Innovation and Business Models

Abstract

Starting from the mid-1990s, business models have received increased attention from both academics and practitioners. At a general level, a business model refers to the core logic that a firm or other type of organization employs to achieve its goals. Thus, in general terms, the business model construct attempts to capture the way organizations “do business” or operate to create, deliver, and capture value. Business model innovation (BMI) constitutes a unique dimension of innovation, different from and complementary to other dimensions of innovation, such as product/service, process, or organizational innovation. This distinction is important in that different dimensions of innovation have different antecedents, different processes, and, eventually, different outcomes. Business models have been the subject of extensive research, giving birth to several lines of inquiry. Among them, one line focuses on business models in relation to innovation. This is a vast, somewhat fragmented, and evolving line of inquiry. Despite this limitation, it is possible to recognize that, at the core, business models are relevant to innovation in at least two main ways. First, business models can act as vehicles for the diffusion of innovation by bridging inventions, innovative technologies, and ideas to (often distant) markets and application domains. Therefore, business models speak to the phenomenon of technology transfer from the point of view of academic entrepreneurship and of corporate innovation. Thus, an important role of the business model in relation to innovation is to support the diffusion and adoption of new technologies and scientific discoveries by bridging them with the realization of economic output in markets. This is a considerable endeavor that relies on a complex process entailing the search for, and recombination of, complementary knowledge and capabilities. Second, business models are a subject of innovation that can become a source of innovation in and of themselves. For example, offerings that reinvent value to the customer—as opposed to offerings that incrementally add value to existing offerings—often involve designing novel business models. Relatedly, BMI refers to both a process (i.e., the dynamics involved in innovating business models) as well as the output of that process. In relation to BMI as a process, the literature has suggested distinguishing between business model reconfiguration (BMR; i.e., the reconfiguration of an existing business model), and business model design (BMD; i.e., the design of a new business model from scratch). This distinction allows us to identify three possible instances, namely general BMR in incumbent firms, BMD in incumbent firms, and BMD in newly formed organizations and startups. These are arguably different phenomena involving different processes as well as different moderators. BMR could be understood as an evolutionary process occurring because of changes in activities and adjustments within an existing configuration. BMD involves facing considerable uncertainty, thus putting a premium on discovery-driven approaches that emphasize experimentation and learning and a considerable degree of knowledge search and recombination.

Theorizing business model innovation: an organizing framework of research dimensions and future perspectives

“…BMI does not meet the boundary condition criteria for a coherent theoretical concept in that extant literature does not unequivocally determine what is included and excluded in grasping this complex phenomenon (Sandberg and Alvesson, 2021). This conceptual ambiguity manifests in BMI and BM theory’s various overlaps and entanglements (Massa et al, 2017; Massa and Tucci, 2020). Consequently, BMI theory is unlikely to evolve into a unifying model that explains and establishes causalities for the various elements and mechanisms surfacing in its conceptual boundaries.…”

“…In the following, we identify and discuss salient commonalities and divergence in the concurrent theory on BMI. It has become evident that extant approaches to defining BMI disperse into various sublines of investigation and show no substantive level of convergence (Zott, et al, 2011;Foss and Saebi, 2017;Massa and Tucci, 2020). Furthermore, the boundary conditions between theory on BMI and BM are permeable regarding what elements and mechanisms are included and excluded in these two related literatures (Sandberg and Alvesson, 2021).…”

“…Simultaneously, the entanglement and influence of BM theory on the BMI concept surface interesting implications for further theory building (Massa et al, 2017; Massa and Tucci, 2020). We first look in depth at the resultant boundary‐spanning, multilevel, multidimensional, and temporal properties of BMI before discussing coherent framing choices for future research.…”

Managing business model innovation uncertainties in 5G technology: a future‐oriented sensemaking perspective

“…BM and BMI have become an important top management priority due to increasing environmental volatility and market dynamics; the rapid pace of technological development, as well as merging industry boundaries (Chesbrough, 2007). BMs exist mainly to deliver offerings designed to reinvent value for customers (Kapoor and Teece, 2021;Massa and Tucci, 2021).…”

Editorial: Perspectives on the value of Big Data sharing

“…This special section aims to provide an outlook on research on these issues, considering specifically the connection, on the one hand, between Big Data, public safety, security and quality of life and, on the other hand, the different paths of business model innovation (cf. Massa and Tucci, 2021) enabled by Big Data, such as social innovation (Misuraca et al , 2018) and crowd-driven innovation (Afuah and Tucci, 2012; Tucci et al , 2018).…”