Leveraging Dynamic Capabilities for Digital Platform Innovation in the Private Equity Industry

Abstract

Purpose: Digital platforms have out-spun as a powerful tool of digital innovation in today’s competitive business environment. It is reported to disrupt nearly all industries – and to be an enabler of value creation and co-creation between both companies and industries. This master thesis was conducted with the purpose of building an understanding of how a private equity firm can leverage its dynamic capabilities to build and govern a digital platform. Although prior research argues the private equity industry to be a traditional industry with a more conservative approach to digital transformation, it is nevertheless bound to a shift toward digital innovations, such as digital platforms.

Methodology: This master thesis followed a qualitative research method with semi-structured interviews. The research objectives are carried out with an in-depth investigation of the dynamic capabilities theory in conjunction with the four phases of the platform lifecycles.

Results and analysis: The results and analysis found that through the dynamic capabilities of sensing, seizing, and transforming, the private equity firm was able to build, govern, and expand its digital platform regardless of its nearly non-existing experience in this field. This study demonstrates that when combined with the four phases of a digital platform life cycle, the theory of dynamic capabilities serves as a valuable framework for companies looking to broaden their exposure to new technological opportunities. The dynamic capabilities theory is beneficial for accelerating and capturing value through digital innovation. Based on the findings in this master thesis, it can be used as an enabler for sustaining competitive advantage.