How Business Models Evolve in Weak Institutional Environments: The Case of Jumia, the Amazon.Com of Africa

Abstract

We advance research on the antecedents of business model design by integrating institutional and imitation theories to explore how the business model of new ventures evolves in a weak institutional environment. Based on a case study of Jumia—an online retailing company in Africa established with the aim to emulate the success of Amazon.com—we propose a process model entitled “imitate-but-modify” that explains how business models evolve through four distinct phases (i.e., clarification, legitimacy, localization, and consolidation). In essence, this model explains how new ventures surrounded by considerable uncertainty deliberately seek to learn vicariously by imitating the business model template of successful firms. However, because of significant institutional voids, the ventures’ intentional imitation is progressively replaced by experiential learning that blends business model imitation with innovation.

Consolidating Unorganised Retail Businesses through Digital Platforms: Implications for Achieving the UN Sustainable Development Goals

“…Langley and Leyshon [5] highlight the role of innovative FinTech platforms and their unique ability to link together and consolidate multiple network effects, thereby building up an ecosystem of goods and services and closing off competitors. More recently, business model innovation has become a prevalent concept to capture new configurations of business model evolution enabled by technological progress, new customer preferences and deregulation [10,15]. Simultaneously, changes in the global economy owing to overall economic downturns, technological disruptions, climate change, resource scarcity [3] and the resultant sustainable development agenda has given rise to a stream of sustainable business model innovation literature.…”

“…More fundamentally, these URs operate in an environment characterised by chronic shortage of infrastructural resources, including a shortage of physical storage space, a sporadic supply of electricity and water, as well as a fragmented supply of raw materials, all of which result in significant diseconomies of scale. These shortages create financial and infrastructural barriers to the adoption of technology [8,10,40].…”

“…Barring Adhikary et al [6] and Kumar et al [7], research into the impact of technological adoption on URs is scant [44]. The academic literature [6,8,10,40] and consulting reports [45] reiterate the fact that the competitiveness and resilience of URs will be key to supporting dynamic, inclusive and sustainable forms of growth because of the significant economic and societal role they play in emerging markets. This inherent potential of the UR businesses therefore warrant further investigation and justify the key research questions of this study.…”

“…The UR retail context is particularly relevant to the emerging literature on sustainable base of pyramid business model innovation because large sections of the base of pyramid population (with daily earnings of USD 1.90-3.20) manage these businesses in emerging markets [9]. The majority of the existing research on sustainable business model innovation has studied business model design in relatively mature and stable institutional environments with sufficient infrastructure and access to resources [10]. In contrast, the literature on sustainable business model evolution at the base of pyramid, which is characterised by chronic resource and infrastructural constraints, has very few studies focusing on the economic [6,7] and social transformation [11] resulting from technological intervention.…”

Commercialization Inabilities of Rural Value Chain Activities in Emerging Markets: The Theory of Constraints Approach

“…To commercialize their activities, firms are required to create value for their target customers, deliver value and capture a sizable value from the activity (Sanchez & Ricart, 2010;Zott & Amit, 2014;Peprah et al, 2021) because customers tend to buy products that have [more] value (Osterwalder & Pigneur, 2010;Tutuba & Msamula, 2020). Similarly, the competitive performances of firms depending on their abilities to create additional value for consumers (Msamula et al, 2016).…”