Business model innovation in a knowledge revolution: An evolutionary theory perspective

Abstract

For knowledge‐intensive industries, a need remains to increase clarity on the dynamics through which business model innovation occurs. Progress has been limited owing to complexities in these industries and to the underlying ontology of the business model concept itself. Through a conceptual methodology, our findings expose impediments to current business model theory and propose economic evolutionary theory as a useful alternative lens through which to address these limitations. This research contributes to the literature by broadening the traditional scope of the economic evolutionary view as relevant for business model innovation research and by offering a corresponding framework for future research.

The EC‐LQO five‐factor framework: An alternative lens for business model innovation in highly knowledge‐intensive industries

“…Still missing from the literature is quantitative research in business model innovation dynamics as well as research that addresses the value‐creation stage (Denicolai et al, ). By empirically testing the evolutionary theory‐based EC‐LQO framework (Downs & Velamuri, ), we respond directly to each of these research gaps. We empirically test the key dynamics of external orientation, learning capabilities, and dynamics of leadership, as well as the important role of routines in supporting a learning culture.…”

“…With this external orientation, the firm is trying to maximize its opportunities with respect to Darwinian-type stochastic mutations and also actively drive Lamarckian-type directed mutations toward adaptations that confer competitive advantages (Downs & Velamuri, 2018). Although this perspective draws on a base of evolutionary theory, it complements a relational view of the firm, which posits that critical resources and value-creation activities span the boundaries of the firm and may be embedded in interfirm relationships (Dyer & Singh, 1998;George, Zahra, Wheatley, & Khan, 2001;Gulati, 1998;Koza & Lewin, 1998).…”

“…Still missing from the literature is quantitative research in business model innovation dynamics as well as research that addresses the value-creation stage (Denicolai et al, 2014). By empirically testing the evolutionary theory-based EC-LQO framework (Downs & Velamuri, 2018), we respond directly to each of these research gaps.…”

“…In this paper, we empirically test the hypothesis of Downs and Velamuri () that the opportunity for business model innovation in highly knowledge‐intensive industries lies in supply‐side knowledge mining and utilization capabilities. These capabilities are enabled by five factors— external orientation , cluster participation , learning capabilities , qualified business management team , and organizational controls —which they call the EC‐LQO framework.…”

“…Second, by empirically exploring the underlying dynamics within the business model concept, we illuminate opportunities for sustainable competitiveness within a particularly complex, highly knowledge-intensive environment. Lastly, as we build on prior work of Downs and Velamuri (2018) by empirically testing their evolutionary theory-based five-factor business model innovation framework, we add further credibility that the evolutionary theory of economic change is a useful theory on which to base business model innovation research.…”