The Relationship between Business-model Innovation and Firm Value: A Dynamic Perspective
When consistently innovative business-models can
give companies a competitive advantage, longitudinal empirical
research, which can reflect dynamic business-model changes, has yet
to prove a definitive connection. This study consequently employs a
dynamic perspective in conjunction with innovation theory to examine
the relationship between the types of business-model innovation and
firm value. This study tries to examine various types of
business-model innovation in high-end and low-end technology
industries such as HTC and the 7-Eleven chain stores with research
periods of 14 years and 32 years, respectively. The empirical results
suggest that adopting radical business-model innovation in addition to
expanding new target markets can successfully lead to a competitive
advantage. Sustained advanced technological competences and
service/product innovation are the key successful factors in high-end
and low-end technology industry business-models respectively. In
sum up, the business-model innovation can yield a higher market value
and financial value in high-end technology industries than low-end
ones.
[1] A. Osterwalder, Y. Pigneur, and C. L. Tucci, "Clarifying business
models: origins, present, and future of the concept," Communications of
the Association for Information Systems, Vol.16, 2005, pp. 1-25.
[2] M. Sosna, R. N. Trevinyo-Rodríguez, and S. R. Velamuri, "Business
Model Innovation through Trial-and-Error learning: The Naturhouse
Case." Long Range Planning, Vol. 43, Issues 2-3, 2010, pp. 383-407.
[3] R. Casadesus-Masanell, and J. E. Ricart, "From strategy to business
models and onto tactics," Long Range Planning, Vol.43, 2010,
pp.195-215.
[4] D. J. Teece, , "Business models, business strategy and innovation", Long
Range Planning, Vol.43. 2010, pp. 172-194.
[5] B. W. Wirtz, O. Schilke, and S. Ullrich, "Strategic development of
internet business models: implications of the Web 2.0 for creating value
on the internet," Long Range Planning, Vol.43, Issues 2-3, 2010, pp.
272-290.
[6] H. Chesbrough, "Business model innovation: opportunities and barriers",
Long Range Planning, Vol. 43, 2010, pp. 354-363.
[7] B. Demil, and X. Lecocq, "Business model evolution: in search of
dynamic consistency, " Long Range Planning, Vol. 43(2/3), 2010, pp.
227-246.
[8] Y. L. Doz , and M. Kosonen, "Embedding strategic agility: A leadership
agenda for accelerating business model renewal," Long Range Planning,
Vol.43, Issues 2-3, 2010, pp. 370-382.
[9] Y.C. Ho, H. C. Fang, and J. F. Lin, "Value Co-creation in Business
Models: Evidence from Three Cases Analysis in Taiwan," The Business
Review, Cambridge, Vol.15, Issues 2, 2010, pp. 171-177
[10] H. Itami, & K. Nishino, "Killing two birds with one stone: Profit for now
and learning for the future," Long Range Planning, Vol.43, Issues 2-3,
2010, pp. 364-369.
[11] R. G. McGrath, "Business models: a discovery driven approach," Long
Range Planning, Vol.43, 2010, pp. 247-261.
[12] K. M. Eisenhardt, and B. N. Tabrizi, "Accelerating Adaptive Processes-
Product Innovation in the Global Computer Industry," Administrative
Science Quarterly, Vol.40, Issues 1, 1995, pp. 84-110
[13] M. Tushman, W. K. Smith, R. C. Wood, G. Westerman and C. O-Reilly,
"Organizational designs and innovation streams", Industrial and
Corporate Change, Vol.19, Issues 5, 2010, pp. 331-1366.
[14] J. Brink, and M. Holmen, "Capabilities and radical changes of the
business models of new Bioscience firms", Creativity and Innovation
Management, Vol. 18, Issue.2, 2009, pp.109-120.
[15] M. Morris, M. Schindehutte, and J. Allen, "The entrepreneur's business
model: Toward a unified perspective, " Journal of Business Research,
Vol.58, Issues 6, 2005, pp. 726-735.
[16] L. Schweizer, "Concepts and evolution of business models," Journal of
General Management, Vol.31, Issues 2, 2005, pp. 37-56.
[17] S. M. Shafer, H. J. Smith, and J. C. Linder, "The power of business
models," Business Horizons, Vol.48, Issues 3, 2005, pp. 199-207.
[18] C. Zott, and R. Amit, , "Business model design: an activity system
perspective", Long Range Planning, Vol.43, 2010, pp. 216-226.
[19] R. Amit, and C. Zott, "Value creation in e-business", Strategic
Management Journal, Vol.22, Issue.6-7, 2001, pp. 493-520.
[20] J. C. Linder, and S. Cantrell, "Changing business models: surveying the
landscape", Accenture Institute for Strategic Change. 2000.
[21] J. Margretta, "Why Business Models Matter." Harvard Business Review,
Vol.80, Issues 5, 2002, pp. 86-92.
[22] K. M. Eisenhardt, and J. A. Martin, "Dynamic Capabilities: What Are
They?," Strategic Management Journal, Vol.21, Issues 10-11, 2000, pp.
1105-1121.
[23] D. G. Sirmon, M. A. Hitt, J-L. Arregle and J. T. Campbell,"The dynamic
interplay of capability strengths and weaknesses: investigating the bases
of temporary competitive advantage," Strategic Management Journal,
Vol.31: 2010, pp. 1386-1409.
[24] D. J. Teece, G. Pisano, and A. Shuen, "Dynamic Capabilities and
Strategic Management," Strategic Management Journal, Vol.18, Issues 7,
1997, pp. 509-533
[25] H. Chesbrough, and R. S. Rosenbloom, "The role of the business model in
capturing value from innovation: Evidence from Xerox Corporation-s
technology spin-off companies," Industrial and Corporate Change,
Vol.11, Issues 3, 2002, pp. 529-555
[26] H. Gatignon, M. L. Tushman, W. Smith, and P. Anderson, "A structural
approach to assessing innovation: construct development of innovation
locus, type, and characteristics", Management Science, Vol.48, Issues 9,
2002, pp. 1103-1122.
[27] C. Zott, and R. Amit, "Business model design and the performance of
entrepreneurial firms," Organization Science, Vol.18, Issues 2, 2007, pp.
181-199.
[28] A. B. Sorescu, and J. Spanjol, "Innovation-s effect on firm value and risk:
insights from consumer packaged goods", Journal of Marketing, Vol.70,
2008, pp. 114-132.
[29] R. K. Yin,"Case Study Research: Design and Methods,"Sage
Publications, London, 3rd ed. 2003.
[30] D. Leonard-Barton, "Wellsprings of knowledge: building and sustaining
the sources of innovation", Boston, Mass: Harvard Business School press.
1995.
[1] A. Osterwalder, Y. Pigneur, and C. L. Tucci, "Clarifying business
models: origins, present, and future of the concept," Communications of
the Association for Information Systems, Vol.16, 2005, pp. 1-25.
[2] M. Sosna, R. N. Trevinyo-Rodríguez, and S. R. Velamuri, "Business
Model Innovation through Trial-and-Error learning: The Naturhouse
Case." Long Range Planning, Vol. 43, Issues 2-3, 2010, pp. 383-407.
[3] R. Casadesus-Masanell, and J. E. Ricart, "From strategy to business
models and onto tactics," Long Range Planning, Vol.43, 2010,
pp.195-215.
[4] D. J. Teece, , "Business models, business strategy and innovation", Long
Range Planning, Vol.43. 2010, pp. 172-194.
[5] B. W. Wirtz, O. Schilke, and S. Ullrich, "Strategic development of
internet business models: implications of the Web 2.0 for creating value
on the internet," Long Range Planning, Vol.43, Issues 2-3, 2010, pp.
272-290.
[6] H. Chesbrough, "Business model innovation: opportunities and barriers",
Long Range Planning, Vol. 43, 2010, pp. 354-363.
[7] B. Demil, and X. Lecocq, "Business model evolution: in search of
dynamic consistency, " Long Range Planning, Vol. 43(2/3), 2010, pp.
227-246.
[8] Y. L. Doz , and M. Kosonen, "Embedding strategic agility: A leadership
agenda for accelerating business model renewal," Long Range Planning,
Vol.43, Issues 2-3, 2010, pp. 370-382.
[9] Y.C. Ho, H. C. Fang, and J. F. Lin, "Value Co-creation in Business
Models: Evidence from Three Cases Analysis in Taiwan," The Business
Review, Cambridge, Vol.15, Issues 2, 2010, pp. 171-177
[10] H. Itami, & K. Nishino, "Killing two birds with one stone: Profit for now
and learning for the future," Long Range Planning, Vol.43, Issues 2-3,
2010, pp. 364-369.
[11] R. G. McGrath, "Business models: a discovery driven approach," Long
Range Planning, Vol.43, 2010, pp. 247-261.
[12] K. M. Eisenhardt, and B. N. Tabrizi, "Accelerating Adaptive Processes-
Product Innovation in the Global Computer Industry," Administrative
Science Quarterly, Vol.40, Issues 1, 1995, pp. 84-110
[13] M. Tushman, W. K. Smith, R. C. Wood, G. Westerman and C. O-Reilly,
"Organizational designs and innovation streams", Industrial and
Corporate Change, Vol.19, Issues 5, 2010, pp. 331-1366.
[14] J. Brink, and M. Holmen, "Capabilities and radical changes of the
business models of new Bioscience firms", Creativity and Innovation
Management, Vol. 18, Issue.2, 2009, pp.109-120.
[15] M. Morris, M. Schindehutte, and J. Allen, "The entrepreneur's business
model: Toward a unified perspective, " Journal of Business Research,
Vol.58, Issues 6, 2005, pp. 726-735.
[16] L. Schweizer, "Concepts and evolution of business models," Journal of
General Management, Vol.31, Issues 2, 2005, pp. 37-56.
[17] S. M. Shafer, H. J. Smith, and J. C. Linder, "The power of business
models," Business Horizons, Vol.48, Issues 3, 2005, pp. 199-207.
[18] C. Zott, and R. Amit, , "Business model design: an activity system
perspective", Long Range Planning, Vol.43, 2010, pp. 216-226.
[19] R. Amit, and C. Zott, "Value creation in e-business", Strategic
Management Journal, Vol.22, Issue.6-7, 2001, pp. 493-520.
[20] J. C. Linder, and S. Cantrell, "Changing business models: surveying the
landscape", Accenture Institute for Strategic Change. 2000.
[21] J. Margretta, "Why Business Models Matter." Harvard Business Review,
Vol.80, Issues 5, 2002, pp. 86-92.
[22] K. M. Eisenhardt, and J. A. Martin, "Dynamic Capabilities: What Are
They?," Strategic Management Journal, Vol.21, Issues 10-11, 2000, pp.
1105-1121.
[23] D. G. Sirmon, M. A. Hitt, J-L. Arregle and J. T. Campbell,"The dynamic
interplay of capability strengths and weaknesses: investigating the bases
of temporary competitive advantage," Strategic Management Journal,
Vol.31: 2010, pp. 1386-1409.
[24] D. J. Teece, G. Pisano, and A. Shuen, "Dynamic Capabilities and
Strategic Management," Strategic Management Journal, Vol.18, Issues 7,
1997, pp. 509-533
[25] H. Chesbrough, and R. S. Rosenbloom, "The role of the business model in
capturing value from innovation: Evidence from Xerox Corporation-s
technology spin-off companies," Industrial and Corporate Change,
Vol.11, Issues 3, 2002, pp. 529-555
[26] H. Gatignon, M. L. Tushman, W. Smith, and P. Anderson, "A structural
approach to assessing innovation: construct development of innovation
locus, type, and characteristics", Management Science, Vol.48, Issues 9,
2002, pp. 1103-1122.
[27] C. Zott, and R. Amit, "Business model design and the performance of
entrepreneurial firms," Organization Science, Vol.18, Issues 2, 2007, pp.
181-199.
[28] A. B. Sorescu, and J. Spanjol, "Innovation-s effect on firm value and risk:
insights from consumer packaged goods", Journal of Marketing, Vol.70,
2008, pp. 114-132.
[29] R. K. Yin,"Case Study Research: Design and Methods,"Sage
Publications, London, 3rd ed. 2003.
[30] D. Leonard-Barton, "Wellsprings of knowledge: building and sustaining
the sources of innovation", Boston, Mass: Harvard Business School press.
1995.
@article{"International Journal of Business, Human and Social Sciences:52545", author = "Yung C. Ho and Hui C. Fang and Ming J. Hsieh", title = "The Relationship between Business-model Innovation and Firm Value: A Dynamic Perspective", abstract = "When consistently innovative business-models can
give companies a competitive advantage, longitudinal empirical
research, which can reflect dynamic business-model changes, has yet
to prove a definitive connection. This study consequently employs a
dynamic perspective in conjunction with innovation theory to examine
the relationship between the types of business-model innovation and
firm value. This study tries to examine various types of
business-model innovation in high-end and low-end technology
industries such as HTC and the 7-Eleven chain stores with research
periods of 14 years and 32 years, respectively. The empirical results
suggest that adopting radical business-model innovation in addition to
expanding new target markets can successfully lead to a competitive
advantage. Sustained advanced technological competences and
service/product innovation are the key successful factors in high-end
and low-end technology industry business-models respectively. In
sum up, the business-model innovation can yield a higher market value
and financial value in high-end technology industries than low-end
ones.", keywords = "Business-model, Dynamic Perspective, Firm Value,
Innovation", volume = "5", number = "5", pages = "452-9", }
