Digital Innovation, Entrepreneurship, and New Business Models
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Paper Number
1553
Paper Type
Completed
Description
This study seeks to provide new insights into the performance effects of firms’ business model innovation (BMI) activities. Adopting an institutional perspective, we hypothesize that there is an S-shaped relationship between a firm’s BMI intensity and financial performance, which is contingent on industry factors, particularly the average industry BMI intensity and industry growth. To test our hypotheses, we use 10-K annual reports from 6,678 publicly listed U.S. firms between 1994 and 2018, based on which we create a novel text-based measure of BMI intensity, as well as archival data. Our results support our prediction that the BMI-performance relationship is S-shaped. We further find that the average industry BMI intensity positively, and industry growth negatively moderates this S-Shaped relationship. Overall, our study contributes to a better understanding of the BMI-performance relationship and helps to reconcile competing perspectives (i.e., conformity vs. differentiation) on how far engaging in BMI activities.
Recommended Citation
Esau, Eduard; Jung, Christopher; Schaeper, Thomas; Piening, Erk; and Foege, Johann Nils, "Business Model Innovation and Financial Performance: An Institutional Perspective" (2021). ICIS 2021 Proceedings. 3.
https://aisel.aisnet.org/icis2021/dig_innov/dig_innov/3
Business Model Innovation and Financial Performance: An Institutional Perspective
This study seeks to provide new insights into the performance effects of firms’ business model innovation (BMI) activities. Adopting an institutional perspective, we hypothesize that there is an S-shaped relationship between a firm’s BMI intensity and financial performance, which is contingent on industry factors, particularly the average industry BMI intensity and industry growth. To test our hypotheses, we use 10-K annual reports from 6,678 publicly listed U.S. firms between 1994 and 2018, based on which we create a novel text-based measure of BMI intensity, as well as archival data. Our results support our prediction that the BMI-performance relationship is S-shaped. We further find that the average industry BMI intensity positively, and industry growth negatively moderates this S-Shaped relationship. Overall, our study contributes to a better understanding of the BMI-performance relationship and helps to reconcile competing perspectives (i.e., conformity vs. differentiation) on how far engaging in BMI activities.
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