Technological change and the Interplay of Strategic Innovation and Business Model Innovation

Abstract

Technology-enabled innovation has increasingly puzzled and attracted strategists, since it offers opportunities to create new sources of value by challenging traditional approaches. To address this topic, research efforts have focused on the emerging construct of Business Model (BM), that describes how an enterprise creates and delivers value to customers, enticing them to pay and converting payments into profits. However, the relationship between Business Model Innovation (BMI) and Strategic Innovation (SI) is still unclear. This study investigates this relationship by examining the role of technological change in it. To this end, we propose a conceptual framework that classifies technological change according to three dimensions: trajectory, intent, and effect. Second, based on this framework, we conduct a multiple-case study with 16 companies to identify different innovation paths that arise from the interplay between SI, BMI, and technological change. Our findings reveal eight types of innovation paths that depend on the mediating or triggering role of the technological change faced. This result suggests a transitivity in the BM-Strategy and BMI-SI relationships. Change is the essence of BMI and SI, both their origin and outcome, and acts as the fil rouge that connects SI with its execution through BMI. Additionally, we shed light on the role of different actors (top, middle and low management and key employees) in SI and BMI, depending on their level of technological change empowerment. The study shows that BMI can survive without supervision and strategic commitment from top management, being primarily led by line managers and employees invested in experimentation at an operational level. This claim reveals the need to focus on the “technological change empowerment” given to line management and employees, balancing it with an ability to supervise and consolidate BMI. Overall, this study contributes to a better understanding of the relationship between SI and BMI and the role of technological change in it. Our findings provide insights for firms to strategically operate and govern technological change and leverage it to innovate their business models.