ABSTRACT
Digital transformation is a critical challenge for commercial banks to achieve sustainable competitive advantages in the digital economy. However, conventional research focuses too much on constructing linear models to explain the non-linear relationships between and among the factors relevant to digital transformation. By adopting the configurational framework, we propose that the interactions between strategy and dynamic capabilities determine the paths of how digital transformation may succeed or fail. The fuzzy-set qualitative comparative analysis (fsQCA) of digital transformation practices by Chinese commercial banks shows that: (1) a single condition of strategic orientation or dynamic capabilities does not constitute the necessary condition for high digital transformation, yet market orientation plays a more general role in generating high digital transformation. (2) There are three configurational paths that can contribute to high digital transformation of commercial banks, such as sensing capability-driven paths dominated by strategic orientation, integrating capability-driven paths dominated by strategic orientation, and the market orientation-driven paths dominated by dynamic capabilities. (3) There are two configurational paths that lead to non-high digital transformation, which verifies the existence of the asymmetrical relationship compared to the configurational paths of high digital transformation;(4) In the pathways dominated by strategic orientation, there is a substitutive relationship between sensing capability and integrating capability. The findings make contributions to the literature on digital transformation and provide implications for the digital transformation of commercial banks.