Business model innovation and growth of manufacturing SMEs: a social exchange perspective

Abstract

PurposeThis study investigates business model innovation in small- and medium-sized manufacturing enterprises (SMEs) and its impact on firm growth.Design/methodology/approachThe study was based on analyzing data collected through a questionnaire survey. Structural equation modeling was applied to test the hypotheses.FindingsBusiness model innovation has a positive effect on SME growth in the manufacturing sectors. Moreover, growth is also achieved through the indirect effect of business model innovation on customer trust and commitment.Practical implicationsManagers will benefit from understanding how business model innovation can help their companies to overcome resource constraints and achieve sustained growth. When manufacturing SMEs engage in modular or structural changes to their business model, they may find it worthwhile to focus on maintaining a relationship of trust and commitment with their customers.Originality/valueThis study highlights business model innovation as a unique and important, yet underexplored, factor in manufacturing SME growth. The findings also untangle the complex processes of customer relationship management by which business model innovation improves manufacturing competitive advantage for SMEs.

Linking incremental and radical creativity to product and process innovation with organisational knowledge

“…The novel ideas only come out either for solving a problem or satisfying a need through humanity's history (Diamond, 1997). In today's competitive milieu, firms gain an advantage from their customers' involvement (Chen et al. , 2021) and employees' original ideas (Kuratko et al.…”

“…The novel ideas only come out either for solving a problem or satisfying a need through humanity's history (Diamond, 1997). In today's competitive milieu, firms gain an advantage from their customers' involvement (Chen et al, 2021) and employees' original ideas (Kuratko et al, 2017;Khessina et al, 2018) and value creation. Organisations engage with creativity when facing difficult situations (Aydin, 2013, p. 35).…”

Implementing strategic responses in the COVID-19 market crisis: a study of small and medium enterprises (SMEs) in India

“…Certainly, SMEs are overwhelmed by the magnitude of external and internal challenges with their limited resources. Pursuing opportunities, entrepreneurial SMEs design, develop and deploy strategic, tactical and operational responses in their respective business contexts (Chen et al , 2020). They experience a tremendous level of ambiguity (e.g.…”

Leveraging the value from digitalization: a business model exploration of new technology-based firms in vertical farming

“…Furthermore, digitalization of manufacturing operations can result in improved production flexibility, greater output capacity, improved product quality and reduced machine downtime (B€ uchi et al, 2020). In other words, digitalization is radically changing business models (Chen et al, 2020;Baden-Fuller and Haefliger, 2013;Rachinger et al, 2019;M€ uller, 2019;Chen et al, 2021;Bj€ orkdahl, 2020). However, for business model innovation to be successful, manufacturers must address the increasingly uncertain, complex and dynamic relationships between novel digital technologies and business model trade-offs related to their value chains (Baden-Fuller and Haefliger, 2013;Porter, 1985;Fjeldstad and Snow, 2018;Skinner, 1974;Ferdows and De Meyer, 1990).…”

“…To leverage the full potential of digitalization, manufacturers must therefore complement a focus on digital activities with their corresponding value drivers (Amit and Zott, 2001). This is essential for resolving the complex interdependencies between digitalization and the associated business model choices that lead to organizational success (Buer et al, 2021;Baden-Fuller and Haefliger, 2013;Rachinger et al, 2019;M€ uller, 2019;Chen et al, 2021).…”