Digital advancement and its effect on business model design: Qualitative-empirical insights

Disruptive technological change fosters the evolution of innovative, highly digital business models. However, few details are known of how digital advancement is reflected in business model design in detail. This paper analyses how digital advancement is reflected in the value architecture of business models. It highlights the specific relevance of distinct value elements for this innovation process, using a two-perspective multiple-case study analysis including 13 firms and 74 customers of the case firms. The data shows that digital business models are characterised by a value architecture design that allows for a high degree of customisation, a modular design of offerings, and extensive, real-time value co-creation. Furthermore, establishing digital business models is accompanied by the utilisation of stringent evaluation to ensure a continuous adaption to changing market settings. This study sheds new light on the effects of digital advancement on business model design, therefore contributing to business model and business model innovation research. It also advances customer acceptance research, as it combines both, a firm and a customer perspective.