Business model design and the performance of entrepreneurial firms
Open accessAbstract
We focus on the design of an organization’s set of boundary-spanning transactions—business model design—and ask how business model design affects the performance of entrepreneurial firms. By extending and integrating theoretical perspectives that inform the study of boundary-spanning organization design, we propose hypotheses about the impact of efficiency-centered and novelty-centered business model design on the performance of entrepreneurial firms. To test these hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial firms that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. Additionally, we find indications of potential diseconomies of scope in design; that is, entrepreneurs’ attempts to incorporate both efficiency- and novelty-centered design elements into their business models may be counterproductive.
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The market share of an SME or start-up can be positively affected by BM experimentation practices, as a novel BM can recombine existing internal resources or use those of external partners.
“The market share of a SME or start-up can also be positively affected by BM experimentation practices, as a novel BM can recombine existing internal resources or use those of external partners (Zott & Amit, 2007).”
From Digitalization, business models, and SMEs: How do business model innovation practices improve performance of digitalizing SMEs? (2019) · cites this paper as Zott & Amit, 2007
The Discussion and Conclusion says firms can innovate by recombining resources they control and by harnessing those of partners, suppliers, and customers. The Abstract reports a positive association between novelty-centered business model design and entrepreneurial-firm performance. But the Dependent Variables section measures performance using stock-market value, not market share, and the paper does not establish an effect of business-model experimentation practices specifically. (LLM, conf=0.88)
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Cites
Evaluating Structural Equation Models with Unobservable Variables and Measurement Error
Fornell, C., & Larcker, D. F. (1981) · Journal of Marketing Research · doi:10.2307/3151312 · Cited by 109,314 · see citing works
Evaluating structural equation models with unobservable variables and measurement error
Fornell, C., & Larcker, D. F. (1981) · Journal of Marketing Research · doi:10.1177/002224378101800104 · Cited by 109,190 · see citing works
Dess, G. G., & Robinson, R. B. (1984) · Strategic Management Journal · doi:10.1002/smj.4250050306 · Cited by 3,337 · see citing works
Shifting Innovation to Users via Toolkits
von Hippel, E., & Katz, R. (2002) · Management Science · doi:10.1287/mnsc.48.7.821.2817
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