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The datafication of digital reality and the diffusion of increasingly powerful AI systems have transformed the context within which diversification takes place, resulting in new realities for firms and necessitating new organizational capabilities. Building on their own field research and the existing literature on digitalization and diversification, the authors show how external technological and market changes influence the extent and type of diversification that firms can undertake. They argue that to succeed with digital diversification, new capabilities are needed and that these...

The datafication of digital reality and the diffusion of increasingly powerful AI systems have transformed the context within which diversification takes place, resulting in new realities for firms and necessitating new organizational capabilities. Building on their own field research and the existing literature on digitalization and diversification, the authors show how external technological and market changes influence the extent and type of diversification that firms can undertake. They argue that to succeed with digital diversification, new capabilities are needed and that these...