Understanding Internal Conditions for Digital Transformation in Service Organisations

Digital transformation promises more than new technologies. For service organisations, it offers opportunities to rethink how people, processes, and systems work together to deliver value. Yet realising these opportunities can prove difficult when established responsibilities, competing priorities, and disconnected systems continue to constrain coordination, even after new digital services become operational. While digital transformation research has increasingly recognised the importance of organisational capabilities and change processes, less attention has been directed towards how persistent intra-organisational tensions and misalignments shape resource integration across interconnected service exchanges. This thesis investigates how strategic, organisational, and socio-technical conditions influence the capacity of service organisations to facilitate value realisation. Drawing on paradox theory and Service-Dominant Logic, the research examines how organisations navigate competing demands for stability and innovation, how internal misalignments constrain resource integration, and how socio-technical coordination practices help maintain or recalibrate the organisational conditions supporting value realisation.

Adopting a qualitative research design informed by critical realism, the thesis combines secondary materials with 33 semi-structured interviews involving digital transformation practitioners across service organisations. The analysis developed through inductive engagement with empirical material and subsequent abductive interpretation, bringing emerging findings into dialogue with relevant theoretical perspectives. Two complementary manuscripts examine different dimensions of the overarching research problem. The first focuses on paradoxical tensions between tradition and innovation in the New Zealand insurance sector, while the second examines intra-organisational misalignment and socio-technical coordination across service organisations.

The first study identifies four strategic orientations towards the tradition–innovation paradox: Operational Continuity, Incremental Adaptation, Foundational Modernisation, and Dynamic Reimagining. It also develops a typology of dynamic equilibrium mechanisms through which organisations may continually address competing demands for operational stability and digital innovation. The second study identifies structural, metric, and cultural-interpretive misalignments that constrain internal resource integration. It conceptualises value attenuation as the progressive weakening of value-realisation capacity arising when persistent organisational misalignments constrain resource integration across nested service exchanges. The study further identifies four socio-technical coherence practices (Shared Signals, Temporal Orchestration, Augmented Integration, and Informed Narratives) through which actors may maintain and/or recalibrate institutional coherence. AI-enabled systems may help people connect information and recognise dependencies across teams. Whether they perform this bridging function depends on how they are configured, governed, and incorporated into everyday work.

Together, the studies explain how organisations navigate competing demands, how internal misalignments make coordination more difficult, and how people use organisational and technological resources to respond. The thesis contributes to paradox theory by differentiating strategic orientations and dynamic equilibrium mechanisms, and to SDL-informed service research by developing value attenuation as a concept and identifying socio-technical micro-foundations of institutional coherence. Importantly, it distinguishes organisational capacity to facilitate value realisation from value itself, which remains contextually and phenomenologically determined by beneficiaries, whether internal or external to the organisation. Practically, the findings offer service organisations ways to recognise emerging coordination frictions, navigate competing transformation priorities, and develop practices that sustain or recalibrate their capacity to facilitate value realisation.