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How to innovate toward an ambidextrous business model? The role of dynamic capabilities and market orientation

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  • Randhawa, Krithika
  • Wilden, Ralf
  • Gudergan, Siegfried

Abstract

Designing a business model is not a one-off process; adjustments are often required. To create such adjustments and realize business model innovation, firms require the deployment of dynamic capabilities. Yet, we know little about the role of dynamic capabilities in fostering business model innovation, particularly in SMEs. This research, designed as an in-depth longitudinal case study, investigates how an SME’s market orientation and its deployment of dynamic capabilities are related to business model innovation. By developing a process framework of an SME’s business model innovation from start-up to scale-up, this paper contributes to the literatures on business model (innovation), small business, and dynamic capabilities. It clarifies how an SME’s market orientation, through the fitting deployment of its dynamic capabilities, drives its business model innovation. More specifically, this study characterizes market-driving, market-driven, and ambidextrous business models in the SME context, and reveals the exact dynamic capability processes necessary for transforming a business model from market-driving to market-driven, and ultimately to a model reflecting an ambidextrous market orientation. These insights outline how SMEs can deploy dynamic capabilities that align with the SME’s market orientation to innovate the design and architecture of their business models.

Suggested Citation

  • Randhawa, Krithika & Wilden, Ralf & Gudergan, Siegfried, 2021. "How to innovate toward an ambidextrous business model? The role of dynamic capabilities and market orientation," Journal of Business Research, Elsevier, vol. 130(C), pages 618-634.
    • Handle: RePEc:eee:jbrese:v:130:y:2021:i:c:p:618-634
    DOI: 10.1016/j.jbusres.2020.05.046
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    2. Vinicius Minatogawa & Matheus Franco & Izabela Simon Rampasso & Maria Holgado & Diego Garrido & Hernan Pinto & Ruy Quadros, 2022. "Towards Systematic Sustainable Business Model Innovation: What Can We Learn from Business Model Innovation," Sustainability, MDPI, vol. 14(5), pages 1-35, March.
    3. Hui‐Ru Chi & Hsuan‐Pei Ho & Pei‐Kuan Lin, 2022. "Survival strategies of the sharing economy from the pandemic to a new normal: A dynamic capabilities approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3219-3234, October.
    4. Jia, Yibo & Su, Jingqin & Cui, Li & Wu, Lin & Hua Tan, Kim, 2023. "Platform business model innovation in the digitalization era: A “driver-process-result” perspective," Journal of Business Research, Elsevier, vol. 160(C).
    5. Mahavarpour, Nasrin & Marvi, Reza & Foroudi, Pantea, 2023. "A Brief History of Service Innovation: The evolution of past, present, and future of service innovation," Journal of Business Research, Elsevier, vol. 160(C).
    6. Valentina Ndou, 2021. "Social Entrepreneurship Education: A Combination of Knowledge Exploitation and Exploration Processes," Administrative Sciences, MDPI, vol. 11(4), pages 1-16, October.
    7. Matthews, Lane & Heyden, Mariano L.M. & Zhou, Dan, 2022. "Paradoxical transparency? Capital market responses to exploration and exploitation disclosure," Research Policy, Elsevier, vol. 51(1).
    8. Farzaneh, Mandana & Wilden, Ralf & Afshari, Leila & Mehralian, Gholamhossein, 2022. "Dynamic capabilities and innovation ambidexterity: The roles of intellectual capital and innovation orientation," Journal of Business Research, Elsevier, vol. 148(C), pages 47-59.
    9. Guo, Jingjing & Zhou, Shasha & Chen, Jin & Chen, Qi, 2021. "How information technology capability and knowledge integration capability interact to affect business model design:A polynomial regression with response surface analysis," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    10. Rasha A. A. ElNaggar & Mayar Farrag ElSayed, 2023. "Drivers of business model innovation in micro and small enterprises: evidence from Egypt as an emerging economy," Future Business Journal, Springer, vol. 9(1), pages 1-17, December.
    11. Shaikh, Ibrahim & Randhawa, Krithika, 2022. "Managing the risks and motivations of technology managers in open innovation: Bringing stakeholder-centric corporate governance into focus," Technovation, Elsevier, vol. 114(C).
    12. Malik, Ashish & Sharma, Piyush & Kingshott, Russel & Laker, Benjamin, 2022. "Leveraging cultural and relational capabilities for business model innovation: The case of a digital media EMMNE," Journal of Business Research, Elsevier, vol. 149(C), pages 270-282.

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