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Legitimizing Digital Transformation: From System Integration to Platformization

Past studies have elucidated how incumbents struggle to adapt to their environments when experiencing technological shifts. Yet, less is known about incumbents' pro-active usage of emerging information technologies to offer discontinuous innovations themselves. Offering discontinuous innovations, which deviate from past strengths, raise questions of internal legitimacy, i.e. perceptions of appropriateness among members, especially when still profiting from the current business model. We conducted an ethnography in an IT company to explore how internal legitimacy emerges within an incumbent which embeds a new technology to shift its business model from being an individual-service to a platform-based provider. Our results suggest that organizational members only perceive the shift as legitimate, after positive cues from the external environment emerged, despite preceding managerial persuasion attempts. By depicting the emergence of a vicious and a virtuous circle in the course of members' legitimizing, we contribute to both, literatures on innovation management and platformization.