Entering the Digital Era - The Impact of Digital Technology-related M&As on Business Model Innovations of Automobile OEMs

Digital technologies have reached the sphere of industrial-age, primarily physical industries, thus forcing incumbent firms to digitally innovate their business models. Employing a longitudinal dataset of the world’s largest automobile manufacturers from 2000 to 2013, we found empirical evidence of a positive effect of digital technology– related mergers and acquisitions (M&As) on digital business model innovativeness. Moreover, this effect is enhanced by previous non-digital M&A experience, a diversified M&A history, as well as early experience with digital technology–related M&As. Consequently, our findings reveal that OEMs acquiring complementary and heterogeneous external knowledge on digital technologies and possessing the absorptive capacity to integrate as well as commercialize this type of knowledge are better prepared to master the digital transformation of their business. Furthermore, we find indications of a positive influence of digital business model innovations on the expected future firm performance of automobile manufacturers, thus substantiating the importance of digital transformation.