Management Decision

Resource fit in digital transformation: Lessons learned from the CBC Bank global e-
banking project
Day-Yang Liu Shou-Wei Chen Tzu-Chuan Chou
Article information:
To cite this document:
Day-Yang Liu Shou-Wei Chen Tzu-Chuan Chou, (2011),"Resource fit in digital transformation",
Management Decision, Vol. 49 Iss 10 pp. 1728 - 1742
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Permanent link to this document:

http://dx.doi.org/10.1108/00251741111183852
Downloaded on: 05 February 2016, At: 00:54 (PT)
References: this document contains references to 47 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 1234 times since 2011*
Users who downloaded this article also downloaded:
Saul J. Berman, (2012),"Digital transformation: opportunities to create new business models", Strategy
& Leadership, Vol. 40 Iss 2 pp. 16-24 http://dx.doi.org/10.1108/10878571211209314
Francisco Liébana-Cabanillas, Francisco Muñoz-Leiva, Francisco Rejón-Guardia, (2013),"The determinants
of satisfaction with e-banking", Industrial Management & Data Systems, Vol. 113 Iss 5 pp. 750-767
http://dx.doi.org/10.1108/02635571311324188
Wai-Ching Poon, (2007),"Users' adoption of e-banking services: the Malaysian perspective", Journal of
Business & Industrial Marketing, Vol. 23 Iss 1 pp. 59-69 http://dx.doi.org/10.1108/08858620810841498

Access to this document was granted through an Emerald subscription provided by emerald-srm:551360 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as
providing an extensive range of online products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.

*Related content and download information correct at time of download.

 The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0025-1747.htm

MD
49,10 Resource fit in digital
transformation
Lessons learned from the CBC Bank global
1728 e-banking project
Day-Yang Liu, Shou-Wei Chen and Tzu-Chuan Chou
National Taiwan University of Science and Technology, Taipei, Taiwan
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Abstract
Purpose – The implementation of e-banking projects highlights the importance of digital
transformation for contemporary organizations in order to survive and achieve competitive
advantage in a digital economy. This paper aims to explore the development process of digital
transformation through an e-banking project based on the resource fit concept.
Design/methodology/approach – The qualitative method of case study is applied. In total,
17 in-depth interviews and secondary data were collected and analyzed.
Findings – Numerous researches related to e-banking have focused on either the resource-based
theory or strategic fit perspective, but not on both. This paper makes a unique contribution by
constructing a resource fit framework that integrates these two theories. This framework offers a
theoretical advancement in the resource fit literature. It includes four dimensions: external resource fit,
internal resource fit, external capability fit, and internal capability fit. Through an actual empirical
case examination of the resource fit framework, this study explored eight critical factors necessary for
successful e-banking project implementation.
Research limitations/implications – This study fills a theoretical gap by developing an
integrative framework and evaluating it via an empirical case study. Hence, examining this framework
for organizational digital transformation in different industries and multiple case studies with
cross-cases comparison will be valuable for future research.
Practical implications – The study demonstrated that managing digital transformation can be
challenging, but awareness of, and preparedness for, analysis of both the resources/capability and
external demands through the resource fit perspective are necessary.
Originality/value – This paper offers a pioneer framework in the resource fit field and makes a
practical case examination that can be useful for researchers and practitioners by taking a more
detailed view of digital transformation development.
Keywords Banking, Virtual banking, Corporate strategy, Taiwan
Paper type Research paper

Management Decision
Vol. 49 No. 10, 2011
pp. 1728-1742
q Emerald Group Publishing Limited
0025-1747
DOI 10.1108/00251741111183852
1. Introduction
Over the last decade, the impacts of digital technologies on business have changed
significantly, rendering many business models obsolete. Accordingly, digital
transformation – namely, the integration of digital technologies into business
processes – has become increasingly imperative for contemporary organizations
seeking to survive and attain competitive advantages in a digital economy (Bharadwaj,
2000). For example, many banks are now implementing e-banking projects in order to
pursue competitive advantage (Shah and Siddiqui, 2006). In terms of a firm’s
competitive strategy, many researchers use the resource-based view (RBV) as the main
analytical theory to study firms’ digital transformation (Bharadwaj, 2000; Wade and
 Hulland, 2004), suggesting that the utilization of both tangible and intangible resources Resource
can contribute to a firm’s competitive advantage (Barney, 1991). From this perspective, fit in digital
digital transformation can enable a firm to exploit firm resources, subsequently leading
to a new business model that enhances the firm’s competitive advantage. transformation
However, the RBV theory has been criticized for its vagueness regarding the origin
of a firm’s heterogeneous resources and how a firm can transform its resources into
competitive advantages in a turbulent environment (Teece et al., 1997; Halfat and 1729
Peteraf, 2003). Given such vagueness, the RBV does not seem to be sufficient for
depicting the full picture of a firm’s digital transformation. In particular, organizational
innovation and transformation are not universally useful for generating firm success;
indeed, they can be dangerous and negatively affect business (Keegan and Turner,
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

2002). Accordingly, Brown and Eisenhardt (1995) indicated that managers of

successful firms need to adopt the fit concept to balance external change and their
internal adjustments. Miles and Snow (1994) used the term strategic fit to emphasize
that organizations need to find a match between their internal resources/capabilities
and the demands of their external environments in order to enhance their competitive
advantage.
Harmancioglu et al. (2009) introduced the concept of resource fit, which refers to
strategic fit resources for a new initiative. Based on this perspective, digital
transformation begins with the evaluation of resources so as to generate a firm’s
competitive advantage and the identification of sources of synergy or fit. Apparently,
resource fit provides a broadened view that considers both resource-based theory and
strategic fit view to extend our understanding of digital transformation. However, to
date, little research has exploited the concept of resource fit in digital transformation;
thus, the critical factors for making a successful digital transformation are still largely
unexplored.
To address these gaps, the objectives of this research are twofold:
(1) develop a resource fit framework that is explicit on the concept of resource fit
and serves as an analytical framework for linking the RBV and strategic fit for
digital transformation; and
(2) explore the critical factors that produce successful digital transformation by
drawing on an in-depth case study of an e-banking project at CBC Bank
(a pseudonym) in Taiwan.

Thus, the primary contributions of this study are that the resource fit framework is a
pioneering concept that can offer a complete explanation of digital transformation as
well as the key factors that make up a proposed analytical framework useful for
business managers. We believe that a practical case exploration of digital
transformation can provide a valuable lesson in this regard.

2. Toward a framework of resource fit in digital transformation

2.1 Digital transformation
Organizational transformation is defined as simultaneous major changes in key
activity domains (e.g. strategy, structure, and power distribution) that typically occur
over a brief interval of time (Wischnevsky and Damanpour, 2006). It is also a complex,
revolutionary, and continuous process that demands fundamental changes in the
organizational structures and systems through product development and service
 MD delivery (Romanelli and Tushman, 1994). Such a transformation may lead to the
49,10 reassessment of organizational norms and values as well as a change of service
delivery systems. Hence, the transformation process itself becomes complex and
chaotic in its nature and might indeed produce a radical departure from the current
state. Accordingly, organizational transformation can have a major structural and
fundamental impact on an entire organization.
1730 Since technologies can trigger such changes and provide the means for moving out
of the past toward a more efficient and powerful future, organizations are increasingly
expected to incorporate digital technology into their business practices to improve
competitiveness (Henderson and Venkatraman, 1993). In this regard, digital
transformation (DT) can be defined as an organizational transformation that
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

integrates digital technologies and business processes in a digital economy. Yet DT is

much more than mere process redesign. It is about structuring new business operations
to facilitate and fully leverage firms’ core competence through digital technology in
order to attain competitive advantage (Brynjolfsson and Hitt, 2000). Therefore, it is
critical to understand precisely how organizations manage their transformation to
capitalize upon the benefits of digital technologies.

2.2 The resource-based theory and the strategic fit perspective

The RBV assumes that firms are heterogeneous with respect to their resources,
capabilities, and endowments as firms are constrained by their historical past, existing
resources, and accumulated capabilities (Barney, 1991; Teece et al., 1997). A firm’s
resources can be perceived as all assets (tangible and intangible) and competencies
owned or controlled by the firm that can be used to conceive and implement
competitive strategies. However, as previously mentioned, RBV has been criticized for
a lack of a clear conceptual model to explain how firms’ heterogeneity arises and the
implemented processes transform resources into competitive advantage (Teece et al.,
1997; Halfat and Peteraf, 2003). Since firms need continuously to make organizational
adjustments in their structure, process, and information systems to adapt to
environmental changes and gain competitive advantage (Smith and Reece, 1999; Zajac
et al., 2000), the fit concept offers an alternative perspective. Prior studies have found
that the fit among the environment, structure, strategy, and leadership is significant to
an organization’s success (Smith and Reece, 1999; Pertusa-Ortega et al., 2010). After
years of academic research into “fit”, the concept of strategic fit emerged as the core
issue for both organizational studies and strategic management research (Miles and
Snow, 1994), including both internal and external domains (Xu et al., 2006; Grant, 2008).
From an internal perspective, a strategic fit among strategy, structure, and
processes is positively associated with performance (Xu et al. 2006). From an external
perspective, when a strategic fit, match, or congruence exists between a firm’s strategy
and environmental or organizational contingencies, it can increase the firm’s
competitive advantage and lead to better business performance (Zajac et al. 2000).
Hence, a complete definition of strategic fit refers to a firm’s strategic congruency,
contingency, or alignment between its internal resources/capabilities and the
environmental demands (Miles and Snow, 1994; Xu et al., 2006). Grant (2008) further
addressed the point that strategic fit relates to a firm’s RBV, suggesting that the
external factors of selection and the internal focus of utilizing the firm’s unique
resources and capabilities is the key to profitability. Hence, to explore the process of a
 firm’s digital transformation more fully, its resources and capability need to be further Resource
divided into both internal and external dimensions according to the domain fit in digital
perspective of strategic fit.
Internal/external resources. From a strategic viewpoint, a firm’s resources can be transformation
seen as the existing properties that the firm has that can be transformed and generated
into positive competitive advantage (Barney, 1991; Halfat and Peteraf, 2003).
Accordingly, a firm’s specific resources related to the external environment, like the 1731
number of branches, corporate reputation, existing customers, and relations with
external cooperating partners (e.g. customers and suppliers) can be seen as its external
resources (Teece et al., 1997). These resources are related to the firm’s past historical
route and will shape its future position in the market (Teece et al., 1997). Similarly, a
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

firm’s internal resources are those resources related to its internal operations and
embedded within business routines and organizational culture, such as the
communication mechanism across departments, empowerment from top
management, and a firm’s hierarchy levels for decision making within the
organization (Daft, 2001; Chen, 2007). These resources relate to the internal power
flow and shape the structure of the organization (Daft, 2001).
Internal/external capabilities. Like the definition of resource, a firm’s capabilities can
be seen as the capacity and implemented processes for generating its competitive
advantage (Barney, 1991; Halfat and Peteraf, 2003). Accordingly, a firm’s
environment-related capabilities can be seen as its external capabilities and include
the capacities to mobilize and deploy a firm’s resources with external business agents,
like the ability to co-operate with customers and suppliers to reach common goals and
offer customization services to different customers ( Jassawalla and Sashittal, 1998).
These external capabilities are critical to implementing a successful digital
transformation (Terwiesch and Loch, 2004). Similarly, a firm’s internal capability
can be defined as its capacity to integrate its specific resources and capabilities, spread
across different departments, through digital technologies and reconfigure them into
the firm’s core competence in a relatively quick and flexible manner. These capabilities
relate to organizational internal capacity and affect the organization’s ability to adapt
to environmental changes (Christopher, 2000).

2.3 The resource fit framework

Based on the literature review, two views reveal a firm’s:
(1) digital transformations strategically fit with its resources and capabilities can
engender the firm’s competitive advantage (Barney, 1991; Bharadwaj, 2000);
and
(2) competitive advantages derive from the better use of its resources, rather than
better resources (Mahoney and Pandian, 1992).

Recently, researchers further examined this resource fit concept and discovered that
new product development needs to strategically fit a firm’s existing resources to
guarantee its success (Harmancioglu et al., 2009). Apparently, resource fit should
consider both resource-based theory (both resource and capability) and strategic fit
views (both external and internal) to extend the understanding of digital
transformation.
 MD Accordingly, a resource fit framework was derived including four dimensions:
49,10 external resource fit, internal resource fit, external capability fit, and internal capability
fit. Each dimension is defined and explained in the following sections.
External/internal resources fit. External resource fit exploits a firm’s external
resources to fit the demands of digital transformation, similar to the development of the
e-supply chain in the Taiwanese motor industry. In that industry, motor companies use
1732 their available resources to gain cooperation from component suppliers, implement
electronic supply chain systems, and form a clear continuity of cooperative electronic
relationships (Yeh, 2005). These cooperative relationships further improve
communication and trust that are major requirements to build successful supply
chains among e-commerce companies (Mayer et al., 1995; Phan and Stata, 2002).
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Internal resource fit can be defined as exploiting a firm’s internal resources to fit the
demands of digital transformation. For example, Moenaert et al. (2000) examined
European multinational corporations (MNCs) for product innovation and determined
that firms need to balance centralization and decentralization and establish a dedicated
liaison to improve cross-functional communication, which are indispensable
foundations for positive product innovation.
External/internal capabilities fit. Similarly, external capability fit can be defined as
utilizing a firm’s external capabilities to fit the demands of digital transformation. Like
the “E-Business Program” at Intel Corp., the IT department serves as an “enabler” of
business and focuses on customer demands. It integrates digital technology with
existing business processes and connects this to its external business agents
(e.g. customers and suppliers), thereby enabling business managers at both Intel and
its external partners to access information for decision making in time and work
together via an e-business system (Phan and Stata, 2002). Finally, internal capability fit
is defined as utilizing a firm’s internal capabilities to fit the demands of digital
transformation. The “Open Plan” by the Woolwich Bank in the UK, for example,
integrates its information systems with available resources and transforms them into
new capabilities to meet customer demands more rapidly. The Woolwich Bank
continuously promoted this system throughout its entire organization to generate
stronger sustainable competitive advantage (Shah and Siddiqui, 2006). Table I depicts
the framework of resource fit.
Given the recent development of the resource fit concept and researchers’ work on
its content through various case studies (Harmancioglu et al., 2009; Pertusa-Ortega
et al., 2010), it is worth exploring firm digital transformation through the concept of
resource fit. However, up to now, little research has examined the resource fit concept
or used a framework as the analytical foundation. Practical case examinations fully

Resource-based view
Strategic fit Resource Capability

External External resource fit External capability fit

The firm’s external resources fit the The firm’s external capabilities fit the
Table I. demands of digital transformation demands of digital transformation
The framework for Internal Internal resource fit Internal capability fit
resource fit in digital The firm’s internal resources fit the The firm’s internal capabilities fit the
transformation demands of digital transformation demands of digital transformation
 exploring firms’ digital transformations are also lacking. Hence, it would be useful to Resource
study these gaps from a longitudinal perspective (Yin, 1994). The results will produce fit in digital
practical implications and move strategy and contingency literature a step forward.
transformation
3. Research method
In light of the current complex environmental and organizational factors, using an 1733
analytical approach that simultaneously considers multiple organizational and
environmental factors is appropriate. Case-study research is an empirical enquiry that
investigates a contemporary phenomenon within its real-life context (Yin, 1994).
Certain “how” and/or “why” questions are asked about a contemporary set of events
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

over which the investigators have little or no control. Since little current empirical
knowledge about the resource fit concept exists and no analytical model for studying
digital transformation has been established, a qualitative case-study approach was
considered the most appropriate for this research.

3.1 Context: Taiwan’s e-Cash Project

Taiwan’s information technology (IT) manufacturing industry has been a central
industry fostered by the government over the past few decades. Most of Taiwan’s
leading PC manufacturers (e.g. Mitac, AUSU) have become MNCs with many overseas
branches, plants, warehouses, and repair centers. All have strong demands for
financial services for global payment collections and multi-currency exchanges. Hence,
the “e-Cash” Project was dominated by the Taiwanese government from 2002 to 2003.
The goal of the e-Cash Project was to create electronic connections among leading
PC manufacturers, their component suppliers, and banks. Those component suppliers
– mostly small and medium companies (SME) – could apply online for financial loans
from banks based on their purchasing orders from leading PC manufacturers to
address financial shortages during production stages. The framework and the process
flow for the e-Cash Project in the PC supply chain is illustrated in Figure 1.
From January 2002 to December 2003, eight banks participated in the e-Cash
Project, each building its own e-banking system. However, by the end of 2004, only
CBC Bank’s Global E-banking System (GEBS) was able to attain superior performance.
The current study arose from this interesting phenomenon. Research access was
negotiated with CBC Bank in August 2006, and field research was conducted over the
next three years until May 2009.
A total of 17 interviews were conducted, each lasting around 90 minutes. Three
other banks, a large information system vendor (IBM Taiwan Corporation), and a
leading PC manufacturer (ASUS, one of CBC’s main customers) were also contacted to
validate and complement the information gathered from CBC Bank. Documentation
from secondary information sources (archival records, industry and stock exchange
reports, financial magazines, and relevant internet publications) was also gathered and
integrated into the research process. The use of multiple informants and archival data
provided good triangulation (Stake, 1994) of evidence and helped the authors cross
check pertinent information and verify the reliability of the data obtained. All
interviewees were encouraged to speak freely, and a standard set of questions
(e.g. When implementing the GEBS projects, how were processes, personnel
deployment, and service packages formulated? What factors were considered?) was
 MD
49,10

1734
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Figure 1.
The framework for the
“e-Cash” Project in the PC
supply chain

designed and used to initiate and guide the interview process, but not as a formal
outline or study.
All interviews were tape recorded (with interviewees’ permission) and immediately
transcribed. After the data collection, data were analyzed based on Wolcott’s (1994)
three criteria:
(1) description (stay close to the data as originally recorded);
(2) analysis (organizing data to identify key factors and their relationships); and
(3) interpretation (make sense of the meaning in a specific context).

The open-coding technique of grounded theory (Strauss and Corbin, 1990) approach
was applied to this analysis process. The entire data analysis process went through
numerous iterations in order to formulate a coherent and consistent overview of the
case.

4. Case analysis
Established in 1903, CBC Bank was a state-owned bank that was privatized in 1971. Its
long-term strategy is to exploit its distinct resources (e.g. the largest number of
overseas subsidiaries and the richest experience in foreign exchange transactions in
the Taiwan banking industry) by using advanced IT applications to serve its corporate
customers. Its GEBS achieved a superior outcome to seven other e-banking
institutions, making it valuable for this research to explore the black box for CBC’s
successful digital transformation.
Based on four dimensions of the resource-fit framework, as previously defined, this
study first analyzed the external demands of the e-Cash Project and then CBC Bank’s
resources and capabilities. Next, resources fit for GEBS implementation were
examined. Through iterative analysis and extraction of the collected data, the resource
 fit processes in each dimension were summarized, and critical factors that determine Resource
successful digital transformation were also discovered.
fit in digital
4.1 External resource fit: external resources fitting the demand of digital transformation transformation
The e-Cash Project required participating banks to offer global capital transaction
services to leading PC manufacturers in a timely manner. Hence, banks needed not
only expertise and experience in foreign exchange, but also existing customers and 1735
practical business flows in order to integrate the global capital transactions processes
and digital technology successfully into their e-banking systems. From the external
perspective, this study found that CBC Bank developed its distinct external resources
and further exploited its external resources, effectively matching them to the demands
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

of the e-Cash Project. Based on the collected data, “historical path” and “embedded
trust” were found to be the two most important factors for forming a positive external
resource fit during GEBS development.
(1) Historical path. A firm’s historical path refers to the strategic alterative available
to that the firm as well as the presence or absence of increasing returns and attendant
path dependencies (Teece et al., 1997). Prior to 1990, Taiwan’s banking industry was
regulated by the government. However, CBC Bank was one of a few banks approved
by the government to undertake foreign exchange business in the overseas market.
After many years of efforts, CBC Bank established numerous oversea branches and
become the leader in the foreign exchange business. The Executive Vice President of
CBC Bank stated that:
Owing to our historical background, the major source of CBC’s competitiveness is in foreign
exchange business and many overseas branches.
According on the development trajectory, CBC Bank established external resources to
generate its competitive advantage (Barney, 1991; Lamberg and Tikkanen, 2006) and
meet the demands of the e-Cash Project.
(2) Embedded trust. Trust within organizations refers to an organization’s
confidence or belief in the integrity and reliability of another organization (Yousafzai
et al., 2003). Such trust is embedded in the relationships among cooperating parties
(Mayer et al. 1995; Mohammed and Sardana, 2010). Since it is necessary to share the
manufacturing flow information in PC supply chains with banks, the “trust” perception
becomes a significant, but tacit, factor for leading PC manufacturers to consider in
choosing their cooperate partners. The Deputy Director of CBC Bank explained that:
[. . .] because of the demands in foreign exchange business, some targeting customers (leading
PC manufacturers) in the e-Cash Project are already our existing customers.
Previous researchers have shown that mutual trust is a critical factor in selecting a
supply chain partner (Phan and Stata, 2002). With years of cooperation between CBC
Bank and some leading PC manufacturers, the mutual trust relationship has become
part of CBC Bank’s external resources and has met the demands of the e-Cash Project.

4.2 Internal resource fit: internal resources fitting the demands of digital transformation
The banks participating in the e-Cash Project needed to coordinate and cooperate with
information system (IS) vendors, software providers, leading PC manufacturers, and
other departments within the firm. Taking an internal perspective, CBC Bank
established its internal resources and matched them to the demands of the e-Cash
 MD Project. The data analysis found a “dedicated liaison device” and “highly authorized
49,10 team” as two critical factors for achieving internal resource fit during GEBS
development.
(1) Dedicated liaison device. When the environment is uncertain, frequent changes
require more information processing in order to achieve horizontal coordination, and a
dedicated integrator is necessary for organizational structure (Daft, 2001). During the
1736 GEBS implementation, the CBC Bank made adjustments in its organizational
structure. The Deputy Director of CBC Bank commented that:
CBC has established a dedicated department, the Electronic Financial Unit (EFU); its major
responsibility is to communicate and offer training programs to external customers and other
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

departments within the bank.

In adapting to external change, firms are required to build a new structure and identify
the grouping together of individuals and make intra- and inter-firm coordination more
efficient (Ciborra, 1996; Daft, 2001). With a dedicated liaison responsible for
coordination and promotion, CBC Bank developed its internal resources and met the
demands of the e-Cash Project.
(3) Highly authorized team. A decentralized structure with top management
empowerment can increase creativity and enhance business performance (Worley and
Doolen, 2006). Basically, the decision-making structure at CBC Bank is a traditionally
centralized system, but top management gave full support to the MIS department to
make its own decisions in the context of “centralization with decentralization” (Holland
et al., 1994) during GEBS implementation
For example, the MIS department decided to select Microsoft BizTalk Server 2000
as its XML platform, based exclusively on its expert perspective for future technical
support. In addition, the MIS department took on the responsibility of integration and
coordination for its information system (IS) vendors, corporate customers, and sales
departments instead of outsourcing the e-banking system entirely to a large system
integrator, like some other participating banks did during the e-Cash Project.
Research efforts have reported that cross-functional communication and
coordination are positively associated with business performance (Worley and
Doolen, 2006). With the MIS department’s full empowerment by top management, CBC
Bank developed its internal resources and met the demands of the e-Cash Project.

4.3 External capability fit: external capabilities fitting the demands of digital
transformation
Since customers (e.g. leading PC manufacturers and component suppliers) required
different demands and information literacy in the e-Cash Project, banks needed to
cooperate with them to fulfill these varied demands. Based on the external perspective,
this study found that CBC Bank developed its distinct external capabilities and
matched them to the demands of the e-Cash Project. According to the interview data,
“collaboration” and “customization” emerged as the two most important factors for
forming good external capability fit during GEBS development.
(1) Collaboration. Collaboration is a recursive process whereby two or more
organizations work together toward a common goal and both participants have a
willingness to understand and accept differences while still remaining focused on the
common objective ( Jassawalla and Sashittal, 1998). In the e-Cash Project, leading PC
 manufacturers desired the professional services of global capital management and Resource
foreign exchange transactions through the use of digital technologies. During its years fit in digital
of accumulated experience with overseas markets, CBC Bank established the
capabilities to offer foreign exchange service. These external capabilities further transformation
enhanced the possibility of cooperation between other targeted leading PC
manufacturers and CBC Bank (Schwab and Miner, 2008). In contrast, those banks
without these capabilities faced serious obstacles when trying to implement their 1737
e-banking system.
For firms in a collaborative supply chain, strong levels of information sharing,
cooperation, and collaboration can generate greater success than when acting in
isolation (Kobe et al., 2007). Good customer relationships and strong capabilities in IT
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

managerial skills directed toward the corporate customer enabled CBC Bank to develop
its external capabilities and meet the demands of the e-Cash Project.
(2) Customization. Customization refers to a company being able to produce
individual differentiated goods or services for different customers (Kotler, 2003). It also
refers to the ability to produce customized, affordable, high-quality goods and services
in short cycle times and at low costs (Christian and Christoph, 2004; Rothenberger and
Srite, 2009). Since different requirements existed for various corporate customers in the
e-Cash Project, CBC Bank offered a variety of customization services. For example, for
large enterprises with their own IT system that they do not want to modify, CBC Bank
modified and added extra functions in GEBS in order to connect with these enterprises.
For customers who do not want to connect their system with the GEBS directly to
protect their trade information, CBC suggested choosing a system integration (SI)
vendor that they trust first, then passing their information to the vendor. CBC Bank
can then cooperate with the SI vendor to convert the passed information for GEBS.
CBC Bank also provided a web browser for those customers on a small scale.
During any project development, it is critical for firms to cooperate with partners
and offer customization services to ensure successful implementation (Christian and
Christoph, 2004). By providing customization services, CBC Bank developed its
external capabilities and met the demands of the e-Cash Project. Consequently, many
corporate customers from other industries also joined GEBS.

4.4 Internal capability fit: internal capabilities fitting the demands of digital
transformation
Banks were required to offer global capital transaction services to leading PC
manufacturers in the e-Cash Project; thus, the banks needed an advanced IT system
that could connect its worldwide branches. By examining the internal perspective, this
study found that CBC Bank not only developed its internal capabilities, but also
exploited its internal capabilities and met the demands of the e-Cash Project. The
collected data indicated that “information technology integration” and “reconfiguration
agility” are two of the most important factors when forming a successful internal
capability fit during GEBS development.
(1) IT integration. An organization can maximize its capabilities through
technology leverage, differentiating its operations from competitors; indeed, IT
integration indicates the quality of collaboration among departments (Daft, 2001;
Brettel et al., 2011). CBC Bank emphasized GEBS as the source of its future
competitiveness instead of merely an individual project within its MIS department.
 MD Some policies and activities were put into force throughout the company. First, CBC
49,10 Bank connected and integrated its overseas branches’ IT systems with GEBS. Five
overseas branches (i.e. New York, Tokyo, Amsterdam, Singapore, and Hong Kong)
were selected first, and others were required to make suitable integration accordingly.
Furthermore, as required by the bank’s president, each overseas branch proposed a
plan that included the annual revenue to be generated from GEBS and a list of
1738 customers using or willing to use the GEBS in the future.
When firms can integrate their resources through IT and complete the congruence
between their business goal and IT development strategy, they can improve firm
performance (Bharadwaj, 2000; Brettel et al., 2011). CBC Bank developed its IT
integration capabilities and met the demands of the e-Cash Project.
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

(2) Reconfiguration agility. Reconfiguration is the capability to reshape existing

resources in ways that will lead to the effective integration of core and complementary
capabilities (Malik, 2008). Reconfiguration agility refers to a firm’s flexible capability to
embrace organizational structures, information systems, and mindsets (Christopher,
2000). In the e-Cash Project, banks were required to integrate and reconfigure their
resources and capabilities with both flexibility and a quick capability to meet different
demands from both leading PC manufacturers and their component suppliers.
As demonstrated in previous sections, during GEBS implementation, CBC Bank
established a dedicated liaison. The MIS department was fully authorized to engage in
coordinating actions among different departments, vendors, and customers.
Furthermore, CBC Bank integrated GEBS with its existing IT systems in overseas
branches sequentially in order to offer global capital transaction services to leading PC
manufacturers. All these processes’ reconfigured resources and capabilities were
reflected to the benefit of CBC Bank. Since reconfiguration agility requires a firm to
integrate and reconfigure resources quickly in response to continuous environmental
changes, during GEBS development, the CBC Bank revealed that it has the capabilities
of reconfiguration agility and met the demands of the e-Cash Project.

5. Discussion and managerial implications

5.1 Case summary
Based on the resource fit framework used to analyze digital transformation at CBC
Bank through its GEBS implementation, eight critical factors (i.e. historical path,
embedded trust, dedicated liaison device, highly authorized team, collaboration,
customization, IT integration, and reconfiguration agility) needed for successful
e-banking project development were identified. Table II illustrates the resource fit
matrix for digital transformation.

5.2 Managerial implications

This study presents a number of important implications for both research and practice.
For research purposes, the study makes three significant contributions. First, this
research integrated resource-based theory and strategic fit perspective – a combination
quite different from most current studies focusing on either resource characteristics or
contingency perspective alone, but not both. Second, the research draws on two
theoretical perspectives to build an integrative framework of resource fit. The
framework represents theoretical advancement in the resource fit literature. Finally,
 Resource
Resource-based view
Strategic fit Resource Capability fit in digital
External External resource fit External capability fit
transformation
The firm’s external resources fit the The firm’s external capabilities fit the
demands of digital transformation demands of digital transformation
– Historical path – Collaboration 1739
– Embedded trust – Customization
Internal Internal resource fit Internal capability fit
The firm’s internal resources fit the The firm’s internal capabilities fit the
demands of digital transformation demands of digital transformation Table II.
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

– Dedicated liaison device – IT integration The matrix of resource fit

– Highly authorized team – Configuration agility for digital transformation

using e-banking as an example of more general digital transformation, our study

evaluated the framework via an actual empirical case.
This analysis also has important practical implications. First, banks with successful
e-banking systems have become indispensable complementary assets for PC
manufacturing supply chains. Second, it is crucial for firms to use existing resources
and capabilities to meet customer demands when implementing digital transformation.
Third, when implementing a digital transformation project, it is important to have
direct policing by top management and solid congruence between a firm’s business
goals and its IT development strategy, not just count IT projects as additional jobs for
the MIS department.
This study is also meaningful for business managers, especially for those in
knowledge intensive business services (KIBS), since they can learn a new concept and
use the resource fit framework as a blueprint for evaluating their digital
transformations in advance to avoid possible significant damage (e.g. like the
remaining seven banks that devoted heavy resources, but returned dejected results).
First, business managers can observe environmental changes and emerging demands
that encompass their organizations. Then, they can collate and analyze their firms’
existing resources and capabilities through both internal and external perspectives.
Accordingly, based on the four dimensions defined in the resource fit framework,
business managers can inspect whether above two fit properly.

6. Conclusion
The implementation of e-banking projects highlights the importance of digital
transformation for contemporary organizations in order to survive and achieve
competitive advantage in a digital economy. This study illustrates the development
process of digital transformation through an e-banking project based on the resource
fit concept. A resource fit framework for digital transformation was constructed to
provide new insights beyond the literature. Through an actual empirical case
examination of the resource fit framework, this study explored eight critical factors
necessary for successful e-banking project implementation. This study also
demonstrated that managing digital transformation can be challenging, but
awareness of and preparedness for analysis of both the resources/capability and
external demands through the resource fit perspective are necessary.
 MD The study includes certain limitations as well. The data were collected retrospectively
49,10 from participants over the 2001-2003 period, and participants’ memories could have been
subjective or biased or both. In the future, a longitudinal ethnographic study might
provide better insights into the subtleties of digital transformation in an organization.
Furthermore, examining this framework for organizational digital transformation
through multiple case studies with cross-case comparisons (Yin, 1994) will be a beacon for
1740 future studies. We hope that more researchers will join this academic topic to collectively
build a cumulative body of knowledge.

References
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of

Management, Vol. 17 No. 1, pp. 99-117.
Bharadwaj, A.S. (2000), “A resource-based perspective on information technology capability and
firm performance: an empirical investigation”, MIS Quarterly, Vol. 24 No. 1, pp. 169-96.
Brettel, M., Heinemann, F., Engelen, A. and Neubauer, S. (2011), “Cross-functional integration of
R&D, marketing, and manufacturing in radical and incremental product innovations and
its effects on project effectiveness and efficiency”, Journal of Product Innovation and
Management, Vol. 28, pp. 251-69.
Brown, S.L. and Eisenhardt, K.M. (1995), “Product development: past research, present findings
and future directions”, Academy of Management Review, Vol. 20 No. 2, pp. 343-78.
Brynjolfsson, E. and Hitt, L.M. (2000), “Beyond computation: information technology,
organizational transformation and business performance”, Journal of Economic
Perspectives, Vol. 14 No. 4, pp. 23-48.
Chen, C.J. (2007), “Information technology, organizational structure, and new product
development – the mediating effect of cross-functional team interaction”, IEEE
Transactions on Engineering Management, Vol. 54 No. 4, pp. 687-98.
Christian, T. and Christoph, H.L. (2004), “Collaborative prototyping and the pricing of
custom-designed products”, Management Science, Vol. 50 No. 2, pp. 145-58.
Christopher, M. (2000), “The agile supply chain, competing in volatile markets”, Industrial
Marketing Management, Vol. 29 No. 1, pp. 37-44.
Ciborra, U.C. (1996), “The platform organization: recombining strategies, structures, and
surprises”, Organization Science, Vol. 7 No. 2, pp. 179-203.
Daft, R.L. (2001), Organization Theory and Design, 7th ed., South-Western College Publishing,
Cincinnati, OH.
Grant, R.M. (2008), Contemporary Strategy Analysis: Concepts, Techniques, Applications, 6th ed.,
Wiley-Blackwell Publishing, Malden, MA.
Halfat, C.E. and Peteraf, M.A. (2003), “The dynamic resource-base view: capability life cycles”,
Strategic Management Journal, Vol. 24 No. 10, pp. 997-1010.
Harmancioglu, N., Droge, C. and Calantone, R.J. (2009), “Strategic fit to resources versus NPD
execution proficiencies: what are their roles in determining success?”, Journal of the
Academy Marketing Science, Vol. 37 No. 3, pp. 266-82.
Henderson, J.C. and Venkatraman, N. (1993), “Strategic alignment: leveraging information
technology for transforming organizations”, IBM System Journal, Vol. 32 No. 1, pp. 472-84.
Holland, C.P., Lockett, G., Richard, J.M. and Blackman, I. (1994), “The evolution of a global cash
management system”, Sloan Management Review, Vol. 36 No. 1, pp. 37-47.
Jassawalla, A.R. and Sashittal, H.C. (1998), “An examination of collaboration in high-technology
new product development processes”, The Journal of Product Innovation Management,
Vol. 15 No. 3, pp. 237-55.
 Keegan, A. and Turner, R. (2002), “The management of innovation in project-based firms”, Long Resource
Range Planning, Vol. 35 No. 4, pp. 367-88.
Kobe, N., Ludo, G. and Liliane, P. (2007), “A swift response tool for measuring the strategic fit for
fit in digital
resource pooling: a case study”, Management Decision, Vol. 45 No. 3, pp. 434-49. transformation
Kotler, P. (2003), Marketing Management, 11th ed., Pearson Education, Upper Saddle River, NJ.
Lamberg, J.A. and Tikkanen, H. (2006), “Changing sources of competitive advantage: cognition
and path dependence in the Finnish retail industry 1945-1995”, Industrial and Corporate 1741
Change, Vol. 15 No. 5, pp. 811-46.
Mahoney, J.T. and Pandian, J.R. (1992), “The resource-based view within the conversation of
strategic management”, Strategic Management Journal, Vol. 13 No. 5, pp. 363-80.
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Malik, O.R. (2008), “Adapting to market liberalization: the role of dynamic capabilities, initial
resource conditions, and strategic path choices in determining evolutionary fitness of less
developed country (LDC) firms”, Journal of International Management, Vol. 14 No. 3,
pp. 217-31.
Mayer, R.C., Davis, H. and Schoorman, F.D. (1995), “An integrated model of organizational trust”,
Academy of Management Review, Vol. 20 No. 3, pp. 709-34.
Miles, R.E. and Snow, C.C. (1994), Fit Failure, and the Hall of Fame: How Companies Succeed or
Fail, Free Press, New York, NY.
Moenaert, R.K., Caeldries, F., Lievens, A. and Wauters, E. (2000), “Communication flows in
international product innovation teams”, Journal of Product Innovation Management,
Vol. 17 No. 5, pp. 360-77.
Mohammed, L. and Sardana, G.D. (2010), “What breaks trust in customer supplier relationship?”,
Management Decision, Vol. 48 No. 3, pp. 353-65.
Pertusa-Ortega, E.M., Molina-Azorı́n, J.F. and Claver-Cortés, E. (2010), “Competitive strategy,
structure and firm performance: a comparison of the resource-based view and the
contingency approach”, Management Decision, Vol. 48 No. 8, pp. 1282-303.
Phan, D.D. and Stata, N.M. (2002), “E-business success at Intel: an organization ecology and
resource dependence perspective”, Industrial Management & Data Systems, Vol. 102
Nos 3/4, pp. 211-7.
Romanelli, E. and Tushman, M.L. (1994), “Organizational transformation as punctuated
equilibrium: an empirical test”, The Academy of Management Journal, Vol. 37 No. 5,
pp. 1141-66.
Rothenberger, M.A. and Srite, M. (2009), “An investigation of customization in ERP system
implementations”, IEEE Transactions on Engineering Management, Vol. 56 No. 4,
pp. 663-76.
Schwab, A. and Miner, A.S. (2008), “Learning in hybrid-project systems: the effects of project
performance on repeated collaboration”, Academy of Management Journal, Vol. 51 No. 6,
pp. 1117-49.
Shah, M.H. and Siddiqui, F.A. (2006), “Organizational critical success factors in adoption of
e-banking at the Woolwich bank”, International Journal of Information Management,
Vol. 26 No. 6, pp. 442-56.
Smith, T.M. and Reece, J.S. (1999), “The relationship of strategy, fit, productivity, and business
performance in a service setting”, Journal of Operation Management, Vol. 17, pp. 145-61.
Stake, R.E. (1994), “Case studies”, in Denzin, N.K. and Lincoln, Y.S. (Eds), Handbook of
Qualitative Research, Sage Publications, Newbury Park, CA.
Strauss, A. and Corbin, J. (1990), Basics of Qualitative Research: Grounded Theory Procedures
and Techniques, Sage Publications, Newbury Park, CA.
 MD Teece, D.J., Pisano, G. and Shuen, A. (1997), “Dynamic capabilities and strategic management”,
Strategic Management Journal, Vol. 18 No. 7, pp. 509-33.
49,10 Terwiesch, C. and Loch, C.H. (2004), “Collaborative prototyping and the pricing of
custom-designed products”, Management Science, Vol. 50 No. 2, pp. 145-58.
Wade, M. and Hulland, J. (2004), “Review: the resources-based view and information systems
research: review, extension, and suggestions for future research”, MIS Quarterly, Vol. 28
No. 1, pp. 107-42.
1742
Wischnevsky, J.D. and Damanpour, F. (2006), “Organizational transformation and performance:
an examination of three perspectives”, Journal of Managerial Issues, Vol. 18 No. 1,
pp. 104-28.
Wolcott, H.F. (1994), Transforming Qualitative Data: Description, Analysis, and Interpretation,
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:54 05 February 2016 (PT)

Sage Publications, Thousand Oaks, CA.

Worley, J.M. and Doolen, T.L. (2006), “The role of communication and management support in a
lean manufacturing implementation”, Management Decision, Vol. 44 No. 2, pp. 228-46.
Xu, S., Tamer, C.S. and White, J.C. (2006), “The impact of strategic fit among strategy, structure,
and processes in multinational corporation performance: a multi-method assessment”,
Journal of International Marketing, Vol. 14 No. 2, pp. 1-31.
Yeh, Y.P. (2005), “Identification of factors affecting continuity of cooperative electronic supply
chain relationships: empirical case of the Taiwanese motor industry”, Supply Chain
Management: An International Journal, Vol. 10 No. 4, pp. 327-35.
Yin, R.K. (1994), Case Study Research: Design and Methods, Sage Publications, Thousand Oaks,
CA.
Yousafzai, S.Y., Pallister, J.G. and Foxall, G.R. (2003), “A proposed model of e-trust for electronic
banking”, Technovation, Vol. 23 No. 11, pp. 847-60.
Zajac, E.J., Kraatz, M.S. and Bresser, R.K.F. (2000), “Modeling the dynamics of strategic fit:
a normative approach to strategic change”, Strategic Management Journal, Vol. 21 No. 4,
pp. 429-53.

Further reading
Ma, J., Yao, X. and Xi, Y. (2009), “How do interorganizational and interpersonal networks affect a
firm’s strategic adaptive capability in a transition economy?”, Journal of Business
Research, Vol. 62 No. 11, pp. 1087-95.

About the authors

Dr Day-Yang Liu is a Professor of Graduate Institute of Finance, National Taiwan University of
Science and Technology.
Shou-Wei Chen is a PhD Candidate of the Department of Business Administration, National
Taiwan University of Science and Technology. He is also an instructor of Department of
Information Management, Technology and Science Institute of Northern Taiwan. Shou-Wei
Chen is the corresponding author and can be contacted at: D9308301@mail.ntust.edu.tw
Tzu-Chuan Chou is an Associate Professor in the Department of Information Management,
National Taiwan University of Science and Technology. Dr Chou’s current research focuses on
the IT/IS outsourcing, IT management, knowledge management and E-government.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints