Business Model Dynamics and Innovation: (Re)establishing the Missing Linkages

Abstract

Purpose – This paper aims to discuss the need to dynamize the existing conceptualization of business model, and proposes a new typology to distinguish different types of business model change.

Design/methodology/approach – The paper integrates basic insights of innovation, business process and routine research into the concept of business model. The main focus of the paper is on strategic and terminological issues.

Findings – The paper offers a new, process-based conceptualization of business model, which recognizes and integrates the role of individual agency. Based on this, it distinguishes and specifies four different types of business model change: business model creation, extension, revision, and termination. Each type of business model change is associated with specific challenges.

Practical implications – The proposed typology can serve as a basis for developing a management tool to evaluate the impact of specific changes to a firm's business model. Such a tool would be particularly useful in identifying path dependencies and resistance at the process level, and would therefore allow a firm's management to take focused action on this in advance.

Originality/value – The paper makes two main contributions: first, it offers a new, process-based conceptualization of business models; second, it is the first paper to establish a direct link between business model change and the degree of innovation (such as 'incremental' vs 'radical'), and which distinguishes and specifies different types of business model change.

Keywords: business model, business processes, change management, individual agency, innovation, strategic maneuvering