Migration Paths in Business Model Innovation of Small Enterprises: Three Cases from Colombia
Jaime A. Barragán,
School of Management, Zhejiang University, Hangzhou, Zhejiang, People´s Republic of China e-mail: firstname.lastname@example.org, email@example.com
Business model innovation is still a subject of debate. Moreover referring to Small and Medium Enterprises (SMEs) from developing countries, where research is scarce despite the general acknowledgment of them as natural innovators. Current literature provides definitions and concepts, however time is briefly discussed and authors seldom build on each other. This study integrates previous developments into a single tool that helps three Colombian small enterprises to elaborate a blueprint of their business model, pointing out past, current and future innovative aspects. In turn, managers identify the innovation mode they have engaged in at various points in time. Consequently, results reveal a Business Model Migration Path (BMMP) along different components of the business model, and a Mode Migration Path (MdMP) pertaining resultant innovation modes, both with particular cyclic behaviors that open further research issues. In sum the study evidences the relation between a dynamic business model innovation and a small firm's sustained value appropriation and eventual success. Overall, it delivers an additional instrument to periodically review the company's business model, seeking for innovation opportunities, and anticipating possible consequences.
In recent years studies have concluded that the success of a company not only resides on an efficient process or an attractive product design, but also on an effective business model that generates profitable returns. (Lin, Ke, and Whinston, 2008). Withal, there is no widely accepted definition of what “business model” really means (Casadesus-Massanell & Ricart, 2007); yet, companies can only survive by continuously reinventing it (De Reuver, 2008). Paradoxically, in many cases managers are not always capable of communicating their business model in a clear way (Linder & Cantrell, 2000). In addition, the relationship between business models and time is little discussed and authors rarely build on each other (Osterwalder, Pigneur, and Tucci, 2005).
Furthermore in many cases innovation has been analyzed mainly within the context of large, multinational, technology firms (Chesbrough, 2003); nevertheless, there is only little research made on business models of SMEs (Nissilä, Salmivalli, Suomi, and Puhakeinen, 2004), even though they are active and natural innovators (King & Ockels, 2009). In this sense, SMEs cannot be ignored as they play an important role by their contribution to both employment and economic growth (Nissilä et al., 2004), even in developing and emerging markets that can also drive innovation (Kramer, Jenkins, and Kats, 2007). Accordingly, this study aimed to determine first, if a conceptual tool, which results in a blueprint of the company’s business model, would allow managers to point out past and current business model innovations, and to foresee which aspects of the business model could be innovated in the future; and second, if those innovations were related to a specific innovation mode. Correspondingly, the present research focused on combining previous concepts and developments to analyze the business model innovation scenario of three small enterprises in Colombia over time.
Theoretical Background and Hypotheses
Business Model Innovation in SMEs
In their study, Osterwalder et al. (2005) define the business model as a conceptual tool with the objective to express the business logic of a specific firm. In this sense they propose four pillars comprising nine blocks to help managers and companies specify their conceptual business model: Product (Value Proposition), Customer Interface (Target Customer, Distribution Channel, and Relationship),...
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