Dynamic capabilities in digital transformation: An institutional theory perspective from case studies of Chinese B2B technology firms

Purpose B2B technology firms play a central role in driving digital innovation yet face profound challenges in digital transformation (DT). This study aims to examine how institutional pressures shape the formation and configuration of digital dynamic capabilities (DDCs) in Chinese B2B technology firms and how these dynamics influence their DT trajectories. Design/methodology/approach A qualitative multi-case approach was adopted across four leading Chinese B2B technology firms. Semi-structured interviews with key informants were complemented by internal organizational documents and secondary sources. Findings From an institutional perspective, the study identifies three enabling conditions and seven micro-foundations of DDCs across digital sensing, digital seizing and digital transformation capabilities. Regulatory, mimetic and normative pressures jointly shape context-specific DDC micro-foundations. Differences in institutional pressures across the case firms lead to heterogeneous configurations of DDCs, giving rise to four distinct DT patterns. Research limitations/implications The findings may not be directly generalizable to countries with different institutional environments. Moreover, DT is dynamic, and configurations of DDCs may evolve over time, while potential bidirectional interactions between institutions and DDCs cannot be fully captured. Practical implications Firms should interpret institutional signals while developing internal capabilities and strategically prioritize developmental digital capabilities in response to the institutional pressures they face. Capability configurations and transformation patterns need to remain aligned with institutional demands and strategic priorities. Policymakers, in turn, should recognize how institutional design shapes feasible transformation trajectories. Originality/value By integrating institutional theory, this study extends the DC framework and develops a contingency perspective, showing that firms selectively integrate institutional pressures to shape distinct DDC configurations. It further provides a mechanism-based explanation of variations in DT trajectories, deepening understanding of DDCs in the Chinese context.