Introduction For more than nearly four decades, the ques- tion whether or not technology is able to gene- rate new products is discussed. Fueled by digi- tization, highly digitized markets demand organizations to become more and more inno- vative. The commonly used digital infrastruc- ture is not enough to stay competitive since it can be swiftly copied or imitated. Organizations face up with these digitization challenges by developing and executing a digital business strategy (DBS) that merges business and infor- mation technology (IT) strategies into a single one (Bharadwaj et al., 2013). A DBS allows organizations to generate more business value from IT and thereby profit in highly competitive markets. In order to implement a DBS suc- cessfully within a company, a continuous and organization-wide culture towards innovative- ness needs to be established. Organizational innovativeness expresses the capability of an organization to generate new ideas from the interplay between technical and administrative innovations. As especially IT contributes to understand, synthesize, and apply technical knowledge for developing inno- vations, this research concentrates on the role of the CIO as agenda setter, influencer, and distributer of IT knowledge within organizations. Innovative organizations are characterized by leadership in particular balancing influences from “outside” with capabilities and knowledge from “inside” the organization to assess poten- tial innovation opportunities. Herein, the CIO’s role is mission-critical as he or she is in charge of turning IT capabilities into IT-enabled busi- ness innovation. This research aims at exploratively investiga- ting how different degrees of executed DBS lead to different organizational innovativeness outcomes. This will reveal first insights on organizational consequences of DBS. Further, we explain the role of the CIO in how the distri- bution of IT knowledge especially to the busi- ness side contributes to organizational innova- tiveness, which ultimately leads to organiza- tional performance. Leadership, Knowledge, and Innovation Leaders act as both (informational) sources of knowledge and (interpersonal) energizers for creating knowledge. Especially in knowledge- intensive industries, hierarchical exposed senior managers effectively lead in creating organizational knowledge by stimulating orga- nizational learning. For innovative organiza- tions, the leadership function has to provide broad guidelines to the organization, balanc- ing the knowledge transfer from “outside” to “inside” the organization and leaving enough room for the employees to act innovatively at the same time. In order to measure IT leader- ship by means of a state-of-the–art construct, we adapted items from a recent study revisit- ing managerial roles for IT leadership against the background of digitization (Wunderlich and Beck, 2017; Table 1). Especially in service and knowledge-intense industries, such as the financial industry, IT knowledge is a pivotal organizational resource and becomes increas- ingly evident for the business side due to forced business process digitization. Knowledge, IT, and innovativeness are closely intertwined: IT represents a crucial compo- nent for organizational knowledge storage and sharing, whereas knowledge plays a crucial part in innovation processes. Innovation re- quires to integrate heterogeneous knowledge resources from both external as well as inter- nal sources to generate creative ideas, tasks, or procedures. IT offers a basis to acquire, col- lect, and internalize data and information, thereby enhancing the analytical capability of an organization and contributing to build orga- nizational knowledge (Joshi et al., 2010). 06 efinancelab | quarterly 04 | 2018 Digitization Drives Knowledgeable Employees to Innovate DIGITIZATION CHALLENGES COMPANIES TO ACCELERATE THEIR INNOVATION CYCLES TO STAY COMPETITIVE. THIS RESEARCH INVESTIGATES HOW IT KNOWLEDGE ESTABLISHED ON DIFFERENT HIERARCHICAL LEVELS LEADS TO ORGANIZATIONAL INNOVATIVENESS. DIFFERENTIATING BETWEEN STRATEGICALLY MORE AND LESS DIGITIZED ORGANIZA- TIONS, THE RESULTS REVEAL: ORGANIZATIONAL INNOVATIVENESS IS SIGNIFICANTLY HIGHER INFLUENCED BY THE IT KNOWLEDGE OF BUSINESS EMPLOYEES IN ORGANIZA- TIONS GIVING THE DIGITAL BUSINESS STRATEGY HIGH IMPORTANCE, WHEREAS THE MANAGEMENT’S ROLE DECREASES. WE FURTHER DEDUCE THE CIO’S POSITIVE ROLE FOR IT-ENABLED BUSINESS INNOVATION IN KNOWLEDGE-INTENSIVE INDUSTRIES, SUCH AS THE FINANCIAL SERVICES SECTOR. Nico Wunderlich Roman Beck Research Report Table 1: CIO IT Leadership, 5-Item-Conceptualization (Wunderlich and Beck 2017) Providing new business-side employees with adequate training for the introduction to the IT-related job tasks at hand. Evaluating the quality of business-side employees’ IT performance. Gathering information about IT trends outside your organization. Allocating IT equipment or related materials. Learning about new ideas originating outside of your department.