Extent versus Range of Service Digitization: Implications for Firm Performance

Service Digitization is a key means by which organizations derive value from their IT investments. We theorize that Service Digitization consists of two underlying dimensions – Extent of Digitization (EoD) and Range of Digitization (RoD), which present a trade-off scenario for a resource-constrained firm. We examine the firm performance implications of EoD and RoD and identify Human Capital Intensity (HCI) and Marketing Intensity (MI) as two complementary organizational competencies. Our empirical analysis of an archival panel data set, consisting of thirty-five quarters of financial and service digitization data from over 7000 credit unions, demonstrates strong support for our theoretical model. We find a J-shaped relationship between EoD and firm performance, which is positively moderated by HCI; and we find an inverted U-shaped relationship between RoD and firm performance, which is positively moderated by MI. Our results contribute towards the IT business value, IT-enablement of services and IT-enabled organizational agility literatures.