Transitioning to Omnichannel Business: A Dynamic Capabilities Perspective of Firms’ Channel Integration

The proliferation of digital devices and services has fundamentally changed customer behavior and needs and thus the manner in which customers engage with firms. Many customers want to engage with firms across both online and offline channels, enjoying seamless switching and simultaneous use. In this changing environment, the omnichannel concept has been proposed as an appropriate approach to satisfy these customer demands. In practice, however, only a few firms have successfully initiated a transition from a multichannel business to an omnichannel business by integrating channels. One major challenge associated with channel integration is that of deploying the necessary dynamic capabilities that enable management to reconfigure the organization. Against this backdrop, we draw on the dynamic capability perspective to examine how firms transitioned to omnichannel management by the combination of adaptive organization principles and omnichannel retail information systems. For this purpose, this study sheds light on the microfoundations of the firms’ IT-enabled dynamic capabilities. The research is based on two qualitative case studies of a click-and-mortar retailer and an insurance firm that have transitioned to an omnichannel approach by successfully integrating their online and offline distribution channels. The findings make four primary contributions to theory and practice. First, they extend the literature on omnichannel business by discussing microfoundations related to channel integration grounded in empirical data. Second, our results provide relevant insights for information systems scholars on IT’s contribution to achieving the target of an omnichannel business. Third, the study contributes to research regarding dynamic capabilities by providing empirical insights into how firms deploy dynamic capabilities in practice. Fourth, for practitioners, this research provides valuable decision support on how to transform their organizations toward an omnichannel approach.