LAUSR

As industries increasingly integrate Digital Twins (DTs) into their operations and service offerings, it becomes crucial to understand the specific technological and organizational capabilities associated with DTs and their role in effective Digital Service Innovation (DSI). This paper aims to contribute to the literature on DSI-enabling factors by examining the role of DT capabilities in driving DSI within organizations, highlighting the areas of interconnection. This study adopts a multiple case study approach, examining two organizations with different engagements with DTs: a consultancy engineering firm offering DT solutions, and a technology company specializing in DT services for different sectors. These diverse perspectives aim to provide a comprehensive understanding of the role of DTs in DSI in different organizational contexts. The study identifies distinct capabilities needed to develop and exploit DTs, as well as new capabilities acquired by organizations through DTs deployment. It reveals that several technical and non-technical DT capabilities overlap with established DSI capabilities, illustrating a logical pathway from DT capabilities to DSI. These insights are synthesized into a theoretical framework which illustrates how DT capabilities support and enable DSI. This research delineates critical DT capabilities and highlights which of these contribute to the effective deployment of DSI. These findings provide actionable strategies for organizations aiming to develop and strengthen DT capabilities to maximize their potential impact on DSI. This paper expands beyond the prevalent technical and engineering emphasis in DT literature by adopting a holistic capabilities-based approach. It provides an in-depth examination of how DT capabilities can drive DSI, delivering valuable insights for both academia and industry practice.