Harnessing digital technologies to enhance innovation outcomes through virtual networks in MNEs

Abstract

Digital communication technologies facilitate increased efficiency and cost reduction in coordinating activities across global locations. These advancements also enable innovative business models that shift value creation and innovation to international networks. The implementation of virtual networks and digital tools has narrowed geographic gaps, mitigating risks associated with distance and underdeveloped infrastructure. However, MNEs face fast changing digital technologies and may struggle to translate digital technology investments into tangible innovation outcomes. Therefore, MNEs must develop the necessary capabilities to leverage these digital technologies to effectively manage their virtual networks and enhance innovation. Digital tools have enabled globally dispersed organisations to connect across time and space, regardless of their geographic location. Organisations are developing digital strategies to create new business models, shifting costs and activities from their own to partners, complementors, customers, and other stakeholders at home or abroad. However, the understanding of how MNEs manage these virtual network relationships, through digital technologies, to enhance organisational innovation outcomes is fragmented. There has been extensive research on how digital technologies impact innovation, however literature on how digital technologies enhance innovation outcomes through MNEs virtual networks is limited. The purpose of this study is to explore how digital technologies enhance innovation outcomes through virtual networks of MNEs. An interpretive, exploratory, phenomenological approach was adopted for this study. Twelve semi-structured interviews were conducted from four grouped clusters (automotive, banking, telecommunications, and manufacturing). These groupings allowed for ease of comparison, but the participants were from eight MNEs based in South Africa, as a host or home country. The research outcomes were found to have similarities with literature in most of the themes identified. However new themes were identified from the empirical data, these were ‘create a virtual experimental environment’ and ‘virtual networks as enablers of customer driven innovation’. This study has contributed to literature by adding empirical evidence to existing literature, and refinement through potentially new insight on how virtual networks enhance innovation outcomes, enabled by digital technologies. Further, a conceptual framework was developed on the key considerations of understanding how digital technologies enhance innovation outcomes through virtual networks in MNEs. Recommendations to management and for future research were included.