Firms are constantly adapting to changing environments, with technological advances posing significant challenges for established firms and their innovation management. One example of high empirical relevance is the digitalization transforming existing physical products into digital service systems. These adaptations affect different firm characteristics, among others, a firm’s organizational identity. Originally, distinct and unique organizational identity attributes are considered as enduring, but recent research indicates that dynamic identity attributes enable organizations to strategically adapt their identity to changing environments. However, despite the tremendous importance of integrating organizational identity research into strategic adaptation literature, researchers rarely consider the interplay between strategic adaptation and changes in organizational identity. To unravel this complex relationship, this study examines how adaptation of firms’ innovation portfolio in terms of patent data interrelates with strategic adaptation of their organizational identity communicated in shareholder letters. Therefore, this study exemplarily analyzes incumbent firms of the agricultural machinery industry, which are increasingly integrating digital technologies to enable digital service offerings beyond their traditional positioning as heavy machinery supplier. To operationalize the construction of organizational identity in the era of digitalization, this study uses computer-aided text analysis of shareholder letters of the worlds’ top five agricultural machinery firms. By integrating this operationalization along with patent indicators in regression analysis and Granger causality tests, this study suggests a cyclical process of aligning firms’ organizational identity and innovation strategy, and thus, contributes to the intersection of innovation management and organization science research.
