and share their own content across a larger
work of value spaces as a tool to better understand the online network. Yet it may be the case that managers
creation and capture of value in digital innovation. do not clearly understand the customers using these dig-
Some firms, including Airbnb, Amazon, Google, or ital innovations because of the interactions these allow
Facebook, have achieved a turnover in billions of dollars, between users.
but Svahn, Mathiassen, Lindgren, and Kane (2017) and While understanding the evolution of behaviours and
Westerman and Bonnet (2015) point out that the opportu- preferences is the main driver of digital transformation,
nity to innovate by digitalizing products and offering dig- only about a third of companies have completely mapped
ital services is proving to be a challenge for well‐ their clients' journey to define and prioritize digital trans-
established companies that have seen digital start‐ups formation strategies, and less than half of them study the
launching large waves of digital innovation over the past impact of mobile devices on consumers; Schultz and
two decades. Thus, relying on theory—as a statement of Peltier (2013) argue that for most companies, the chal-
concepts and their interrelations that shows how and/or lenge has not been to develop and launch digital chan-
why a phenomenon occurs (Corley & Gioia, 2011, p. 12) nels, but to make them more attractive and useful to
—will be key to enriching research in digital innovation consumers. It turns out that digital transformation is a
in years to come. Specifically, we argue that there is a complex subject that affects many or all of a firm's activ-
need to develop conceptual models in order to achieve ities. Managers must simultaneously balance the explora-
better understanding of specificities of digital innova- tion and exploitation of resources to achieve the expected
tions, their development, and their dynamics; of the com- organizational agility, a necessary condition for the suc-
plexity of the socio‐material interaction for the actors of cess of this transformation. For marketing managers,
this type of innovation; of the phenomenon of digital the increasing digitalization generates significant chal-
entrepreneurship (Sahut, Landoli, & Teulon, 2019); of lenges. They are facing increasingly complex and agile
production processes, as well as the organizational struc- markets that are beyond their control. So, companies
tures they generate; and of the impacts of digital innova- need to understand these changes and understand how
tions on marketing, the value chain, and business models. to deal with them.
In this context, the digital revolution in society in
general and more precisely in marketing creates enor-
2.2 | The impact of digital innovation on mous challenges for companies. The existing literature
marketing, value chain, and business in marketing has mainly studied the impact of the dig-
models ital revolution conceptually. Although there are many
initiatives to theorize this phenomenon and a real will-
2.2.1 | Tensions and marketing challenges ingness on the part of authors to examine the impact of
digital innovation on marketing(Kannan, 2017), there is
Digital innovations generate the digital transformation of a struggle to find a consensus that would allow general-
enterprises (Serval, 2018); we must not dilute the impor- izations. In addition, the specificity of the issues
tance of this transformation as a strategic imperative that addressed and the disparity of the fields of research
requires accelerating investments within companies in bring only a partial understanding of the impacts of dig-
the expertise, ownership, and implementation of digital ital innovation on marketing. Examples include the
innovations. The proliferation of mobile devices and the study of the effect of user‐generated content on share-
ubiquity of the Internet in everyday life have radically holder value creation (Tirunillai & Tellis, 2012), the
changed the expectations, preferences, and behaviours models proposed to analyze big data news (Feit, Wang,
of customers. In addition, the rise of disruptive technolo- Bradlow, & Fader, 2013) or the special issue of
gies, such as artificial intelligence (AI), blockchain, aug- Marketing Science introduced by Fader and Winer
mented reality (AR), and virtual reality (VR), connected (2012), However, this work has made it possible to
4 SAHUT ET AL.

better understand the impacts of digital innovation on iii. Develop explanations of digital innovation based on
marketing and to identify the major challenges of this an oscillation between the specific and the general.
transformation. As a continuation of this work, So far, most empirical research on digital innovation
Leeflang, Verhoef, Dahlström, and Freundt (2014) offer provides overly precise empirical explanations of
three avenues to dig about the marketing tensions digital innovation, without reaching a certain gener-
caused by digital transformation. The authors stress that alization. This results in fragmentary research
these tensions or challenges can be interpreted posi- results that lack homogeneity.
tively as opportunities or negatively, and therefore rep-
resent threats. They are classified into three categories:
business strategy and customer knowledge; go‐to‐market
operations and execution; and organization and 2.2.3 | Impact of digital innovations on
capabilities. the business model

The concept of the business model (BM) dates back to the


2.2.2 | The value chain 1960s (Sahut, Hikkerova, & Moez, 2013); however, it is
not a coincidence that its popularity increased as the
The digitalization of innovation challenges traditional economy was going digital. The BM literature started to
value‐creation hypotheses (Henfridsson et al., 2018; Yoo, become mainstream with: electronic business models
Boland, Lyytinen, & Majchrzak, 2012); this raises the (eBM) since the emergence of e‐commerce during the
need for new theories and alternative conceptions of value 1990s; and digital BM, in the current digital economy
creation. Indeed, unlike a traditional value chain typically (Blank, 2013; Osterwalder & Pigneur, 2010; Teece, 2018;
found in traditional industries, the value of digital innova- Ibarra et al., 2018).
tion is created by non‐linear distributed control and The business model may be described as a system of
dynamic processes in networked environments (Boland, interrelated and interdependent activities that determines
Lyytinen, & Yoo, 2007; Westergren & Holmström, 2012). the capacity of how the company does business with its
Furthermore, at the heart of digital innovation we find stakeholders. In other words, an enterprise business
digitalization, which refers to the encoding of analogue model is a set of specific activities—a system of activi-
information in digital format (Tilson, Lyytinen, & ties—aimed at satisfying the perceived needs of the mar-
Sorensen, 2010; Yoo et al., 2012). Thanks to digitalization, ket. It specifies which parts within relate to each other,
physical products integrate with digital technology in tra- or, as partners realize which activities, how those activi-
ditionally non‐digital products such as cameras (Tripsas, ties are interrelated. The three design elements that char-
2009), magazines (Nylén, Holmström, & Lyytinen, 2014), acterize a company's business system are content,
telephones (Ghazawneh & Henfridsson, 2013) and cars structure, and governance. Changing one or more of
(Svahn et al., 2017). With advances in digital technology, these elements means changing the whole model. If the
these digitalized products can provide a much broader new business model is new to the world and not just
range of functionality than non‐digital products. new to the business, it is an innovation of the business
To illustrate these possibilities, Fichman, Dos Santos, model. The content of an activity system refers to the
and Zheng (2014) rely on the exploration of the link selection of activities to be performed; this represents
between digital innovation configurations and value the what. The structure describes how the activities are
creation: related and in what order; it can be called the comment.
Governance refers to the party performing the activities;
i. Develop explanations of digital innovation by recog- it is the who of the activity system (Schallmo, Williams,
nizing the complexity of socio‐material interactions & Boardman, 2017).
in digital innovation. For example, Jonsson, Wisely conceived, a new business model can increase
Mathiassen, and Holmström (2018) analyze how a value for all stakeholders, including customers, partners,
distributed network of workers use a diversified and suppliers. Its design is one of the major choices that
portfolio of digital technologies to decide when and entrepreneurs and managers must make, because the
how to maintain machines. business model defines how a company connects to its
ii. Develop explanations of digital innovation based on ecosystem (agents, customers, suppliers, institutions,
the specificities of digital technology. For example, and so on). It can bring together actors who had no pre-
Nylén et al. (2014) explore how a media company vious links or connect existing actors in new ways.
relies on digital innovations to improve customer That said, recent research focuses more on technologi-
experience and revive an e‐magazine. cal development and less on the new business models that
SAHUT ET AL. 5

emerge through the integration of these technological motivations in a world in which consumption is increas-
innovations. Moreover, there are many recent examples ingly driven by self‐expression and not only to collect
of organizations that have been unable to keep pace with demographic data and purchase histories (Pariser, 2011);
the new digital reality. For instance, the bankruptcy of and the second dimension implies moving from a con-
the movie rental firm Blockbuster LLC (El Kalak & trolled value‐chain orientation to a network orientation,
Hudson, 2016) was largely due to its inability to develop based on a web of relationships. These new dimensions
and quickly implement a new digital business model. Fur- of value creation constitute areas of development for the
thermore, the new industrial paradigm introduced by the next generation of businesses and entrepreneurs.
digital transformation of society is also transforming the
current modes of value creation, since it implies changes
in technical developments and productive processes, 2.3 | Contents of this special issue
which in turn have significant organizational conse-
quences (Arnold, Kiel, & Voigt, 2017; Bauer, Hämmerle, Based on the digital value creation perspective, this spe-
Schlund, & Vocke, 2015) by providing more supportive cial issue of the Canadian Journal of Administrative
environments, improved customer relationships, or new Sciences (CJAS) brings together relevant papers about
product and service offerings. This requires rethinking marketing. From the start, our intent was to focus partic-
the very concept of business models. ularly on how the production and consumption of digital
While the business model approach originated in strat- information affects entrepreneurial action and new ven-
egy, it is relevant to the entrepreneurship and innovation ture creation.
literature because a business model can be seen as the The articles in this special issue were selected follow-
way a new venture expects to create digital value. In the ing a thematic open call for papers. Those that were pos-
disciplines of strategy and entrepreneurship, the concept itively assessed were subjected to the usual CJAS review
of business models became relevant because of the higher procedures. The articles presented here successfully navi-
flexibility that digital technologies offer—to coordinate gated this process. Given this selection process, the
the various phases and steps of the process through accepted articles do not match all the research streams
which a firm creates value. In this sense, a business identified in our review of this emerging literature, but
model canvas can be seen as a digitally augmented ver- rather contribute to a better understanding of digitaliza-
sion of the more traditional value‐chain model that was tion and its challenges. In the following, we briefly intro-
so popular in the pre‐digital age. duce each article, and how it contributes to the topic and
Although it is possible to draw a business canvas for perspectives of this special issue.
any company, large or small, digital or not, various BMs Ramadani, Canziani, Welsh, and Dana contribute
are often possible thanks to the multiple ways in which “Claiming a family brand identity: The semiotics of
digital technologies can help to implement innovations website storytelling,” in which they focus on family as a
and one of more of a BM's building blocks. For instance, central communication objective in storytelling. Examin-
the adoption of alternative revenue models—such as the ing winery websites, they contribute to the literature by
“freemium” model or subscription‐based models—is identifying how businesses are communicating family
greatly enhanced by the flexibility offered by online brand identities. Their findings reveal that three claims
access and payments. The availability of multiple online critical to the establishment of family brand identities
tools creates alternative possibilities for how to imple- appear in website texts. The authors discuss practical
ment communication channels. The reduction of transac- implications.
tion costs made possible by digital collaboration increases Hallem, Ben Arfi, and Teulon present “Exploring con-
the number of ways value creation can be segmented and sumer attitudes to online collaborative consumption: A
allocated across multiple actors. typology of collaborative consumer profiles.” In this paper,
Finally, we are witnessing the emergence of a research the authors note that online collaborative consumption
stream focused on digital BMs (Margiono, Zolin, & enhances peer networks, through which peers communi-
Chang, 2018; Richter, Kraus, Brem, Durst, & Giselbrecht, cate, collaborate, and even deliver services to one another
2017), based on the description of new BM typologies via digital sharing platforms. Using a qualitative approach,
enabled by digitalization and based on a discussion of this article explores the motivating factors and barriers to
their challenges. In particular, this research shows that collaborative consumption; the authors then establish a
digitalization is pushing firms to change their BM along typology of collaborative consumer profiles, identifying
two key dimensions: the first dimension relates to the the most suitable type of online sharing platforms for each
understanding of customer needs as digital technologies profile. Findings reveal collaborative consumer profiles,
make it possible to unveil customers' intrinsic each demonstrating different preferences for the different
6 SAHUT ET AL.

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