Competitive Strategy - Technology research

Business Model Innovation as Lever of Organizational Sustainability

Elias G. Carayannis • Stavros Sindakis • Christian Walter

Published online: 11 January 2014 � Springer Science+Business Media New York 2014

Abstract The concept of business models and consequently business model innovation has its foundation in corporate practice, strategic management, and industrial economics.

However, business models are not a strategy but constitute the core and driver of a strategy

as well as the key for decoding, understanding, and effectively communicating a strategy

both within an organization as well as across its business ecosystem. As with Business

Model, the Business Model Innovation literature is not well developed. This paper focuses

on the effects that can be achieved through business model innovation, in particular

organizational sustainability. In this regard, the paper focuses on the organizational design

and governance and the role different stakeholders, predominantly customers and partners

play in the innovation process towards organizational sustainability. Finally, the ways by

which organizational performance is influenced by different business models are also

explored, aiming to shed light on this theoretical gap. The results provide insights to

manufacturers in developing countries, overcoming their dependence on commoditized

products and OEM manufacturing while maintaining a sustainable ecosystem. Finally,

implications for theory, policy, and practice are outlined along with the suggestions for

future research.

Keywords Business model � Value proposition � Organizational sustainability � Innovation

JEL Classification O310 � O320 � O330

E. G. Carayannis (&) George Washington University, Washington, DC, USA e-mail: [email protected]

S. Sindakis � C. Walter Bangkok University, Bangkok, Thailand e-mail: [email protected]

C. Walter e-mail: [email protected]

123

J Technol Transf (2015) 40:85–104 DOI 10.1007/s10961-013-9330-y

1 Introduction

Organizations are open systems operating under conditions of substantial turbulence, risk

(known unknowns) and uncertainty (unknown unknowns) and seeking to balance stability

and coherence with flexibility and change in pursuit of higher levels of efficacy and

organizational sustainability. In addition, organizations exist, survive and prosper on the

basis of a sound value proposition (even not-for-profits should be creating and not

destroying value) and functional business model that helps unlock, capture and re-dis-

tribute in an efficacious manner the value added by the organization in question.

Business model innovation (BMI) is a concept based on the principle that firms innovate

by leveraging their internal capabilities and resources (Zott and Amit 2010a); therefore

relates to a number of the innovation strategies identified by Reinmoeller and van Baa-

rdwijk (2005): knowledge management, exploration, cooperation, and entrepreneurship.

Chesbrough (2010) has noted that technological advancements force organizations to

change, so business models must be responsive to the dynamics of the industry, envi-

ronment, etc. In this case, technology transfer agents play an important role to transform

scientific knowledge into marketable innovative products. Consequently, organizations that

combine and adopt business models aiming to distribute research-based innovations to

different market segments have a higher impact as technology transfer agents and is more

likely for them to succeed Clausen and Rasmussen (2012). Nevertheless, it is noteworthy

that not all business models reinforce innovation, with some types leading to a higher

degree of innovativeness.

Although the amount of literature on Business model increases, a sound theoretical

foundation is still missing, which also applies for the concept of BMI (Schneider and

Spieth 2013). Likewise, the role of technology transfer offices in assisting companies to

create, transform, or change their business model still remains to be examined. On one

hand, several studies have pointed out the importance of technology transfer agents in the

development of entrepreneurship, while on the other; this emerging field of BMI attracts

the interest of researchers (e.g. Markman et al. 2005; Wright et al. 2004; Debackere and

Veugelers 2005). However, there is no study yet, which aims to explore the activities of

technology transfer offices within the context of BMI. As with business model, the BMI

literature is not well structured. Despite Porter’s (2000) early doubt in the business model

concept, many scholars argue that business models provide a concise framework that

explains the ways by which firms create and capture value, and clarify the means by which

enterprises monetize their innovations (e.g. De Reuver et al. 2013). Business models

provide a narrative that lays out the activities and structure of the business, improving

organizational performance (Magretta 2002). Indeed, the value proposition and business

model concepts stand at the core of firms who aim to become and remain sustainable,

profitable, and scalable. This also applies to non-profit value-adding and value-maximizing

new organizations, highlighting its significance especially in knowledge-based and

knowledge-driven contexts (Carayannis et al. 2011, 2012, 2013; Carayannis 2008).

Likewise, Velamuri et al. (2013) note that BMI is particularly interesting for enterprises

facing commoditization, such as manufacturing firms. Increasing cost-pressure, difficulties

in differentiation, and threats of easy substitution are the major challenges that corpora-

tions have to meet, especially in environments, such as the developing countries, where the

culture and the intention to imitate precedence over innovation and sustainable develop-

ment. When developing countries move towards the level of developed countries, labour

cost and expectations increase and their competitive advantage vanishes.

86 E. G. Carayannis et al.

123

In this context, it is often perceived that globalization serves as both a catalyst of

accelerated development as well as an agent of chaotic disruption resulting in socio-

economic and political dislocations. In light of this, a key idea may be that heterogeneity

could be understood as a mind-set and a practice where complexity and diversity are

leveraged strategically in a manner that promotes organizational sustainability. Carayannis

and Provance (2008) have argued that innovation emerges from posture, the organizations

position within a business ecosystem, propensity, as a reflection of processes, routines and

capabilities including the organizational culture and performance (3P), which are not only

financial but also products, patents and environmental impacts. Organizational design for

innovation is in then the effective alignments of the organization to the firm’s business

model in order to create an optimal environment for the 3P’s.

The present case shows how BMI can be used to overcome commoditization challenges,

partly by moving from a business model focused on the trade of goods to a business model

focused on the trade of tasks (Carayannis et al. 2011). In addition, this paper aims to

address how organization sustainability can be achieved with BMI and examine the role

that organizational design, governance, and different stakeholders (e.g. customers, clients)

have in the process. Finally, the ways by which organizational performance is influenced

by different business models are also explored, aiming to shed light on this theoretical gap,

which was identified by Clausen and Rasmussen (2012). The results provide insights to

manufacturers in developing countries, overcoming their dependence on commoditized

products and OEM manufacturing while maintaining a sustainable ecosystem. The fol-

lowing sections review the existing literature on business models and BMI, before the

different elements of business model are set into the context of organizational sustain-

ability, setting the background for the empirical analysis. Subsequently, the paper outlines

the research approach taken before the case is described in detail and the findings are

evaluated as well as are comprehensively discussed. Finally, implications for theory,

policy, and practice are outlined along with the suggestions for future research.

2 Business model theory

The concept of business models and consequently BMI has its foundation in corporate

practice, strategic management and industrial economics (Aspara et al. 2009). It received

increasing attention during the late 1990s and early 2000s (e.g. Amit and Zott 2001;

Petrovic et al. 2001; Applegate 2000) due to the emergence of internet-based businesses

(Santos et al. 2009). Despite the fact that the concept of Business Models is first mentioned

in 1947 by Santos et al. (2009), there seems to be no clear academic definition in the

literature (e.g. Goethals 2009; Mäkinen and Seppänen 2007) and according to Schneider

and Spieth (2013), neither is there for the concept of BMI. Early definitions of business

model date back to Timmers (1998), Amit and Zott (2001), Chesbrough and Rosenbloom

(2002), Magretta (2002), and others (see Zott et al. (2011) for comprehensive list). Shafer

et al. (2005) found twelve different definitions between 1998 and 2002, encompassing 42

different business model components. Overall, the definitions fit into four themes: strategic

choices, creating value, capturing value and value networks. They conclude that business

model reflects the strategic choices and their operating implications, which help to com-

municate, analyze, test and validate the cause-effect relationships that derive from the

strategic choices made (Shafer et al. 2005). Similarly, Zott et al. (2011) list ten general

level definitions for business models and suggest that existing literature mainly addresses

business models under the view of a new analytical approach, that is a holistic perspective

Business model innovation 87

123

on how enterprises do business, stressing organizational activities, and emphasizing on

value creation. Likewise, George and Bock (2011) established six themes on which

business models seem to reflect upon: (1) Organizational design, (2) Resources-based view

of the firm, (3) Narrative and sense making, (4) Nature of innovation, (5) Nature of

opportunity, and (6) Transactive structures. Nonetheless, their study shows that practitio-

ners relate a business model predominantly to performance, survival, and opportunity

exploitation.

Furthermore, De Reuver et al. (2013) distinguish the European and American Schools

of business models, where the former focus on modelling and designing approaches and

the latter emphasize on classifications of business models and its use in open innovation.

The latter approach is considered to be an abstract systemic description of interconnected

activities (Abdelkafi et al. 2013). For instance, Zott et al. (2011) acknowledge business

models as a new holistic, systemic way of analysing and describing the ways and means by

which organizations operate. This leads us to perceive business models as structural

activity-centered frameworks of firms’ dynamics with their internal and external stake-

holders (Zott et al. 2011; Zott and Amit 2008). Consequently, business models should not

be deemed as organizations’ operational strategy. They are rather designed as tools for

decoding, understanding, and effectively communicating a strategy both within an orga-

nization as well as across its business ecosystem. Therefore, business models constitute the

core and driver of firms’ strategy. This is consistent with Zott and Amit’s study (2008),

which shows that the product market strategy and the business model are indeed different

concepts and their combination affects firms’ market value. On the contrary, Casadesus-

Masanell and Ricart (2010) argue that strategy and business model overlap. The interac-

tions between strategy and business models enable external observers to understand a

firm’s strategy by looking at its business model, as the business model reflects the oper-

ational strategy of an organization. The business model therefore reflects the architecture

of an organization to accomplish a specific purpose, usually value creation. Additionally,

business models enable value unlocking, capturing and leveraging, which are considered as

core elements of the current and emerging state of the art in relation to organization

science, theory, policy and practice matters. In other words, business models focus at least

on value creation and value capturing aspects of businesses (Zott et al. 2011). In a sense,

this plethora of views and variants of business models may indeed denote the emergent

stage of the theory around business models and hence BMI perspectives. Below, we

describe the importance of value proposition, which stands at the core of the business

model framework, as this was developed by Abdelkafi et al. (2013).

3 Defining value proposition

While systemic frameworks and definitions of business models are useful, they also tend to

be generic, as their abstraction level is higher, since they do not deal directly with activities

and business patterns (Abdelkafi et al. 2013). A less abstract way of defining Business

Models evolved around value-based business models. The studies by Osterwalder and

Pigneur (2010), Johnson (2010), and Abdelkafi et al. (2013) propose frameworks that focus

on definitions of Business Models that have the concept of value at their core.

Osterwalder and Pigneur (2010) develop the business model canvas around the value

proposition, and defined a business model (p. 14) as ‘‘a rational of how an organization

creates, delivers and captures value’’. Johnson (2010, p. 288) defines the Business Model as

a ‘‘representation of how a business creates delivers value, both for the customer and the

88 E. G. Carayannis et al.

123

company.’’ His business model includes four interconnected key elements: customer value

proposition, profit formula and the closely linked key resources and processes, which

altogether grow the rules, norms, and success metrics of a business. Abdelkafi et al. (2013,

p. 12) follow a similar approach by defining the business model as a description of ‘‘how a

company communicates, creates, delivers, and captures value out of a value proposition.’’

Their framework (Fig. 1) captures how each aspect is carried out in the organization.

Value proposition is defined by Osterwalder and Pigneur (2010, p. 22) as ‘‘the bundle of

products and services that create value for a specific customer segment’’. The surrounding

aspects of value creation, delivery, capture, and communication emerge from the value

proposition, which is by definition relevant to a specific or several specific customer

segments. Therefore, it has to be communicated, selecting accurate content and appropriate

channels. More specifically, value creation presents the key partnerships, resources, and

process required for business operation. Likewise, value delivery portrays the customer

relationships and segments along with the distribution channels, while value capture

focuses on the means that revenue is generated as well as on the ways costs are kept under

control (Abdelkafi et al. 2013). Consequently, we consider value proposition to be the

enabling foundation for the conceptualization and implementation of a business model or

models as it encapsulates the unique, and challenging to expropriate and/or emulate as well

as superior value-adding in a financially, socially and environmentally sustainable manner,

leading to sustainable entrepreneurship and robust competitiveness regimes (Carayannis

et al. 2000, 2011, 2013; Carayannis and Campbell 2009; Carayannis and Korres 2013;

Carayannis and Provance 2008; Carayannis and Wang 2012).

The research adopts Abdelkafi et al’s (2013) definition and framework as it allows to

discuss different patterns in a comprehensive manner. It enables to thoroughly examine a

business and explore activities carried out in the context, facilitating the operationalization

of business model research. It also enables the exploration of the different business patterns

in the selected cases and allows comparison of the BMI approaches. A business model, in

general, empowers the conceptualization of the interrelated strategies and relationships

among the different components as well as assesses the logic and consistency of a firm’s

Fig. 1 Business model framework (source Abdelkafi et al. 2013, p. 12)

Business model innovation 89

123

operating framework (Morris et al. 2005). Furthermore, a predefined framework enables to

define BMI as an evolution or revolution of an existing business model. In other words, if

one or several aspects of the business model denoted in the framework change, it is

possible to speak about a development or an innovation of the business model. Moreover,

innovation may also be driven by transformations in the way different aspects of a business

model relate to and interact with each other.

4 Conceptualizing business model innovation

Following the previous discussion on business models and value proposition, we anticipate

that the use of different business models benefits firms, providing them with the advantage

of flexibility and with the opportunity to remain current and innovative. Clausen and

Rasmussen (2012) found that firms, which employ more than one business model at the

same time, have greater chances of successful innovation than their traditional counter-

parts, leading also to the application of academic research. Taking this into consideration,

Schneider and Spieth (2013) identified that BMI research focuses on three core

perspectives:

a. the theoretical foundations of the resourced-based view of the firm (Barney 1991),

b. the dynamic capabilities view of the firm (Teece et al. 1997), and

c. the strategic entrepreneurship view (Hitt et al. 2001; Kuratko and Audretsch 2009).

The resource based-view argues that an organization’s competitive advantage is based

on their different, unique and non-substitutable resources (Barney 1991). Similarly, the

dynamic capabilities in a resource-based view context indicate the active integration, or in

business model terms, the reconfiguration of capabilities and organizational processes to

gain competitive advantages from them (Teece et al. 1997). This re-assembles the view of

Santos et al. (2009), who defined BMI as ‘‘a reconfiguration of activities in the existing

business model of a firm that is new to the product/service market in which the firm

competes’’. They also describe BMI as a method of lean innovation, since the resources

and other capabilities are already inherent in the organization, and investment can often be

kept at a minimum. Likewise, Lindgardt et al. (2009) argue that BMI can be embedded in

the existing core business, allowing the capitalization of existing capabilities, or be inte-

grated into a new firm, when dealing with disruptive innovations Christensen (1997). The

third incorporated perspective is strategic entrepreneurship, which combines internal sit-

uation and external opportunity perspectives (Schneider and Spieth 2013). Schneider and

Spieth developed a business model research framework based on the distinction of business

model development and BMI, where the former is considered as the continuous change and

the latter as the response to changing sources of value creation. Consequently, BMI is

dominantly rooted in strategic entrepreneurship, while business model development is

rooted in the concepts of resource-based view and dynamic capabilities perspective. A

business model is a constantly adjusting and dynamic system based on internal and

external changes, that might be either incremental or radical (Bucherer et al. 2012). As a

result, it will not be possible to predict the innovation of a business model by only

examining an organization’s existing business model. The business model reflects the

status quo of organizations and not the strategic choices they might make (Casadesus-

Masanell and Ricart 2010).

In addition, Aspara et al. (2009) argue that BMI can be regarded as a strategic choice of

a business or as a continuous strategic orientation. It is seen as valuable in instable

90 E. G. Carayannis et al.

123

economic situations, where businesses often face the need to completely reinvent them-

selves (Lindgardt et al. 2009). On the other hand, Business Models seem to be more stable

during times of success, as the ‘path ahead’ look as if obvious (Schneider and Spieth 2013).

Cost reduction and flexibility are among the most compelling reasons for organizations to

engage in BMI, as BMI allows specialization and seizing emerging opportunities quickly

(Pohle and Chapman 2006). Several studies distinguish internal and external drivers that

lead to BMI (e.g. Bucherer et al. 2012; Sorescu et al. 2011), by aligning internal capa-

bilities or adapting to external changes, such as technological developments (Chesbrough

2010) or changing customer values (McGrath 2010). Indeed, the process of implementing

an innovative business model seems to be driven by acting on internal and external

opportunities and threats (Bucherer et al. 2012).

In this uncertain context, organizations should experiment with business models in order

to find and adopt the optimum one for them (Chesbrough 2010; McGrath 2010). Similar to

the Lean Start-up approach (Ries 2011), which is popular in the entrepreneurship com-

munity, a discovery-driven approach could be used, enabling organizations to be trained

about and become familiar with their newly developed business models quickly and at low

cost (McGrath 2010). This is consistent with the findings of Clausen and Rasmussen (2012)

that firms which experiment with several business models are able to discover and exploit

more business opportunities. Complementary to this approach, the processes of exploration

and exploitation as well as the act of creating opportunities through entrepreneurial action

are important aspects of the emerging BMI body of knowledge and theoretical framework

(e.g. March 1991; Chandler et al. 2003; Mitchell et al. 2008; Raisch et al. 2009; Zahra

2007). Similarly, Bucherer et al. (2012) found that BMI can either run in parallel to an

existing business model or go so far as to establish a new entity, either internally as a

business unit or externally as a new venture. In addition, it has been argued that making the

strategic choice to completely change or alter an existing business model leads to sig-

nificant sustainable business performance improvements (Lindgardt et al. 2009). Despite

the BMI praise, Aspara et al. (2009) found that BMI alone will not likely result in greater

business performance. However, in combination with a second strategic focus—namely

replication of effort as covered in the quoted study—will yield better performance.

5 The influence of organization design and governance on business model innovation

Osterwalder (2004) notes that the business model is situated within the triangle of business

strategy, information and communication Technologies (ICT), and business organisation,

the latter including organizational structure, departments, units, processes, and workflow.

He notes that changes within the business model will effectively change the way organi-

zation is designed. Similarly, Zott and Amit (2010b) have argued that the business model

represents an activity system of a firm and that its design around content (what), structure

(how) and governance (who) should address one/or several themes around novelty of

content, structure and governance, lock-in of stakeholders, complementarities of activities,

and efficiency to reduce transaction cost. This poses the question where BMI originates

within an organization, and what kind of leadership style is needed to drive BMI. Estab-

lished firms in particular, face the barrier of responsibility in regards to BMI. In large

organizations, several stakeholders could potentially be responsible for innovating the

business model, but top management frequently assigns the responsibility to mid-level

management, which often lacks the requisite competence, experience, expertise and

authority to properly shape, drive and leverage BMI, and that eventually results in a

Business model innovation 91

123

leadership gap and even failure (Chesbrough 2007; Santos et al. 2009). This may well

explain why smaller firms are sometimes more successful, as they face less constraints, can

adapt quicker, and have a less extensive organizational structure (Aspara et al. 2009).

De Waal (2006) has argued that organizational design in high performance organisations

should stimulate cross-functional and cross-organizational collaboration, simplify the

organization by reducing barriers around units, foster knowledge sharing and be able to

continuously align the business with the ever changing internal and external environment.

These changes however, can only be mandated by the top management. BMI, particularly

such that could lead to market disruption, needs organizational re-design which might explain

why established firms tend to be more successful at sustaining innovations, while being less

successful in BMI per se, whereas firms new to a market are more likely to succeed in BMI. In

this regard, Santos et al. (2009) consider the relational linkages between internal and external

(i.e. partners, supplier, customers) units as well as the transactional linkages of activities of

those units. Taking this into account, governing mechanisms are considered vital in the

organization design. Governance in particular, addresses the problem of power distribution,

control, and hierarchy. It might be these governance issues that predominantly hinder BMI as

the conflicting interests between the configuration of existing business assets and potentially

new ways of doing business contradict the dominant logic that a firm follows. Often BMI

makes several capabilities and partners obsolete, which conversely means that new skills and

knowledge are required organization-wide, thus triggering defensive routines and other

organizational inertia and resistance to change and learning symptoms (Argyris and Schôn

1987; Argyris 1985). It potentially changes the scope of the corporation, impacts other

departments, and increases risk exposure (Santos et al. 2009).

6 Business model innovation and organization design towards sustainability

Several studies have reported that the main goal of firms is to create wealth and profits for

shareholders, putting social and environmental ‘aspects’ as secondary under the main busi-

ness goal (e.g. Stormer 2003). Other studies mention that corporations have to undertake

initiatives and operate in such way that will address social and ecological degradation,

developing new business models and adopting organization designs that would lead them to

become integrated entities that operate beyond the economic profit, creating social and

environmental value (e.g. Doppelt 2003; Dunphy et al. 2003). Nidumolu et al. (2009) argue

that sustainable development is the only way available for enterprises’ growth, decreasing

production costs and generating additional revenues from novel offerings or business

expansion. Their empirical study found that (p. 2) ‘‘sustainability is a mother lode of orga-

nizational and technological innovations that yield both bottom-line and top-line returns.’’

Although this path is not easy—with those firms facing the challenges of the five stages of

change (Nidumolu et al. 2009, p. 5): viewing compliance as opportunity; making value chains

sustainable; designing sustainable products and services; developing new business models,

and creating next-practice platforms—they present this strategy as the competency for

businesses to develop future’s competitive advantage. This is also emphasized as different

management standards (e.g. ISO 14001) that aim to address sustainability issues (Hall and

Wagner 2012). Considering the role of different stakeholders (particularly partners, clients,

and customers) in achieving organizational sustainability is critical as organizations can

position themselves as sustainable leaders.

Likewise, Stubbs and Cocklin (2008) suggest that the current business model must be

transformed, incorporating social and environmental priorities for organizational

92 E. G. Carayannis et al.

123

sustainability. Scholars have raised the issue of integration of economic, social, and envi-

ronmental aspects in business operation (e.g. Elkington 1998; Savitz 2006). For example,

Carayannis and Campbell (2010), who underlined the importance of ecology in business

operations developed an inter-disciplinary and trans-disciplinary framework of analysis for

sustainable development. Based on the Triple (university-industry-government relations) and

Quadruple (university-industry-government-civil society relations) Helices (Carayannis and

Campbell 2009), they introduced the broader and more comprehensive concept of Quintuple

Helix (Carayannis et al. 2012) which frames knowledge and innovation in the context of the

natural environment, and can be interpreted as an approach in line with sustainable devel-

opment and social ecology. The Quintuple Helix is the system that sets a common ground

between ecology, knowledge, and innovation, creating the synergies between economy,

society, and democracy. Consequently, organizations should operate within those frame-

works and adopt such business models aiming also to provide solutions to societal and

environmental challenges (apart from seeking economic profit), as ‘‘such global problems are

too complex to be solved solely by political actors’’ (Hansen et al. 2009, p. 684). Additionally,

sustainable development provides the framework for innovation and business expansion

through new regulations that push for innovation and new ideas leading to business growth,

namely the regulatory push and vision pull model (Day 1998; Hockerts 2007; Preuss 2007).

Putting all these together, we consider that sustainability innovations maintain and increase

the overall capital stock (social, economic, and environmental) of a firm (Hansen et al. 2009),

with ethics and culture (people) being the cornerstones of this framework.

Furthermore, a critical organization design consideration is the emergence of an

enterprise form that optimizes explorative and exploitative innovation. According to He

and Wong (2004), it is more likely for ambidextrous firms to achieve sustainability and

enhance performance, by adopting both explorative innovation strategies targeting new

product and market areas as well as exploitative innovation strategies aiming to improve

current product and market positions. Likewise, several studies highlight the importance of

ambidexterity in organizations, arguing that exploratory innovation seeks to develop new

knowledge, promoting novelty for radical innovation, while exploitative innovation builds

on current knowledge, aiming at incremental innovation to retain competitive advantage

and achieve better performance (e.g. Atuahene-Gima 2005; Benner and Tushman 2003;

Gibson and Birkinshaw 2004). Whenever there are differences in the sets of strategies and

actions maximizing ambidexterity, the organization should exercise care to elaborate and

make informed choices among the trade-offs between exploitation and exploration tensions

that ultimately constrain any choice of strategies, actions, and organization design

including and in particular that of BMI choice and evolution (Aspara et al. 2009; Cara-

yannis and Provance 2008). This is also supported by Xu et al. (2007), who found that

organizational strategy, structure, and culture are among the key factors that influence

innovation performance, which improves by the effective synergy of all the key innovation

elements. Just as organization design is central to BMI, so is ambidexterity a documented

enabler of sustainability.

Figure 2 aims to illustrate the linkages between the examined concepts of organization

design, governance, and BMI for organizational sustainability.

Within this framework, this study aims to explore the ways and means by which

sustainability is created, focusing on a lighting manufacturing organization in Thailand

(Please see the research design below). Hall and Wagner (2012) analyzed the impact of

how integrating sustainability aspects into the business model of manufacturing firms can

help create competitive advantages. They argue that integrating sustainable metrics and

measures can be the foundation for competitive advantage as it allows reducing

Business model innovation 93

123

inadequacies usually caused by deviating from objectives as well as diverging objectives

(such as financial vs. social vs. environmental). They propose that business models based

on cross-functional problem solving perform economically and ecologically better than

those using a modular approach. However cross-functional coordination leads to a less

tight integration with regulatory bodies in the case of process innovation. Based on

Schaltegger et al’s (2012) argument that the degree of BMI impacts corporate sustain-

ability strategies, and therefore the overall performance and competitiveness of the orga-

nization, the authors also plan to conceptualize and empirically corroborate the assumption

that BMI is the driver of sustainable growth in the case organization.

7 Empirical research design

Considering that the research on BMI and organizational sustainability is still emerging, an

exploratory qualitative research approach was chosen based on case-study research (Ei-

senhardt 1989; Yin 2009). A qualitative, case-study-based approach allows unveiling and

building theory when the phenomenon studied is not clear or little is known. It considers

complex patterns and context specific factors as well as causal relationships. This study

exploits the theory and research context to develop a research design framework that

directs the data collection process, followed by the comparison of the findings with rele-

vant literature to raise external validity. Apart from exploratory interviews, other tech-

niques of data gathering were also used in this research, such as historical financial data,

and documents relevant to the BMI process. The authors conducted an exploratory case

study, employing face-to-face in-depth interviews. The in-depth interview technique uses

Fig. 2 BMI at the core of enterprise governance and organization design for sustainability (GODS)

94 E. G. Carayannis et al.

123

open-ended questions allowing the interviewees to provide broader ideas, which was

considered the most appropriate for this study.

The case company of this study is regarded as dynamic units and are subject to a process

of transformation and changes. It can be born, grow or disappear in response to internal and

external changes. The process of innovation and growth are highly conditioned by the

efforts of entrepreneurs as well as the systematic accumulation of knowledge and man-

power skills. Therefore, basic characteristics of the firms under study, including infor-

mation concerning both pre- and post-transformation, should be taken into account before

empirical analysis is made. The interview questions were derived from the business model,

organization design, and sustainability reviews of the literature, focusing on when, why,

and how the new practices were developed and implemented. They also aimed to examine

the practical changes that these implementations had on the organization: new offerings,

lever of existing and new knowledge, and improvement of technologies that enable market

leadership and/or improve organizational sustainability.

The process of identifying interviewees is determined by the purpose of the research

project. Statistical representativeness is not normally sought in qualitative research,

while sample sizes are not determined by hard and fast rules. On the contrary, they are

based on factors such as the depth and duration of the interview and what is feasible

for a single interviewer. Data collection was based on in-depth semi-structured inter-

views with 8 senior executives, including the CEO and Managing Director. Participants

were chosen to provide information about the conception, implementation, and evolu-

tion of the case organizations’ business models. A study by McDermott and O’Connor

(2002) emphasises that this approach offers a thorough understanding and a richer

portrayal of the case being studied. Participants were selected because they have deep

knowledge of the case organizations’ innovation and entrepreneurial activity, so the

information acquired could be compared and treated as being highly credible. This

purposive sampling technique provides a deep and rich investigation of executive

viewpoints regarding the phenomena under study. We first clarified the concepts of

BMI and organizational sustainability to the interviewees to ensure the concepts were

addressed correctly. Afterwards, the interviews were taken place to collect data in light

of the proposed framework. The interviews lasted between 20 and 60 min and were

held on-site. They were carried out in English language, having also a Thai translator

present to clarify concepts and questions when remarks arose. Translation was per-

formed to data that was only available in Thai language, and was then proofread by a

second translator to ensure accuracy.

The data collected were subjected to qualitative analysis by the researchers. Data

analysis was performed throughout by a broad and thorough procedure. The data was

studied in an iterative way allowing for creation of new relationships that explore possible

explanation for the studied phenomenon. At the early stage of the qualitative analysis,

interviews were transcribed to produce manuscript that could be used to generate coding

categories and test theories. Before transcriptions were coded, each transcript was exam-

ined carefully to enable a thorough understanding of its value. A guide to themes then

emerged, using a category system for data reduction and coding in line with both the initial

theoretical framework and the conceptions that had been developed by the interviewees.

The next step followed the process employed by Lindgren and O’Connor (2011), who

classified interview data and organised them thematically to compare organisation, oper-

ation, and strategy among case study sites as well as participants’ viewpoints. This sys-

tematic process concerns the description of managerial practices, the interpretation of

decisions and actions, as well as the search for patterns and correlations among data. As

Business model innovation 95

123

regards conclusion drawing and data verification, one would apply the notion of Rohrbeck

and Gemünden (2011), who recommend that a researcher should follow the theoretical

framework, identify and assess rival explanations and make a case description.

Table 1 Changes in the LKS business model

Before establishing LeKise Lighting

With LeKise Lighting

Value proposition Lighting products Lighting products and services

Value communication—story for communicating value

High quality lighting products

Customized high quality lighting solutions that save energy and decrease cost for organizational and environmental benefits

Value communication— channels for communicating value

Social responsibility projects

Customer relationship management

On- and offline media (TV/ Websites)

Social responsibility projects

On- and offline media (TV/Websites)

Value creation—key partnerships

Hitachi Raw material suppliers

Raw material suppliers

Mainly internal LKS Group partners

Mainly internal LKS group partners

Lighting designers

OEM partners Contractors

OEM partners

Value creation key resource sand processes

Raw materials Raw materials

Sales team Human resources

Manufacturing process

Manufacturing process

Lighting design

Customer relationship management

Power serve

Value capture—cost structure Manufacturing Manufacturing

Customer relationship management

Social responsibility

R&D

Value capture—revenue streams

Wholesale Wholesale

OEM products Projects

Export Government projects

Export

OEM

Value delivery—customer segments and relationships

Wholesale Wholesalers

OEM clients Modern trade

Government

OEM

Value delivery—distribution channels

Direct sales to wholesale customers

Direct sales to wholesale and retail customers

96 E. G. Carayannis et al.

123

8 Empirical case-in-point: Lee KichareonSeang Co.Ltd.

Lee KichareonSeang Co.Ltd. (LKS) was founded 44 years ago and is Thailand’s largest

lighting manufacturer, and is owned by LKS consists of six companies all focusing on

different parts of the lighting manufacturing, packaging and sales. The particular interest of

this research is on LeKise Lighting (LKL), which was established in 2009. LKS started as

an OEM manufacturer 44 years ago and has since then technologically collaborated with

Hitachi Japan to produce various lighting solutions. LKS is the first and one of the largest

providers of T5 and later T8 tube lighting in Thailand and is now the first Thai organization

to introduce LED lighting to the country. Among their clients are companies like Toshiba,

Panasonic, and Philips.

LeKise was forced to innovate its business model due to changing market conditions.

The evolution of the business model is summarized in Table 1. One LeKise manager

pointed out that LKS is in fact not able to compete on price anymore, due to the Chinese

competition. He pointed out that in OEM manufacturing, LKS is only able to compete on

quality.

We sell our products in a good price and the quality is beyond the price they paid.

That means customer will think that our product is worth paying for. For example, a

lamp has its life time at 22,000 hours which customer can use for 4 years and they

only pay about 30-50 Baht for it.

9 Conclusion: empirical findings and discussion

Based on the one empirical case study (LKS), some preliminary findings can derive as an

emerging set of indicators that may be reinforcing some of our theoretical tenets outlined

above. It comes forward, for example, that LKS takes the advantage of current resources

and knowledge in order to develop and establish its own brand (LKL), aiming to fill the

gap in the local market and compete with larger firms that still collaborates with under the

OEM framework. This is consistent with the views of Barney (1991), Teece et al. (1997)

and Santos et al. (2009), that companies that manage to reconfigure their capabilities and

organizational processes are able to innovate and therefore, compete and survive in the

global competitive landscape. Likewise, this case company verifies the arguments of

Lindgardt et al (2009), Christensen (1997), and Schneider and Spieth (2013), who used the

term strategic entrepreneurship to describe corporate entrepreneurial initiatives as tools for

BMI (e.g. when organizations utilise current competencies and resources to develop new

units or new ventures). Therefore, we see that LKS links, proves and practically enriches

the three core perspectives of BMI given by Schneider and Spieth (2013) (see above).

This study also corroborates the views of Aspara et al. (2009), Pohle and Chapman

(2006), Carayannis et al. (2000) and Carayannis (2008) that this continuous strategic

orientation to innovation and flexibility is characterized by pro-activeness as it allows firms

to appreciate future risks and take the necessary actions to obviate competitors; check on

global technological advancements (in this case by adopting, adapting and developing

innovations for the local market); respond to environmental changes (by designing lighting

products that save energy); and meet customers’ needs (by developing high quality cus-

tomised lighting solutions). LKS seems to be a good example of a company in SE Asia that

adopts BMI, readapting its structure, developing and establishing a new business, and

adjusting the balance of production—investing more on producing LKL products and less

Business model innovation 97

123

on OEM—responding in that way to the challenges of the present time. This study also

underlines the ambidexterity that is required for successful BMI, leading companies to

create opportunities for growth, and so, prevent decay.

Here comes the ability of the company not to develop its strategy and count only on the

benefits of the short-term goals, but also consider long-term planning as the tunnel to

success and sustainability. In other words, ‘‘the ability of an organization to focus on both

the short and the long term is one of the key critical enterprise success factors and this

balance can be achieved by relying and leveraging technological learning processes at

multiple levels within the organization’’ (Carayannis 1998, p. 699). LKS and its BMI

example illustrate the importance and influence of organization design on the development

of innovation and reinforces Osterwalder’s notion that the Business Model is positioned at

the centre of the business strategy, ICT, and business organisation triangle. This is shown

clearly in Table 1, where the key partnerships, resources and processes as well as the cost

structure have been modified according to the new business model development framework

of the company. Similarly, we see that posture, propensity, and performance (Carayannis

and Provance 2008) have also been revised and updated, setting up the framework for the

company to be competitive (changing its position within the business ecosystem—from an

OEM to own brand and product developer—adapting and adopting routines and culture for

innovation development; and improving the performance and environmental impact). This

study also enhances De Waal’s (2006) argument about cross-functional and cross-orga-

nizational collaborations. Table 1 shows the differences from before to after the estab-

lishment of LKL. In the new context, we see that the key partnerships have been enriched

and developed mainly with partners that influence the production of high-quality cus-

tomized outcomes (suppliers, lighting designers, and lead customers); provide solutions for

cost reduction (suppliers and contractors); and optimal product distribution (wholesale and

retail distribution). Therefore, we can assume that successful BMI requires an integration

of the stakeholders into the design, production, and distribution process, following the

same rules and aiming to achieve the same results in terms of values (quality) and per-

formance (quantity).

Furthermore, we have seen no application of technology transfer agents in the case

organization’s change of its business model. Although, they have been underlined as key

factors for development and innovation, especially in technology-oriented firms, there

seems to be no direct link and utilisation in this case. This leads to the conclusion that more

research needs to be conducted to define, explore, and analyse the applicability of BMI to

technology transfer offices as well as to examine the ways by which those agents can

contribute to the transformation of a business, aiming to become innovative, competitive,

and therefore, remain sustainable.

To sum up, we see that BMI requires the application of organization design and gov-

ernance competences that incorporate resources, dynamic capabilities, and entrepreneur-

ship to develop such competitive advantages and explore new business opportunities so

that firms may achieve organizational sustainability. Moreover, the emphasis on innova-

tion, flexibility, and ambidexterity (O’Reilly and Tushman 2004) is a prerequisite for

successful BMI development in addition to organization design for innovation that act as

enabler of sustainability. Finally, we argue that cross-organizational and cross-functional

collaborations are factors of success and facilitate the implementation of BMI. Clearly, this

is work in progress in terms of the collection of empirical data and we expect to have

additional empirical validation in the near future. On the matter of the move from trade in

goods to trade in tasks (see Carayannis et al. 2011 above) we see confirmation on this based

on the following quote below.

98 E. G. Carayannis et al.

123

In order to be able to be able to deliver new services LeKise Lighting had to

restructure itself significantly. While originally only focusing on sales and manu-

facturing it has had to change to a company that provides services. Not only had the

organizational structure to change but the mind-sets of employees. In itself LKL as

part of Lee Kitchareonsaeng was set up to enable the group to deliver new products

and services to the lighting market.

In addition, we see in the following quote an affirmation of the LKS’s capacity to

engage in BMI and re-invent itself in the process possibly not only sustaining but also

enhancing its value proposition:

When LeKise Lighting had to adapt to the market situation due to the increasing

adoption of LED lighting and their introduction of the 1-stop-service LKL had to

change again.

We are the organization that is really good at adapting or changing. We are very

flexible. All employees can easily adapt to change. When the LED technology came

in the existing organization structure and unit was not enough to drive the whole

organizational changes necessary. So we set up a new unit.

Organization design and sustainability are demonstrated in the manner that LKS seems

to have been adapting as well as re-allocating resources to provide a strong foundation for

future performance and competitiveness based on quality-centric and less cost-centric

differentiation: LeKise describes itself as a very flexible and adapting organization. The

firm is designed to meet customer requirements and it is possible to change process

depending on customer needs. However, change is mainly driven by the CEO himself. In

all conducted interviews, the managers pointed out that the vision and strategy are pro-

vided by the top management and disseminated through meetings, emails, and bulletins to

the different management levels and departments.

Our CEO looks into long term success of the organization. He teaches all employees

that we always have to be one step ahead of others.

Moreover, it is interesting to note that this adaptive flexibility is combined with a rather

overall conservative culture for LKS per the quotation below. This apparent contradiction

seems to be effectively managed and even leveraged for enhancing results via the organic,

top-down and bottom-up as well as mid-level out approach at LKS—that may be reflective

of the Quadruple Innovation Helix concept at the micro level (see references in text above).

One manager noted that the approach works very well for LeKise because the CEO and

Managing director are both actively involved in the day to day operations of the firm. This

is in accordance with several managers noting that the organization in itself is very con-

servative. The CEO and top management develops a three to 5 years strategy for LKL,

which is then translated into key performance indicators (KPIs) by the head of depart-

ments. Value creation is enhanced by measuring organizational results against the KPIs

and meetings are called for to be able to quickly react to market changes if the KPIs are not

met. Part of the KPIs is also to reduce cost and awareness programs and competitions are

run to increase mindfulness about cost saving issues.

Particularly interesting is the change in marketing efforts. LKL used to promote pro-

ducts as cost saving rather than energy efficient and social responsible. One could argue

that this is indeed implicit in the message of cost saving, however LKL did change the

scope of its marketing efforts completely by setting up a corporate social responsibility and

customer relationship management unit. This emphasises is now on advertising sustainable

Business model innovation 99

123

products and services through mainly corporate social responsibility activities. It is note-

worthy that Thailand was victim to an extensive flood in 2011. Previous research (Hen-

derson 2007) has shown that such incidents can have an effect on the interest of

organizations in acting more social and environmental friendly. It is however unlikely that,

given the economic demands, implementing corporate social responsible practices is just a

philanthropic endeavour. Organizations always need to consider the triple bottom line of

social, environmental, and economic returns in creating value, even in terms of corporate

social responsibility. While the aftermath of the flood, who’s victim several of LKS’s

competitors were, might have triggered corporate social responsibility initiatives, LKS’

products and services can easily be aligned to CSR practices, after all LED technologies

allows for decreasing energy consumption. This allows LKS to apply corporate social

responsibility practices not only in times of need, out of philanthropy, but also to increase

the triple bottom line results in a sustainable manner. It is a practice that can be used to

reach organizational growth by achieving environmental friendly and societal beneficial

goals at the same time. While every firm can, in theory, implement corporate social

responsibility schemes, the case of LKS is different as CSR and CRM are both results of a

large organizational restructuring as part of an innovation in the business model. All in all,

the LKS case study seems to be the first in a series of empirical validation steps that has

already provided some interesting and encouraging insights into whether, when, how and

why organizational sustainability can be best served by BMI.

10 Limitations and implications for future research

LKS serves as an example case of BMI serving organizational sustainability. However,

LKS is only one case and while the data is rich and valuable, its limitations have to be

acknowledged. As such, the study cannot claim generalizability, or causality. Organiza-

tional reality is not only determined by the firm’s actions but also by its competitors and

environmental causes and the data is not sufficient enough to make such claims. The study

can also not claim to offer a representative picture, as we note above that the LKS case is a

unique case that overcomes the OEM manufacturing trap by innovating its business model

and aligning it to financial, environmental and societal goals. To clarify if BMI can serve

organizational sustainability comparative case studies across multiple organizations in

different setting would determine if BMI can consistently be a drive for such goals and

quantitative research would allow unravelling patterns that are conducive to BMI being a

driver for organizational sustainability.

The LKS case provides initial insights into how BMI can serve organizational sus-

tainability, however future research is needed to develop comprehensive insights. First, the

study can be extended to a series of comparative case studies that could provide insights in

potential patterns and processes that would allow us to conduct further research in this area

by qualitative and quantitative means. That is, the case studies could be complemented and

extended via surveys and semi-structured interviews. Second, extending the study cross-

sectorally, that is beyond manufacturing firms to organizations operating in the service

sector would allow us to get insights into when, whether and how organizations with a

potentially smaller ecologic footprint could align their business model with sustainable

goals. Third, the role of the value chain network has not been discussed in the present

study. It would certainly be of value to explore how first and higher order customers,

suppliers, complementors, and competitors actually drive or inhibit firms in aligning their

business model with ecological, societal, and financial goals. Finally, this research has

100 E. G. Carayannis et al.

123

identified the gap in theory regarding the influence of technology transfer offices in BMI.

Consequently, more research is required to investigate the ways and means by which

technology transfer agents may contribute to and advance BMI.

References

Abdelkafi, N., Makhotin, S., & Posselt, T. (2013). Business model innovations for electric mobility—what can be learned from existing business model patterns? International Journal of Innovation Manage- ment, 17(1), 1340003.

Amit, R., & Zott, C. (2001). Value creation in E-business. Strategic Management Journal, 22(6–7), 493–520.

Applegate, L. M. (2000). E-business models: Making sense of the internet business landscape. In L. M. Applegate, G. W. Dickson, & G. DeSanctis (Eds.), Information technology and the new enterprise: Future models for managers. Upper Saddle River, NJ: Prentice Hall.

Argyris, C. (1985). Strategy, change and defensive routines (p. 368). Southport PR9 9YF, England: Pitman Publishing.

Argyris, C., & Schôn, D. (1987). Reasoning, action strategies, and defensive routines: The case of OD practitioners. Research in Organizational Change and Development, 1, 89–128.

Aspara, J., Hietanen, J., & Tikkanen, H. (2009). Business model innovation vs. replication. Journal of Strategic Marketing, 18(1), 39–56.

Atuahene-Gima, K. (2005). Resolving the capability: Rigidity paradox in new product innovation. Journal of Marketing, 69(4), 61–83.

Barney, J. (1991). Firm resources and sustained competitive advantage. (Anonymous, Ed.). Journal of Management, 17(1), 99–120.

Benner, M. J., & Tushman, M. L. (2003). Exploitation, exploration, and process management: The pro- ductivity dilemma revisited. Academy of Management Review, 28(2), 238–256.

Bucherer, E., Eisert, U., & Gassmann, O. (2012). Towards systematic business model innovation: Lessons from product innovation management. Creativity and Innovation Management, 21(2), 183–198.

Carayannis, E. G. (1998). The strategic management of technological learning in project/program man- agement: The role of extranets, intranets and intelligent agents in knowledge generation, diffusion, and leveraging. Technovation, 18(11), 697–703.

Carayannis, E. G. (2008). Knowledge-driven creative destruction, or leveraging knowledge for competitive advantage: Strategic Knowledge arbitrage and serendipity as real options drivers triggered by co- opetition, co-evolution and co-specialization. Industry and Higher Education, 22(6), 343–353.

Carayannis, E. G., Alexander, J., & Ioannidis, A. (2000). Leveraging knowledge, learning, and innovation in forming strategic government–university–industry (GUI) R&D partnerships in the US, Germany, and France. Technovation, 20(9), 477–488.

Carayannis, E. G., Barth, T. D., & Campbell, D. F. (2012). The Quintuple Helix innovation model: Global warming as a challenge and driver for innovation. Journal of Innovation and Entrepreneurship, 1(1), 1–12.

Carayannis, E. G., & Campbell, D. F. J. (2009). ‘‘Mode 3’’ and ‘‘Quadruple Helix’’: Toward a 21st century fractal innovation ecosystem. International Journal of Technology Management, 46(3/4), 201–234.

Carayannis, E. G., & Campbell, D. F. (2010). Triple Helix, Quadruple Helix and Quintuple Helix and how do knowledge, innovation and the environment relate to each other? A proposed framework for a trans- disciplinary analysis of sustainable development and social ecology. International Journal of Social Ecology and Sustainable Development, 1(1), 41–69.

Carayannis, E. G., Edgeman, R. L., & Sindakis, S. (2013). Knowledge, information and data analytics for sustainable enterprise excellence (KID4SEE). In World summit on big data and organizational design, Paris.

Carayannis, E. G., & Korres, G. M. (2013). The innovation union in Europe: A socio-economic perspective on EU integration (p. 208). Cheltenham, UK: Edward Elgar Publishing.

Carayannis, E. G., & Provance, M. (2008). Managing firm innovativeness: Towards a composite index built on firm innovative posture, propensity and performance attributes. International Journal of Innovation and Regional Development, 1(1), 90–107.

Carayannis, E. G., Provance, M., & Givens, N. (2011). Knowledge arbitrage, serendipity, and acquisition formality: Their effects on sustainable entrepreneurial activity in regions. IEEE Transactions on Engineering Management, 58(3), 564–577.

Business model innovation 101

123

Carayannis, E. G., & Wang, V. W. L. (2012). Competitiveness model—A double diamond. Journal of the Knowledge Economy, 3(3), 280–293.

Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long Range Planning, 43(2–3), 195–215.

Chandler, G. N., DeTienne, D. R., & Lyon, D. W. (2003). Outcome implications of opportunity creation/ discovery processes. In Babson Kauffman Entrepreneurship Research Conference (BKERC), 2002–2006. http://ssrn.com/abstract=1783698.

Chesbrough, H. (2007). Business model innovation: It’s not just about technology anymore. Strategy and Leadership, 35(6), 12–17.

Chesbrough, H. (2010). Business model innovation: Opportunities and barriers. Long Range Planning, 43(2–3), 354–363.

Chesbrough, H. W., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’ s technology spinoff companies. Industrial Corporate Change, 11(3), 529–555.

Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Boston, MA: Harvard Business School Press.

Clausen, T. H., & Rasmussen, E. (2012). Parallel business models and the innovativeness of research-based spin-off ventures. The Journal of Technology Transfer, 38, 836–849.

Day, R. M. (1998). Beyond eco-efficiency: Sustainability as a driver for innovation. Washington: World Resources Institute Sustainable Enterprise Initiative.

Gibson, C. B., & Birkinshaw, J. (2004). The antecedents, consequences, and mediating role of organiza- tional ambidexterity. Academy of Management Journal, 47(2), 209–226.

De Reuver, M., Bouwman, H., & Haaker, T. (2013). Business model roadmapping: A practical approach to come from an existing to a desired business model. International Journal of Innovation Management, 17(01), 1340006.

De Waal, A. A. (2006). The characteristics of high performance organization. http://ssrn.com/abstract= 931873.

Debackere, K., & Veugelers, R. (2005). The role of academic technology transfer organizations in improving industry science links. Research Policy, 34(3), 321–342.

Doppelt, B. (2003). Leading change toward sustainability: A change-management guide for business, government and civil society (p. 296). Sheffield, UK: Greenleaf.

Dunphy, D. C., Griffiths, A., & Benn, S. (2003). Organizational change for corporate sustainability: A guide for leaders and change agents of the future. London: Routledge.

Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532–550.

Elkington, J. (1998). Cannibals with forks: The triple bottom-line of 21st century business (p. 407). Stony Creek, CT: New Society Publishers.

George, G., & Bock, A. J. (2011). The business model in practice and its implications for entrepreneurship research. Entrepreneurship Theory and Practice, 35(1), 83–111.

Goethals, F. (2009). The unified business model framework. Little Economie & Management, 9, 1–47. Hall, J., & Wagner, M. (2012). Integrating sustainability into firms’ processes: Performance effects and the

moderating role of business models and innovation. Business Strategy and the Environment, 21(3), 183–196.

Hansen, E. G., Grosse-Dunker, F., & Reichwald, R. (2009). Sustainability innovation cube—A framework to evaluate sustainability-oriented innovations. International Journal of Innovation Management, 13(04), 683–713.

He, Z. L., & Wong, P. K. (2004). Exploration vs. exploitation: An empirical test of the ambidexterity hypothesis. Organization Science, 15(4), 481–494.

Henderson, J. C. (2007). Corporate social responsibility and tourism: Hotel companies in Phuket, Thailand, after the Indian Ocean tsunami. Management, 26(1), 228–239.

Hitt, M. A., Ireland, R. D., Camp, M., & Sexton, D. L. (2001). Strategic entrepreneurship: Entrepreneurial strategies for wealth creation. Strategic Management Journal, 22(6–7), 479–491.

Hockerts, K. (2007). Managerial perceptions of the business case for corporate social responsibility. CBS Center for Corporate Social Responsibility.

Johnson, M. W. (2010). Seizing the white space: Business model innovation for growth and renewal (p. 288). Boston, MA: Harvard Business Press.

Kuratko, D. F., & Audretsch, D. B. (2009). Strategic entrepreneurship: Exploring different perspectives of an emerging concept. Entrepreneurship Theory and Practice, 33(1), 1–17.

Lindgardt, Z., Reeves, M., Stalk, G., & Deimler, M. S. (2009). Business model innovation: When the game gets tough, change the game. The Boston Consulting Group.

102 E. G. Carayannis et al.

123

Lindgren, L. M., & O’Connor, G. C. (2011). The role of future-market focus in the early stages of NPD across varying levels of innovativeness. Journal of Product Innovation Management, 28(5), 787–800.

Magretta, J. (2002). Why business model matter. Havard Business Review, 80(5), 86–92. Mäkinen, S., & Seppänen, M. (2007). Assessing business model concepts with taxonomical research criteria:

A preliminary study. Management Research News, 30(10), 735–748. doi:10.1108/ 01409170710823458.

March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.

Markman, G. D., Phan, P. H., Balkin, D. B., & Gianiodis, P. T. (2005). Entrepreneurship and university- based technology transfer. Journal of Business Venturing, 20(2), 241–263.

McDermott, C. M., & O’Connor, G. C. (2002). Managing radical innovation: An overview of emergent strategy issues. Journal of Product Innovation Management, 19(6), 424–438.

McGrath, R. G. (2010). Business models: A discovery driven approach. Long Range Planning, 43(2–3), 247–261. doi:10.1016/j.lrp.2009.07.005.

Mitchell, R. K., Mitchell, J. R., & Smith, J. B. (2008). Inside opportunity formation: Enterprise failure, cognition, and the creation of opportunities. Strategic Entrepreneurship Journal, 2(3), 225–242.

Morris, M., Schindehutte, M., & Allen, J. (2005). The entrepreneur’s business model: Toward a unified perspective. Journal of Business Research, 58(6), 726–735.

Nidumolu, R., Prahalad, C. K., & Rangaswami, M. R. (2009). Why sustainability is now the key driver of innovation. Harvard Business Review, 87(9), 56–64.

O’Reilly, C., & Tushman, M. (2004). The ambidextrous organization. Harvard Business Review, 82, 74–83. Osterwalder, A. (2004). The business model ontology: A proposition in a design science approach. Lau-

sanne, Switzerland: Institut d’Informatique et Organisation, University of Lausanne, Ecole des Hautes Etudes Commerciales HEC, 173.

Osterwalder, A., & Pigneur, Y. (2010). Business model generation. Self published (p. 281). Hoboken, New Jersey: Wiley.

Petrovic, O., Kittl, C., & Teksten, R. D. (2001). Developing business models for ebusiness. In Proceedings of the International Conference on Electronic Commerce 2001. Vienna, Austria. doi:10.2139/ssrn. 1658505.

Pohle, G., & Chapman, M. (2006). IBM’s global CEO report 2006: Business model innovation matters. Strategy and Leadership, 34(5), 34–40.

Porter, M. E. (2000). Strategy and the internet. Havard Business Review, 79(3), 62–78. Preuss, L. (2007). Contribution of purchasing and supply management to ecological innovation. Interna-

tional Journal of Innovation Management, 11(4), 515–537. Raisch, S., Birkinshaw, J., Probst, G., & Tushman, M. L. (2009). Organizational ambidexterity: Balancing

exploitation and exploration for sustained performance. Organization Science, 20(4), 685–695. Reinmoeller, P., & Van Baardwijk, N. (2005). The link between diversity and resilience. MIT Sloan

Management Review, 46(4), 61–64. Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically

successful businesses. Random House Digital, Inc. Rohrbeck, R., & Gemünden, H. G. (2011). Corporate foresight: Its three roles in enhancing the innovation

capacity of a firm. Technological Forecasting and Social Change, 78(2), 231–243. Savitz, A. W. (2006). The triple bottom line: How today’s best-run companies are achieving economic,

social and environmental success—and how you can too. San Francisco: Wiley. Schaltegger, S., Ludeke-Freund, F., & Hansen, E. G. (2012). Business cases for sustainability: The role of

business model innovation for corporate sustainability. International Journal of Innovation and Sus- tainable Development, 6(2), 95–119.

Schneider, S., & Spieth, P. (2013). Business model innovation: Towards an integrated future research agenda. International Journal of Innovation Management, 17(1), 1340001.

Shafer, S. M., Smith, H. J., & Linder, J. C. (2005). The power of business models. Business Horizons, 48(3), 199–207.

Sorescu, A., Frambach, R. T., Singh, J., Rangaswamy, A., & Bridges, C. (2011). Innovations in retail business models. Journal of Retailing, 87, 3–16.

Santos, J., Spector, B., & Van der Heyden, L. (2009). Toward a theory of business model innovation within incumbent firms. Fontainebleau, France: INSEAD.

Stormer, F. (2003). Making the shift: Moving from ‘‘Ethics Pays’’ to an inter-systems model of business. Journal of Business Ethics, 44, 279–289.

Stubbs, W., & Cocklin, C. (2008). Conceptualizing a ‘‘sustainability business model’’. Organization and Environment, 21(2), 103–127.

Business model innovation 103

123

Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.

Timmers, P. (1998). Business models for electronic markets. Electronic Markets, 8(2), 3–8. Velamuri, V. K., Bansemir, B., Neyer, A.-K., & Möslein, K. M. (2013). Product service systems as a driver

for business model innovation: Lessons learned from the manufacturing industry. International Journal of Innovation Management, 17(1), 1340004.

Wright, M., Birley, S., & Mosey, S. (2004). Entrepreneurship and university technology transfer. The Journal of Technology Transfer, 29(3–4), 235–246.

Xu, Q., Zhu, L., Zheng, G., & Wang, F. (2007). Haier’s Tao of innovation: A case study of the emerging total innovation management model. The Journal of Technology Transfer, 32(1–2), 27–47.

Yin, R. K. (2009). Case study research: Design and methods (Vol. 5). Sage. Zahra, S. (2007). Contextualizing theory building in entrepreneurship research. Journal of Business Ven-

turing, 22(3), 443–452. Zott, C., & Amit, R. (2008). The fit between product market strategy and business model: Implications for

firm performance. Strategic Management Journal, 29(2008), 1–26. Zott, C., Amit, R. (2010a). Business model innovation: Creating value in times of change (No. D/870). IESE

Business School. Zott, C., & Amit, R. (2010b). Business model design: An activity system perspective. Long Range Planning,

43(2–3), 216–226. Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research.

Journal of Management, 37(4), 1019–1042.

104 E. G. Carayannis et al.

123

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.