Waking up to digital innovation: how organisational secrecy hampers top management focus on strategic renewal

Small and medium-sized firms are increasingly adopting digital technologies to transform themselves. Yet, the ability of top-management teams to embark on strategic transformations depends on entrepreneurial ideas and initiatives that arise across the firm. We conducted a qualitative pre-study of manufacturing companies to understand their challenges in engaging in and implementing digital transformation. The study drew attention to the prevalence of internal secrecy that inhibits knowledge sharing across units and, therefore, complicates the identification and elaboration of customer-centric innovations based on digital data. Building on our initial findings and research, we then developed and tested hypotheses that relate organisational secrecy, competitive pressures, and the range of digital technologies in use to top management's shift in focus towards digital innovation. We find, in particular, that organisational secrecy impeds a shift in top management attention towards those forms of digital innovation that require complex cross-unit coordination. We also found that perceived external pressures from competition were associated with an increase in top management's focus on digital innovation. Our study contributes to the literature on digital transformation and strategy processes more generally by elaborating on how organisational secrecy can hamper strategic renewal. The findings suggest that a culture of openness and transparency can facilitate strategic renewal in established companies.