Abstract:    Digital innovation, as a new innovation paradigm for manufacturing enterprise, its connotations and implementation processes are becoming a focus of research in academia and industry. Based on the literature on digital innovation, digital capabilities and the theory of strategy-capability matching, this paper studied the process mechanism of digital innovation and digital capability reconfiguration in manufacturing enterprises. Through a longitudinal case study of Gree Electric Appliances, the results of study are as follows: Firstly, the implementation process of digital innovation in manufacturing enterprises can be divided into three stages: digital process innovation, digital product innovation and digital service innovation. Digital innovation strategies can be guided by three types: efficiency-oriented, novelty-oriented and convergence-oriented. Secondly, the three digital capabilities of digital synergy, digital innovation diffusion and digital value-added play a leading role respectively. The ways of reconfiguring digital capabilities include evolutionary reconfiguration, substitution reconfiguration and co-creation reconfiguration. Thirdly, there are differences in the process mechanism of implementing digital innovation strategies to reconfigure digital capabilities at different stages of digital innovation. Specifically, in the stage of digital process innovation, efficiency-oriented digital innovation forms digital synergy capabilities through evolutionary reconfiguration. In the stage of digital product innovation, novelty-oriented digital innovation forms digital innovation diffusion capability through substitution reconfiguration. In the stage of digital service innovation, convergence-oriented digital innovation forms digital value-added capabilities through co-creation reconfiguration. This paper opened up the "black box" of the process for manufacturing enterprises to implement digital innovation strategies and reconfigure their digital capabilities, thus providing theoretical guidance and practical inspiration for manufacturing enterprises to carry out digital innovation activities.

Key words: digital innovation, digital capability, capability reconfiguration, strategy-capability matching perspective, process mechanism