The innovative use of digital technology has long been a key survival and success factor for companies. With the spread of computers from the 1980s onwards and later the internet, digital technologies became increasingly important for competitiveness in the market, but were also accompanied by continuous internal changes. For some years now, it has been stated that organizations must undergo a comprehensive digital transformation in view of the ever faster developments in the field of digital technologies. Such a digital transformation goes beyond the previous challenges associated with the implementation of digital technologies. Previous digital innovations were primarily aimed at optimizing and increasing the efficiency of processes within the company. Internal processes were to be made more efficient, effective, faster and easier through the use of digital technologies. Although this has changed organizational, management, communication and working methods within the company, the core of the company has remained largely unchanged. However, the innovative use of digital technologies not only changes processes within a company, but also enables completely new digital business models – and thus ultimately changes the company itself. As a result, digital product innovations are increasingly taking center stage. Business processes should not only be improved by digital technologies. In fact, new digital technologies such as big data analytics, artificial intelligence and the Internet of Things are opening up completely new opportunities for companies in terms of products, services and business models.
However, in order to enable such digital innovations, companies are confronted with far-reaching and comprehensive organizational change, which also includes fundamental changes at a structural and cultural level as well as in the area of leadership and skills [7], [12]. These changes therefore affect the core of a company, shaking its foundations to a certain extent and fundamentally questioning the company’s previous self-image. Digital transformation becomes a question of organizational identity in the true sense of the word. It inevitably raises the question: Who are we as an organization and who do we want to be in the future? [4].
Organizational identity [1] – the response of organizational members to the question “Who are we as an organization?” – also forms an important frame of reference and orientation within the company [8]. It embodies what makes the organization unique for its members, what unites it and distinguishes it from others. A shared organizational identity is a kind of signpost or compass within the company that indicates which actions are appropriate or inappropriate or desirable or undesirable in the interests of the organization. The organizational identity thus defines the framework for action and enables collective action in the interests of the organization. It also forms the basis for a sense of belonging and is closely linked to the identification and motivation of organizational members with their company.
If digital transformation brings with it comprehensive and far-reaching changes to the company’s processes and business models, then these change processes also directly affect the organizational identity. The literature therefore discusses whether the emergence of a new organizational identity is not even a defining characteristic of digital transformation, i.e. whether a “real” digital transformation only exists when the identity of a company has also changed [13]. Our current research project shows that a digital transformation does not necessarily entail the emergence of a new identity, but that it can challenge and change it and that not only the digital transformation has an influence on the organizational identity, but also vice versa. There is therefore a reciprocal relationship [4].
This can be further differentiated in detail. On the one hand, the established organizational identity forms the starting and enabling condition for digital innovations within the company. It forms the background against which digital technologies and the associated potential are perceived and evaluated, marks the limits of what is conceivable and sets the course for such internal organizational change processes. In this way, organizational identity can enable and promote digital transformation processes in the first place, but ultimately also inhibit or prevent them. Organizational identity is a mediator and enabler for the digital transformation of an organization. On the other hand, digital transformation acts as a disruptor for the established corporate identity: It shakes up the established self-image and calls into question the previous organizational identity. As a result, the digital transformation leads to (re)negotiation processes about the (future) identity. What these negotiation processes look like depends both on the extent of the changes associated with the digital transformation in the company and on how these changes are actually implemented [4]. A digital transformation can certainly lead to constructive and invigorating discourses and to an adaptation or expansion of the previous organizational identity, but it can also lead to a problematic “identity crisis” (for the company and its members), which is accompanied by great uncertainty and disorientation. Figure 1 provides an overview of these observations.

Source: Angela Graf
For a successful digital transformation, it is therefore important to know the established organizational identity and to consciously and carefully shape the digital transformation processes as well as the (re-)negotiation processes around the future corporate identity in the course of these transformation processes in order to avoid resistance and to preserve the sense of belonging and carry it into the future.
Comparability with analogue phenomena
Digital transformation is a specific form of organizational change induced by digital technologies that is accompanied by far-reaching and comprehensive changes at different levels of the company. These changes affect not only technical but also social aspects and ultimately lead to the questioning and (re)negotiation of organizational identity.
Other organizational transformation processes can also be accompanied by far-reaching changes at different levels of the company and thus call the organizational identity into question. Different forms of organizational change can be roughly differentiated according to the direction from which the changes are initiated. Endogenous, company-induced transformation processes include, for example, company mergers or takeovers, rebranding processes or other forms of restructuring. Changes in the organization’s environment, such as pandemics, wars or demands for environmental sustainability, can also trigger organizational change. Depending on the extent to which the core of the company is affected by these changes, such transformation processes can also lead to a questioning of identity or even to an identity crisis. In the literature, this is referred to as an identity threat, which forces the members of the organization to actively deal with the collective identity of their organization [10], [2], [9].
Compared to these (sometimes far-reaching) organizational changes, two special features can be identified for the digital transformation.
On the one hand, there is still a controversial debate as to whether the digital transformation of companies is ever complete or whether it is a permanent transformation due to ongoing technological developments. Do companies need to continuously transform themselves in order to react appropriately to the ever-changing digital technologies and be able to use them to their advantage? Such a permanent digital transformation would not only be associated with great effort and costs for companies, it would also inhibit the possibility of efficiency developments and shake the stability of the company as a whole. Or can a company succeed in transforming its structures, processes and skills in such a way that it is able to take advantage of future technological developments and new digital technologies and turn them into digital innovations and business models? At this point, the question of what such a digitally transformed company would look like and what would characterize it must remain open.
Secondly, but closely related to this, the development of digital technologies is characterized by high speed and increased changeability. Unlike the other forms of organizational change mentioned above, the digital transformation of a company is more of a moving target, a transformation process that is characterized in particular by its sequential, iterative and non-linear development [11]. It is more of a digital journey in which the destination is not clearly defined from the outset. (Unforeseen) challenges in the implementation of digital technologies or the emergence of new technologies (such as the recent ChatGPT) cause the company to constantly realign and adapt. In addition, digital transformation is often driven by ‘bottom-up’ initiatives, meaning that conscious digital transformation strategies developed by management are not only provisional and vague, but also only account for a fraction of the transformation processes that actually take place [5].
Social relevance
The question of how companies renegotiate and redefine their identity in the digital age has far-reaching social implications.
The innovative use of digital technologies is increasingly becoming a key success and survival factor for companies in the digital age. A digital transformation means profound and far-reaching changes and ultimately has the potential to change the company at its core. The process of (re)negotiating organizational identity in the course of digital transformation is of an essential and normative nature. Whether a media company continues to see itself as a company with a focus on content creation (journalistic self-image) in the course of digital transformation, for example, or shifts its organizational self-image in the direction of a tech company and thus focuses on the provision and orchestration of technical solutions, has an impact on all areas of the company [5].
Digital transformation therefore presents companies with a particular challenge – they have to reinvent themselves and take care not to lose themselves in the process. An identity crisis in the course of a transformation can therefore threaten the very existence of a company if it fails to take its employees along on this digital journey – uncertainty, resistance, loss of motivation and thus performance can be the result or lead to the failure of the digital transformation as such. The digital transformation therefore not only influences internal company structures and forms of behavior, but ultimately also regional economic structures and social prosperity.
Companies are not only economic players, but also have a significant impact on our lives as employers, drivers of innovation and social stakeholders. In this respect, the organizational search for identity in the course of a digital transformation affects not only the organization as a whole, but also the individual members of the organization. Work organizations form a central point of reference in our lives and identification with the company is often an important part of our personal identity. The far-reaching organizational changes, shifts in the status structure of companies, new competence requirements in the workplace and the questioning of organizational identity can therefore ultimately also lead to personal identity crises.
Ultimately, the digital transformation of companies can be seen as a kind of magnifying glass for digital transformation processes at a societal level. Digital innovations from companies in the form of new business models and new products influence our behavior and our needs as consumers and ultimately change our everyday world – the way we live, communicate and work together. They therefore have the potential to transform society as a whole just as fundamentally as they do at the organizational level. The question could therefore be raised as to what impact such a digital transformation has on the identity of individuals, groups or even entire societies.
Sources
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