Profiting from Business Model Innovation: Evidence from Pay-as-You-Drive Auto Insurance

Posted: 6 May 2012 Last revised: 11 Sep 2013

See all articles by Panos Desyllas

Panos Desyllas

University of Bath School of Management

Mari Sako

University of Oxford - Said Business School

Date Written: January 1, 2011

Abstract

The emergent business model literature, revolving mainly around the mechanisms through which new business models create and deliver value, has left the value capture challenge under-explored. This paper examines how an incumbent firm profits from business model innovation through the study of Pay-As-You-Drive auto-insurance. Although business models do not warrant formal intellectual property (IP) protection, their constituent components (e.g. business methods and brands) often do. Drawing on the profiting-from-innovation framework, we find that formal and strategic IP protection methods play complementary roles. Initially, formal IP rights are used primarily as a defensive strategy, as vehicles for packaging and trading know-how, and most importantly as a means of “buying time” to build specialised complementary assets. Long-term competitiveness, however, depends on whether the innovator builds a strong position in specialised complementary assets and is capable of reconfiguring them over time in line with changes in the market environment. Thus, we explicate the complex mechanism and dynamic capability for capturing value from business model innovation.

Keywords: Business model innovation, Intellectual property, Pay-As-You-Drive insurance

Suggested Citation

Desyllas, Panos and Sako, Mari, Profiting from Business Model Innovation: Evidence from Pay-as-You-Drive Auto Insurance (January 1, 2011). Research Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2050887

Panos Desyllas (Contact Author)

University of Bath School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

HOME PAGE: http://www.desyllas.org

Mari Sako

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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