Case Study of Why

Business Model
Innovation Is the New
Competitive Advantage

SUBMITTED TO:
Mr. Alexander hernandez

Submitted by:
John matthew manalang
Summary of what is business mode
innovation

Research on business models has seen a huge surge over the last decade
predominantly withthe advent of Internet (Zott et al., 2011). A business model
typically explains how a firmcreates or generates value and how it captures some
of the value as profit known by researchersas value capture (Teece, 2010).
According to Casadesus-Masanell and Ricart (2010), businessmodel represents
the business logic of a firm or in Peter Drucker’s words “theory of thebusiness”
(Drucker, 1994). The various bundle of benefits which a company offers to
itscustomers is known as value creation and how a company monetizes this value
through itsrevenue model is known as value capture (Bowman and Ambrosini,
2000). Osterwalder andPignuer (2010) have also included the value dimension
and defined business model as arationale of how an organization creates,
delivers and captures value. Although there is nota universal definition of business
model, almost all of the researchers, scholars and peoplefrom industry
unanimously agree on the growing importance, applicability and relevance ofthe
concept of business model innovation (Amit and Zott, 2012; and Bashir et al.,
2016).Researchers, scholars and top executives unanimously approve that
business modelinnovation is altogether a new form of innovation which is distinct
from product or processinnovation (Baden-Fuller and Mangematin, 2013;
Björkdahl and Holmén, 2013; and Massaand Tucci, 2014). The benefits linked
with business model innovation beyond any doubtoutstrip any other form of
innovation (Lindgardt et al., 2009; Schallmo and Brecht, 2010;and Snihur and
Zott, 2013). Business model innovation has also been described as the processof
finding a novel way of doing business which results in reconfiguring of value
creation andvalue capturing mechanisms (Björkdahl and Holmén, 2013; and
Massa and Tucci, 2014).Researchers also agree that business model innovation
can occur even by changing only oneof the elements or components of a business
model (Lindgardt et al., 2009; Demil and Lecocq,2010; and Abdelkafi et al.
Reflection

The business model is a company's value proposition and the set of means
implemented to generate revenue and profitability. In an environment of
uncertainty, increasingly rapid change and fierce competition, it is becoming
imperative to innovate its business model to adapt and remain competitive.
Nowadays, product and process innovation are not the only options, as firms can
also direct efforts towards business model innovation. As it is highly dependent on
environmental factors, a business model has to be constantly revisited and, if
necessary, redesigned in order to keep it viable, competitive, and hard-to-imitate.
A robust, well designed business model is particularly relevant to firms operating
according to the logic of value networks, that is, firms that articulate and manage
a number of actors and their relationships through the use of mediating
technologies. As this approach to value creation is highly vulnerable to
technological and market changes, business model innovation becomes critical. In
this context, this paper reports the business model innovation process in a
Brazilian company operating according to the value network logic. Given the strong
novelty aspect and business-oriented nature of the research problem, an
exploratory empirical study based on a qualitative research approach was
employed. The research design is based on a detailed ex post facto case study.
The unit of analysis is the firm and its business model. Usual case study data
collection tools were employed such as semi structured interviews, focus groups
and direct observation. The results of this research extend the theory on business
model innovation by drawing empirical light over an issue that still lacks systematic
research, that is, the process of business model innovation by value network
operators.
Case Study of Fifteen Years
of Research on Business
Model Innovation: How Far
Have We Come, and Where
Should We Go?

SUBMITTED TO:
 Mr. Alexander Hernandez

SUBMITTED BY:
John Matthew Manalang

Summary of BMI Field: Four Streams of

Research
On the basis of our literature review and coding procedure, we distinguish four partly overlapping
streams of BMI research (see Table 2). These four streams represent important strides forward;
however, they also have limitations that are scrutinized as follows.
Foss, Saebi / Fifteen Years of Research on Business Model Innovation 207
Research Stream 1: Conceptualizing BMI
The first stream highlights the phenomenon itself, offering definitions and conceptualiza- tions of
BMI (e.g., Amit & Zott, 2012; Santos, Spector, & Van der Heyden, 2009; Teece, 2010). Thus, it
focuses on such issues as the minimum meaningful definition of “business model innovation” and
the dimensions along which companies can innovate the BM (e.g., Amit & Zott, 2012; Santos et
al., 2009; Sorescua, Frambach, Singh, Rangaswamy, & Bridges, 2011). The aim seems to be the
development of classificatory schemes. However, as we show, definitions abound, differ
markedly, and are often ambiguous.
Research Stream 2: BMI as an Organizational Change Process
Innovation is known to often strongly challenge organizational processes (e.g., Damanpour,
1996). It is not surprising, therefore, that a stream of research relates BMI to organizational
change processes. This stream emphasizes the capabilities, leadership, and learning mecha-
nisms that are needed for successful BMI. Studies within this stream describe BMI as a dynamic
process by
• highlighting the different stages of the BMI process (e.g., de Reuver, Bouwman, & Haaker, 2013;
Frankenberger, Weiblen, Csik, & Gassmann, 2013; Girotra & Netessine, 2013, 2014; Pynnonen,
Hallikas, & Ritala, 2012),
• identifying the different organizational capabilities and processes required to support this change
process (e.g., Achtenhagen et al., 2013; Demil & Lecocq, 2010; Doz & Kosonen, 2010; Dunford,
Palmer, & Benviste, 2010),
• citing the importance of experimentation and learning (e.g., Andries & Debackere, 2013;
Cavalcante, 2014; Eppler, Hoffmann, & Bresciani, 2011; Günzel & Holm, 2013; Moingeon &
Lehmann-Ortega, 2010; Sosna, Trevinyo-Rodriguez & Velamuri, 2010), and
• proposing practitioner-oriented tools for managing the process (e.g., Deshler & Smith, 2011;
Evans & Johnson, 2013).
Research Stream 3: BMI as an Outcome
A third stream of BMI literature focuses on the outcome of the organizational change process—
new and innovative BMs, which are typically contextualized in some way. This stream often
addresses the emergence of new BMs in a particular industry, such as electric mobility (Abdelkafi,
Makhotin, & Posselt, 2013), newspapers (Holm, Günzel, & Ulhøi, 2013; Karimi & Zhiping, 2016),
tourism (Souto, 2015), and aviation (Schneider & Spieth, 2013). Other research in this stream
examines one particular type of new BM, such as that for low-income markets (Anderson & Kupp,
2008; Sánchez & Ricart; 2010; Yunus, Moingeon, & Lehmann-Ortega, 2010), sustainable energy
(Richter, 2013), manufacturing firms (Witell & Löfgren, 2013), or service (Visnjic Kastalli & Van
Looy, 2013). Other articles describe a particular company’s “innovative” BM, such as Nestlé’s
Nespresso (Matzler, Bailom, den Eichen, & Kohler, 2013). Perhaps surprising, contributions to
this research stream do not usually build on the first research stream. Instead, the focus is on
describing one particular type of change of BM, often claimed to be a new kind. However, this
descriptive stream does not offer a discussion of the criteria under which the relevant BM change
can be regarded as being novel.

208 Journal of Management / January 2017

Research Stream 4: Consequences of BMI
The fourth stream addresses the organizational performance implications of BMI. In this stream,
we can differentiate between studies that link the “act,” or process, of BMI to out- come
implications (e.g., Aspara, Hietanen, & Tikkanen, 2010; Bock et al., 2012; Cucculelli & Bettinelli,
2015; Giesen, Berman, Bell, & Blitz, 2007) and those that examine the effects of different types
of BMs on firm performance (e.g., Huang, Lai, Lin, & Chen, 2013; Wei, Yang, Sun, & Gu, 2014;
Zott & Amit, 2007, 2008). In the first case, studies assume a pro- cess view and investigate
whether an innovative change in the existing BM leads to superior performance outcomes. For
example, Aspara et al. (2010) compare the financial perfor- mance implications of BMI to those
of replication, while Giesen et al. (2007) find that BMI targeted at disrupting the industry chain,
revenue model, or organizational boundaries yields no significant variation in financial
performance across the different types of BMI. In the context of entrepreneurial firms, Cucculelli
and Bettinelli (2015) find that firms who modi- fied their BMs over time and, in an innovative way,
experienced a positive effect on venture performance.
In the second case, studies do not directly link BMI to performance outcomes. Instead, they
empirically test the effects of different BM designs on innovation performance. For example, after
differentiating between novelty- and efficiency-centered BM designs, Zott and Amit (2007) found
a positive relation between novelty-centered BMs and firm perfor- mance in entrepreneurial firms.
In a later study (2008), these same authors show the impor- tance of fit between product market
strategy and BM design for enhancing firm performance. After adopting the same differentiation
of novelty- and efficiency-centered BM designs, Wei et al. (2014) examined how exploitative and
exploratory innovation fit with different BM designs to promote growth in Chinese firms.
Strengths and Weaknesses of the Four Streams
The BMI literature has yielded several key insights. A fundamental contribution to mac-
romanagement research in its own right is that firms can introduce changes into the design and
architecture of their BMs that are novel to a context and potentially the basis of substan- tial
appropriable value creation and competitive advantages. Several advances have been made in
our understanding of the nature of such innovation, its process dimension, and its consequences.
In particular, two main lines of argumentation are apparent. Studies either adopt a dynamic view
of BMI and conceptualize it as an organizational change process requiring appropriate
capabilities, leadership, and learning mechanisms (Research Stream 2) or view BMI statically as
new types of innovative ventures (Research Stream 3) that may affect firm performance
(Research Stream 4).
Nevertheless, as the above brief characterization of the literature suggests, BMI research does
not exhibit the characteristics of a well-defined cumulative research stream. Many con- tributions
are conceptual rather than theoretical or are fundamentally descriptive rather than explanatory.
For example, our review did not result in the identification of articles that clearly deal with the
antecedents of BMI. Furthermore, the four research streams have largely evolved in relatively
isolated silos (as indicated by little cross-citation among the streams) and do not seem to build off
one another.

Reflection

Over the last 15 years, business model innovation (BMI) has gained an increasing
amount of attention in management research and among practitioners. The
emerging BMI literature addresses an important phenomenon but lacks theoretical
underpinning, and empirical inquiry is not cumulative. Thus, a concerted research
effort seems warranted. Accordingly, we take stock of the extant literature on BMI.
We identify and analyze 150 peer-reviewed scholarly articles on BMI published
between 2000 and 2015. We provide the first comprehensive systematic review of
the BMI literature, include a critical assessment of these research efforts, and offer
suggestions for future research. We argue that the literature faces problems with
respect to construct clarity and has gaps with respect to the identification of
antecedent conditions, contingencies, and outcomes. We identify important
avenues for future research and show how the complexity theory, innovation, and
other streams of literature can help overcome many of the gaps in the BMI
literature.