Thriving in the New Normal: The HR Microfoundations of Capabilities for Business Model Innovation. An Integrated Literature Review

Abstract

Firms need to respond to the increasing competition and change of the current New Normal environment by being more innovative, and especially in developing new business models. This paper seeks to explore how microfoundations, particularly with respect to human resource management, play a key role in facilitating innovation in business models through the development of key needed capabilities. Four themes are identified with respect to business model innovation (BMI) in the New Normal: BMI as an enabler to create and operate across industries and product‐markets; BMI as a mechanism for firms to better navigate changing institutional landscapes; BMI as giving rise to business model portfolios; and concurrent and cumulative innovations that can lead to BMI. This paper also develops a conceptual framework that presents a synoptic view of the five essential capabilities for BMI, which include analogical reasoning, sensemaking, dynamic capabilities, organisational ambidexterity, and organisational learning. Finally, it is shown how the microfoundations of a bespoke, development‐oriented BMI HR architecture can support the advancement of these capabilities and thus contribute to the strategic HR literature.

Opening the Dynamic Capability Black Box: An Approach to Business Model Innovation Management in the Digital Era

“…Resources and capability building are the extent to which the company is capable of creating new resources and capabilities. In practice, this can be done by developing internally, creating new business functions, and training people [103] or externally by leveraging strategic partners [104]. It is a necessary dimension to scale a BM growth.…”

Digital transforming capability and performance: a microfoundational perspective

“…Although scholars have posited that there are capabilities that are valuable for firms in high-velocity environments (Peteraf et al, 2013), the organisational and individual aspects that lead to the creation of those capabilities, and the relationship with firms' performance, have not been explored and tested. The study of the microfoundations of capabilities, specifically the digital transforming capability, however, may enrich both the theoretical understanding and practical knowledge of how firms create sustainable advantage (Loon et al, 2020). In addition, the research design adopted in this 7 research, which is drawn from archival data, contributes to recent calls to broaden the toolkit used in dynamic capabilities research (Schilke et al, 2018).…”

Managing Technological, Sociopolitical, and Institutional Change in the New Normal

“…The concluding paper in the SI is also a qualitative review paper by Loon, Otaye-Ebede, and Stewart (2020). They sought to further explore the process of innovation, but in business models.…”

“…To do so, the authors conducted an integrated systematic literature review of the top peer‐reviewed journal articles that are generally regarded as validated knowledge (Pfeffer and Sutton, 2006; Podsakoff et al, 2005; Zoogah and Peng, 2019). Loon et al’s (2020) study built upon the work of Foss and Saebi (2017) by adopting their recommendation to explore the antecedents of BMI that can be internal (framed as microfoundations in this study) and external (e.g., BMI necessitated from the New Normal). The authors argued that HR architecture for BMI in the New Normal requires a unique combination of HR systems which then enables the development of capabilities for BMI.…”