Phygital Capabilities: Microfoundations and Dynamic Interplay

The concept of “phygital” is increasingly spreading in the contemporary business landscape. As businesses embrace this hybrid of physical and digital realms, a critical inquiry emerges: what are the microfoundations of phygital capabilities? To answer this research question, our study adopts a case-study approach focusing on Webidoo Store, Europe’s first phygital, tech-experience store. By introducing a new conceptual framework for phygital capability development, our findings identify and explore the microfoundations that enable the development of a firm’s phygital sensing, seizing, and reconfiguring Dynamic Capabilities. In addition, the study extends prior literature showing that phygital capabilities are not isolated silos within an organization. Instead, they are interconnected and involve a continuous interplay, influencing each other. This research also has important implications for managers aiming to build and maintain a competitive advantage in today’s business scenarios where physical and virtual worlds are increasingly integrated.