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  • Business Model Innovation - Drivers and Outcomes

    A thesis proposal

    THI PHUONG VAN

    Supervisors: Christina Öberg, Johan Kask, Nina Hasche and Per Carlborg

    OCTOBER 31, 2019 ÖREBRO UNIVERSITY

    School of Business Business Administration Department

    701 82 Örebro

  • 1

    Table of Contents 1. Introduction ....................................................................................................................... 2

    Research purpose and questions ......................................................................................................... 4 The expected contribution .................................................................................................................. 4

    2. Theoretical Background .................................................................................................... 6 2.1 Business model ............................................................................................................................. 6 2.2 Business model innovation ........................................................................................................... 8

    2.2.1 BMI conceptualization .......................................................................................................................... 8 2.2.2 The importance of BMI ...................................................................................................................... 10

    2.3 Business model innovation and firm performance ..................................................................... 11 2.4 AI & Machine learning - a new technique in digital revolution ................................................ 13

    3. Methodology .................................................................................................................... 14 3.1 Research context ......................................................................................................................... 14 3.2 Research method ........................................................................................................................ 14

    4. Working papers ................................................................................................................ 16 Paper 1: Business Model Innovation: A Systematic Literature Review and Guide for Future Research ........................................................................................................................................... 16 Paper 2: Business Models, Ecosystem and Adaptive Fit: The Case of Electric Utilities ................. 16 Paper 3: BMI and firm performance in electric utilities: a new scale of measurement ................... 17 Paper 4: Leveraging AI/Machine Learning techniques to predict changes in environment to navigate directions of Business Model Innovation .......................................................................... 17

    5. Working plan ................................................................................................................... 18 References ............................................................................................................................... 19

  • 2

    1. Introduction The term “business model innovation” (BMI) has attracted considerable attention in both

    practice and recent academic as a new growing subfield of the business model. BMI is defined

    as "the action of modifying the firm’s existing activity system and renewing its core business

    logic, to enact and exploit opportunities" (Cucculelli and Bettinelli, 2015, p.329). While

    business models are typically concerned with firm-level value creation and capture, business

    model innovation raises the additional complex and challenging questions about the novelty in

    customer value proposition as well as the reconfiguration of firm’s logic and structure (Spieth

    et al., 2014). Since business model has been recognised widely as a powerful and essential tool

    to appropriate value from technological innovation, now it is potentially the object of

    innovation themselves to allow firms getting significant advantages in the market competition

    (Chesbrough, 2010, Demil and Lecocq, 2010). Netflix is a well-known example of a company

    adapt continuously business model innovation (Mudaly, 2017). Moving from convenient

    DVD-hiring company to on-demand streaming service and recently original television show

    content provider, Netflix shows the flexibility in their business model resulting in financial

    success and huge competitive advantages compared to their competitors such as Blockbuster

    and Amazon.

    Business model innovation research has experienced continuous development. The early

    publications on BMI mostly are conceptual or case-based studies that focus on the definition,

    the difference or relation between BMI and similar concepts and the process of BMI ((Johnson

    et al., 2008, Chesbrough, 2007, Teece, 2010, Sosna et al., 2010)). Following research on BMI

    highlights the importance of causal analysis of antecedences and effects of BMI ((Guo et al.,

    2016, Visnjic et al., 2016, Bouncken and Fredrich, 2016, Kim and Min, 2015)) as well as

    focuses on sustainable BMI that help firms to achieve their sustainability ambitions such that

    to create an innovative way of delivering value while still having positive impacts and reducing

    negative impacts for the society and the environment (Bocken et al., 2019, Frishammar and

    Parida, 2019, Geissdoerfer et al., 2018).

    Despite a large number of emerging research on BMI, it is still young, abstruse and

    incomprehensible (Bocken et al., 2014, Bashir and Verma, 2016, DaSilva and Trkman, 2014).

    BMI lacks theoretical and empirical underpinning, leaving us fundamental unanswered

    questions about antecedent conditions and outcomes of BMI which are non-trivial, complex

    and have not been well-understood by the literature (Zott and Amit, 2007, Foss and Saebi,

    2017, George and Bock, 2011).

  • 3

    There have been researches focusing on the identification and validation of BMI drivers, with

    a particular interest in technology innovation (Björkdahl, 2009, Gambardella and McGahan,

    2010, Shomali and Pinkse, 2016, Teece, 2018, Wu et al., 2010), sustainability (Yip and

    Bocken, 2018, Yang et al., 2017, Ciulli and Kolk, 2019), external stakeholders (Miller et al.,

    2014), competitive environment (Saebi et al., 2017) or internationalization (Teece, 2018).

    Although these studies have enriched the discipline's knowledge of BMI, this line of research

    is still at an infant stage, and such work is usually post-analysing and inductive for a particular

    case study rather than predictive and theoretically general (Foss and Saebi 2017).

    The outcomes of BMI are investigated in previous studies that primarily focus on firm

    performance (Giesen et al., 2007b, Huang et al., 2013, Kim and Min, 2015, Visnjic et al., 2016,

    Bouncken and Fredrich, 2016), value creation (Sorescu et al., 2011), firm sustainability

    (Pedersen et al., 2018) and firm survival (Velu, 2015). Due to the high availability of public

    economic and financial data of firms, firm performance, especially financial performance

    (Giesen et al., 2007b, Huang et al., 2013, Kim and Min, 2015, Visnjic et al., 2016) has been

    prioritized as the primary business model innovation outcomes to measure. Even so, there are

    still limited well-defined study on the relationship between BMI and firm performance (Spieth

    et al., 2014, Schneider and Spieth, 2013, Foss and Saebi, 2017) due to the high complexity in

    measuring BMI and different dimensions of performance during BMI process (Foss and Saebi,

    2017). Furthermore, most recent studies have focused on BMI and its effect on firm

    performance in the manufacturing sector because of the ease of database access. This suggests

    further researches to develop a comprehensively validated measurement scale in BMI to

    understand the link between BMI and firm performance in various industry sectors.

    To systematically address the complex questions about BMI’s drivers and outcomes, or in other

    words, to understand comprehensively why and when a business model needs to innovate,

    greater attention must be paid to the embedded environment within which the BM is enacted

    as a business model in different environments may give completely different outcomes (Zott

    and Amit, 2007, Giesen et al., 2007a). The success or failure of a business model must be

    related to how well it fits in, adapt and contributes to the environment, even more important

    when the environment is disruptive and about to undergo change. An existing well-established

    business model running smoothly in an environment may become unfit with the new one.

    Therefore, by early anticipating potential changes in the environment where BM operates,

    firms could potentially identify when and how to innovate their BM to adapt and position it

    better with the new environment.

  • 4

    Research purpose and questions The overarching aim of the thesis is to advance the conceptualisation and theory of BMI by

    investigating and analysing its main drivers and outcomes as well as to propose and develop a

    measurement scale for