Business model innovation and decision making: uncovering mechanisms for coping with uncertainty

Abstract

As a research subject, business model innovation spans the strategy, innovation, and entrepreneurship fields. Yet, despite the importance of the concept, prior work has paid little attention to how decision-makers cope with uncertainty and gain understanding about interdependencies in new business model configurations. To address this gap, we combine top-down theorising and evidence-based exploration and seek to unpack some of the coping mechanisms that operate in the evolutionary view of business model innovation. Using in-depth interviewing to collect data, our study reveals five strategies -customer centricity, value co-creation, capability evolution, ecosystem growth, and adaptive pricing -that decision-makers apply to cope with uncertainty in business model innovation. We find that coping mechanisms support decision making during the development of new business models. Furthermore, we find that the five coping strategies delineate decision making for value proposition, value creation, and value capture configurations in more detail than existing literature has described. Our findings have important implications for decision making in business model innovation.

Does model consistency in business model innovation matter? A contingency‐based approach

“…Our selection of BM elements is analogous to the conceptualization by Spieth and Schneider (2016), which has been empirically derived in multiple workshops with managers, practitioners, and innovation experts using an inductive approach. Recent research has also shown that the understanding of business models converges to these components (Saebi, Lien, & Foss, 2017;Schneckenberg, Velamuri, Comberg, & Spieth, 2017). Consequently, our definition can build on both theoretical and practical foundations.…”

“…It extends the activity-based concept with regard to the revenue model and effectively balances value proposition and value delivery, which fits our intent to capture BM consistency in a well-adjusted and comprehensive manner. Recent research has also shown that the understanding of business models converges to these components (Saebi, Lien, & Foss, 2017;Schneckenberg, Velamuri, Comberg, & Spieth, 2017). Our selection of BM elements is analogous to the conceptualization by Spieth and Schneider (2016), which has been empirically derived in multiple workshops with managers, practitioners, and innovation experts using an inductive approach.…”

“…Reinforcement effects as they are shown by interactions of BM elements reflected in management choices are seen as crucial for building competitive advantage (Casadesus-Masanell & Ricart, 2010. When deciding on new business models during BMI, managers apply different strategies to build consistent designs (Schneckenberg et al, 2017). Recent research has underlined the equifinality approach and that consistent BMs can lead to higher performance (Kulins, Leonardy, & Weber, 2016).…”

“…Research in recent years has underlined the increasing role of the customer for the market and a shift to value co-creation processes with strong individualization (Prahalad & Ramaswamy, 2004). Value co-creation with customers is also a known strategy for handling uncertainty in BMI (Schneckenberg et al, 2017). The categories consequently reflect the alignment of other BM elements to the customer benefits intended.…”

“…BMI. When deciding on new business models during BMI, managers apply different strategies to build consistent designs(Schneckenberg et al, 2017). When deciding on new business models during BMI, managers apply different strategies to build consistent designs(Schneckenberg et al, 2017).…”