Impact of business model innovations on SME’s innovativeness and performance

Abstract

Purpose Business model innovations (BMIs), their drivers and outcomes are attracting increasing attention in academic literature. However, previous studies have mainly focused on large companies, while knowledge of BMI in small-to-medium-sized enterprises (SMEs) is limited. Therefore, the purpose of this paper is to add new insights into how related BMI drivers, practices and outcomes are in relation to SMEs. Design/methodology/approach An extensive review of the existing literature was performed. Consequently, the relationships between BMI drivers, BMI practices and outcomes of BMI were developed as a conceptual framework. An empirical study was carried out. A structural equation modeling (SEM) procedure was used to empirically test the model using a quantitative data set of Lithuanian SMEs (n=73). Findings The study provides insights into the relations between BMI drivers, BMI practices and outcomes of BMI in SMEs. The findings of SEM, four drivers (innovation activities, strategic orientation, market and technology turbulence, respectively) are indicated to contribute to BMI of SMEs. In addition, the results proved that the implementation of BMI practices leads to strategic and architectural changes in firms and has a positive impact on SMEs performance and innovativeness. Research limitations/implications Empirical research is focused on a limited number of internal and external BMI drivers, which have an influence on BMI in SMEs from one geographical region. Consequently, there are many external and internal BMI drivers which also may have an influence on BMI in SMEs, such as industry life cycle, organizational inertia and leadership. Meanwhile, SMEs possess multiple characteristics, i.e. a phase of maturity, gender of CEO, firm size and industry; therefore, the aforesaid aspects are considered to be significant limitations. In addition, the importance of SMEs characteristics as mediators for the effects on a firm’s performance and innovativeness should be considered in future research avenues. Practical implications Findings of this research can be used by SME managers to better understand how firms might actively engage in BMI practices, what drivers lead to BMI and, in turn, affect their firm’s performance and innovativeness. SME managers should be encouraged to pay attention to strategic and architectural changes of BM that can contribute to enterprise performance and innovativeness. Originality/value This paper adds to the stream of BMI research by empirically exploring drivers and outcomes of BMI in SMEs. In addition, this paper fulfills research gaps proposed by Bouwman et al. (2018), Foss and Saebi (2017), Heikkilä, Bouwman and Heikkilä (2018) and Lambert and Davidson (2013), and enhances the current overall understanding of BMIs.

Innovation and small and medium enterprises’ performance in Cameroon

“…SEM are multivariate models used to model causal structures in data. For example, they have been used by (Gatautis et al , 2019; Wang, 2019) to analyse the effect of innovation on firm performance. The interest of SEM lies essentially in its ability to simultaneously test the existence of causal relationships between several variables, including moderators and mediators while incorporating measurement errors (Bagozzi, 1980).…”

Analysis of Innovation Activities of Slovak Small and Medium-Sized Family Businesses

“…The results showed that business strategies focused on the internal environment, which the company can directly control, increase confidence in planning future innovations. An important part of the innovation activities of small and medium-sized enterprises is the implementation of business model innovation practices, which has a positive impact on necessary strategic and architectural changes in the business model, which will positively affect company's innovation and overall performance (Gatautis et al 2019). The innovation potential and competitiveness of small and medium-sized enterprises increases with the increasing level of the controlling management of the company, especially with a focus on the future results of the company (Pisar and Bilkova 2019).…”

Gender and firm innovation - A systematic literature review and future research agenda

“…However, on reading the full text, we concluded that they did not address firm innovation or gender adequately to justify inclusion. For example, Gatautis et al (2019) present an interesting study on how business model innovation influences the innovativeness of an SME. They mention gender as one of the properties of an SME in the abstract.…”