Business model diversification and firm performance: A demand‐side perspective

Abstract

Research summary: This study explores the relationship between business model diversification (BMD) and firm performance from a demand-side perspective. We focus on the addition of a business model with a high degree of demand complementarity, which we refer to as demand-related argue and show that demand-related BMD increases firm performance and is more profitable than demand-unrelated BMD. We also explore external market conditions under which demand-related BMD should lead to greater performance improvements. Our results reveal that demand-related BMD is more profitable in markets with higher demand heterogeneity-as fostered by increases in consumer incomes-and increased technology availability that enables consumers to act on their heterogenous preferences. K E Y W O R D S business model, demand-side perspective, diversification, firm performance, retail sector

Thriving in the New Normal: The HR Microfoundations of Capabilities for Business Model Innovation. An Integrated Literature Review

“…This can be attributed to major and unpredictable changes (Voelpel et al, 2004) synonymous with the New Normal environment of the past decade or so (El-Erian, 2010;Etzioni, 2015), which is characterised by radical, nonergodic erratic change with steep and difficult-to-predict inflection points (Verbeke, 2018). For instance, the increasing success of firms seeking growth by operating globally across sectors and markets (Ahlstrom, 2010;Van Reenen, 2018) corresponds with the rise of BMIs that allow firms to be more sophisticated in the way they address the 'compete vs collaborate' conundrum and other innovation puzzles (Christensen et al, 2016;Sohl et al, 2020;Velu, 2016). Similarly, the fall in poverty in many parts of the world in recent years (Pinkovskiy and Sala-i-Martin, 2014;Si et al, 2020) corresponds to the rise of locally based, innovative business models such as Grameen Bank's microfinancing and other initiatives encouraging new ventures and freer markets (McCloskey, 2016(McCloskey, , 2019Yunus et al, 2010).…”

“…While these perspectives are important, they provide a limited understanding of the topic of business model innovation (BMI). Much of the cognition and learning research tends to be centred on individuals, and at the early phases of BMI, while agility and organisational ambidexterity focus more on managing two business models at the same time, leaving major gaps in understanding the approaches to BMI (DaSilva and Trkman, ; Sohl et al, ). More specifically, the micro level that contributes to effective BMI is still less understood, particularly from a human resources (HR) and microfoundations perspective, which is paramount, given this perspective’s importance to the formulation, implementation, and trial‐and‐error correction required for successful innovation in business models (Teece, ).…”

Not All Wine Businesses Are the Same: Examining the Impact of Winery Business Model Extensions on the Size of Its Core Business

“…This research deals with BM and takes a resource-based approach because it is more suitable for agri-food SMEs, as they rely on finite and scarce resources, knowledge, and relations, all identified to be major elements of a resource-based theory by Acedo et al [79]. It does not deal with BM diversification, as this approach tends to be more suitable in the publicly traded companies with abundance of capital and human resources, operating globally [80][81][82]. These conditions do not apply to the German SME wineries, therefore deeming a resource-based approach more suitable.…”

Evaluation of Synergies in the Context of European Multi-Business Utilities

“…4 Whereas RWE Innogy's headquarters were located in Germany, the subsidiary was responsible for RWE's global renewables business. 5 RWE Supply & Trading's headquarters are located in Germany, but the subsidiary is responsible for RWE's global trading activities.…”

“…The increase in imitation barriers due to the effects of between-complexity is here discovered to be one of the explanations for the recent findings of high performance in multi-BM organizations. Sohl, Vroom and McCann [5] extended the existing research on the relationship between BM diversification and firm performance. They reveal that demand-related BM diversification showed a positive impact on profitability, especially when there is a strong demand heterogeneity.…”