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The Impact of a Radical Innovation on Business Models: Incremental Adjustments or Big Bang?

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  • Marc Bourreau
  • Michel Gensollen
  • François Moreau

Abstract

In this paper we study the impact of a radical technological innovation on business models. Do firms react by adjusting their business models incrementally, through iterative steps? Or do such innovations lead, instead, to a big bang of new innovative business models that are all adopted and experimented with by the industry? To answer these questions, we analyze the impact of digitization—a radical innovation—on business models in the recorded music industry. Using an economic analysis of the effects of digitization, we begin by building five potential digital business models for the music industry. Then, using data from a survey on a sample of French record companies, we map these record labels on our digital business models. Our analysis suggests that digitization has led to a big bang of business models in the music industry, rather than to incremental adjustments of the existing business model.

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  • Marc Bourreau & Michel Gensollen & François Moreau, 2012. "The Impact of a Radical Innovation on Business Models: Incremental Adjustments or Big Bang?," Industry and Innovation, Taylor & Francis Journals, vol. 19(5), pages 415-435, July.
    • Handle: RePEc:taf:indinn:v:19:y:2012:i:5:p:415-435
    DOI: 10.1080/13662716.2012.711026
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    Cited by:

    1. Maikel Kishna & Simona Negro & Floortje Alkemade & Marko Hekkert, 2017. "Innovation at the end of the life cycle: discontinuous innovation strategies by incumbents," Industry and Innovation, Taylor & Francis Journals, vol. 24(3), pages 263-279, April.
    2. Prabhakaran, Thara & Lathabai, Hiran H. & Changat, Manoj, 2015. "Detection of paradigm shifts and emerging fields using scientific network: A case study of Information Technology for Engineering," Technological Forecasting and Social Change, Elsevier, vol. 91(C), pages 124-145.
    3. Germano Glufke Reis & Marina Sucha Heidemann & Katherine Helena Oliveira de Matos & Carla Forte Maiolino Molento, 2020. "Cell-Based Meat and Firms’ Environmental Strategies: New Rationales as per Available Literature," Sustainability, MDPI, vol. 12(22), pages 1-16, November.
    4. Reis, G.G. & Heidemann, M.S. & Goes, H.A.A. & Molento, C.F.M., 2021. "Can radical innovation mitigate environmental and animal welfare misconduct in global value chains? The case of cell-based tuna," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    5. Charlotte Krychowski & Bertrand Quelin & Bulat Sanditov, 2017. "Experimenting business models with network effects : a real options perspective," Post-Print hal-01582498, HAL.
    6. Edurne A. Inigo & Laura Albareda & Paavo Ritala, 2017. "Business model innovation for sustainability: exploring evolutionary and radical approaches through dynamic capabilities," Industry and Innovation, Taylor & Francis Journals, vol. 24(5), pages 515-542, July.
    7. Charlotte Krychowski & Bertrand Quelin & Bulat Sanditov, 2017. "Experimenting business models with network effects : a real options perspective," Grenoble Ecole de Management (Post-Print) hal-01582498, HAL.
    8. Athena Roumboutsos & St�phane Saussier, 2014. "Public-private partnerships and investments in innovation: the influence of the contractual arrangement," Construction Management and Economics, Taylor & Francis Journals, vol. 32(4), pages 349-361, April.
    9. Ancillai, Chiara & Sabatini, Andrea & Gatti, Marco & Perna, Andrea, 2023. "Digital technology and business model innovation: A systematic literature review and future research agenda," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    10. Michaela Sprenger & Tobias Mettler & Robert Winter, 2017. "A viability theory for digital businesses: Exploring the evolutionary changes of revenue mechanisms to support managerial decisions," Information Systems Frontiers, Springer, vol. 19(4), pages 899-922, August.
    11. Juan D. Montoro-Pons & Manuel Cuadrado-García, 2018. "“Let’s make lots of money”: the determinants of performance in the recorded music sector," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(2), pages 287-307, May.
    12. Arash Rezazadeh & Ana Carvalho, 2018. "A value-based approach to business model innovation: Defining the elements of the concept," NIPE Working Papers 12/2018, NIPE - Universidade do Minho.
    13. Jang, Kyeong Kook & Bae, Joonheui & Kim, Kyung Hoon, 2021. "Servitization experience measurement and the effect of servitization experience on brand resonance and customer retention," Journal of Business Research, Elsevier, vol. 130(C), pages 384-397.
    14. Hossein Mahdavimazdeh & Loren Falkenberg & Madelynn Stackhouse, 2019. "The Innovation Value Canvas: A Guide To Defining Value Propositions And Target Customers For Commercialization Of Technological Innovations," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 24(02), pages 1-29, February.
    15. Gamble, Jordan Robert & Brennan, Michael & McAdam, Rodney, 2017. "A rewarding experience? Exploring how crowdfunding is affecting music industry business models," Journal of Business Research, Elsevier, vol. 70(C), pages 25-36.
    16. Michaela Sprenger & Tobias Mettler & Robert Winter, 0. "A viability theory for digital businesses: Exploring the evolutionary changes of revenue mechanisms to support managerial decisions," Information Systems Frontiers, Springer, vol. 0, pages 1-24.
    17. Matthias Fabian Gregersen Trischler & Jason Li-Ying, 2023. "Digital business model innovation: toward construct clarity and future research directions," Review of Managerial Science, Springer, vol. 17(1), pages 3-32, January.
    18. Mary J. Benner & Joel Waldfogel, 2016. "The Song Remains the Same? Technological Change and Positioning in the Recorded Music Industry," Strategy Science, INFORMS, vol. 1(3), pages 129-147, September.

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