The Influences of Technological Capability and Market Orientation Toward Business Model Innovations of Digital Startups

Abstract

Previous studies have addressed the importance of business model innovation (BMI) for established firms. However, there are limited studies on BMI in digital startups. Due to their characteristics, established firms differ from startups; thus, the findings of the previous studies cannot be applied straightforwardly to such startups. Because each startup experiences different types of BMI, they presumably possess varying types of technological capability and adopt market orientation differently. The links among technological capability, market orientation, and BMI, nevertheless, are not clearly articulated in the literature. Therefore, it is necessary to conduct further investigations. Using four Indonesia’s digital startups as cases, two research questions are posed: (1) What kinds of technological capability and market orientation are needed for digital startups to conduct their BMI? (2) How can a set of technological capability and market orientation lead to different BMIs experimented by digital startups? The findings reveal that a certain type of BMI demanded startups possess a certain type of technological capability and adopt a peculiar type of market orientation. These refer to ecosystem- and specialisation-focused technological capability, and market orientation toward specialisation and ecosystem. Based on these findings, practical implications are presented at the end of this paper.

What companies can learn from unicorn startups to overcome the COVID-19 crisis

“…This shows that BMI applies to startups and established companies, and highlights the difference between the design of a business model (Sushandoyo et al , 2020) and its fast reconfiguration, recombination (Priyono et al , 2020) or a new configuration (Nunes & Russo, 2019), to overcome the crisis by choosing less uncertain and costly measures (Massa & Tucci, 2014; Amit & Zott, 2015). Therefore, unicorns indicate how adaptable they are to the current scenario, showing competencies for quickly reconfiguring their business model, skills to attract investments and adopt incremental innovations, combining innovations in various dimensions that represent the BMI (Nunes & Russo, 2019).…”

“…BMI in digital startups is a gap in the literature. It is an important step for digital startups to survive in the initial stage of their journey (Sushandoyo et al , 2020), but should not be restricted to that phase. It is continuously necessary, especially for adopting innovative strategies or redefining the strategy to withstand crises, by seeking economic results different from those already used.…”

“…Regarding business model innovation (BMI) in digital startups, essentially in established startups (Sushandoyo, Kencanasari, & Prasetio, 2020), innovation through reconfiguration is a little discussed topic and a developing field (Massa & Tucci, 2014; Amit & Zott, 2015; García-Gutiérrez & Martínez-Borreguero, 2016; Wirtz, Pistoia, Ullrich, & Göttel, 2016). Nunes and Russo (2019) highlight the shortage of studies on BMI in the international context, and mention the absence of research involving Brazilian companies.…”