Navigating Business Model Innovation in Chinese Manufacturing: Insights and Implications
Received: 8 March 2024 | Revised: 19 March 2024 | Accepted: 22 March 2024 | Online: 1 June 2024
Corresponding author: Yuan Yuan
Abstract
Despite an increasing number of manufacturing companies innovating their business models in the digital economy, how innovative business models are formed has remained an under-researched area, especially in the manufacturing industry. This study addresses the particular research gap by analyzing the business model innovation process and identifies and explores five conditions that influence the business model innovation process: creative ideas, value proposition optimization, transaction structure reconstruction, profit model exploration, and dynamic potential accumulation. Then, based on the data of 238 respondents in Chinese manufacturing companies, the fuzzy-set approach is employed by conducting Qualitative Comparative Analysis (fsQCA) to explore the configurations of the innovative business model formation process. The results show that high levels of business model innovation can be achieved through different configurations: (1) creative ideas, value proposition optimization, and transaction structure reconstruction combined with dynamic potential accumulation, (2) creative ideas, value proposition optimization, and profit model exploration combined with dynamic potential accumulation, (3) value proposition optimization, and profit model exploration combined with transaction structure reconstruction, and (4) transaction structure reconstruction combined with dynamic potential accumulation. This study contributes to the theoretical literature on business model innovation and provides practical information for manufacturing companies looking to innovate their business models.
Keywords:
business model innovation, manufacturing industry, digital economy, process perspective, fsQCADownloads
References
C. Ancillai, A. Sabatini, M. Gatti, and A. Perna, "Digital technology and business model innovation: A systematic literature review and future research agenda," Technological Forecasting and Social Change, vol. 188, Mar. 2023, Art. no. 122307.
N. J. Foss and T. Saebi, "Business models and business model innovation: Between wicked and paradigmatic problems," Long Range Planning, vol. 51, no. 1, pp. 9–21, Feb. 2018.
D. J. Teece, "Business Models, Business Strategy and Innovation," Long Range Planning, vol. 43, no. 2, pp. 172–194, Apr. 2010.
D. R. Sjödin, V. Parida, and J. Lindström, "Barriers and conditions of open operation: a customer perspective on value co-creation for integrated product-service solutions," International Journal of Technology Marketing, vol. 12, no. 1, pp. 90–111, Jan. 2017.
D. Sjödin, V. Parida, M. Jovanovic, and I. Visnjic, "Value Creation and Value Capture Alignment in Business Model Innovation: A Process View on Outcome-Based Business Models," Journal of Product Innovation Management, vol. 37, no. 2, pp. 158–183, 2020.
A. P. Codini, T. Abbate, and A. Messeni Petruzzelli, "Business Model Innovation and exaptation: A new way of innovating in SMEs," Technovation, vol. 119, Jan. 2023, Art. no. 102548.
D. Schneckenberg, K. Matzler, and P. Spieth, "Theorizing business model innovation: an organizing framework of research dimensions and future perspectives," R&D Management, vol. 52, no. 3, pp. 593–609, 2022.
M. Muhic and L. Bengtsson, "Dynamic capabilities triggered by cloud sourcing: a stage-based model of business model innovation," Review of Managerial Science, vol. 15, no. 1, pp. 33–54, Jan. 2021.
T. Clauss, "Measuring business model innovation: conceptualization, scale development, and proof of performance," R&D Management, vol. 47, no. 3, pp. 385–403, 2017.
A. Asemokha, J. Musona, L. Torkkeli, and S. Saarenketo, "Business model innovation and entrepreneurial orientation relationships in SMEs: Implications for international performance," Journal of International Entrepreneurship, vol. 17, no. 3, pp. 425–453, Sep. 2019.
N. J. Foss and T. Saebi, "Fifteen Years of Research on Business Model Innovation: How Far Have We Come, and Where Should We Go?," Journal of Management, vol. 43, no. 1, pp. 200–227, Jan. 2017.
D. Mitchell and C. Coles, "The ultimate competitive advantage of continuing business model innovation," Journal of Business Strategy, vol. 24, no. 5, pp. 15–21, Jan. 2003.
N. P. E. Karlsson, F. Halila, M. Mattsson, and M. Hoveskog, "Success factors for agricultural biogas production in Sweden: A case study of business model innovation," Journal of Cleaner Production, vol. 142, pp. 2925–2934, Jan. 2017.
K. Täuscher and N. Abdelkafi, "Visual tools for business model innovation: Recommendations from a cognitive perspective," Creativity and Innovation Management, vol. 26, no. 2, pp. 160–174, 2017.
B. Spigel and R. Harrison, "Toward a process theory of entrepreneurial ecosystems," Strategic Entrepreneurship Journal, vol. 12, no. 1, pp. 151–168, 2018.
T. Burström, V. Parida, T. Lahti, and J. Wincent, "AI-enabled business-model innovation and transformation in industrial ecosystems: A framework, model and outline for further research," Journal of Business Research, vol. 127, pp. 85–95, Apr. 2021.
C. C. Ragin, The Comparative Method: Moving Beyond Qualitative and Quantitative Strategies. Oakland, CA, USA: University of California Press, 2014.
C. Cheng and L. Wang, "How companies configure digital innovation attributes for business model innovation? A configurational view," Technovation, vol. 112, Apr. 2022, Art. no. 102398.
C. C. Ragin, Redesigning Social Inquiry: Fuzzy Sets and Beyond. Chicago, IL, USA: University of Chicago Press, 2009.
P. Timmers, "Business Models for Electronic Markets," Electronic Markets, vol. 8, no. 2, pp. 3–8, Jan. 1998.
Darek. M. Haftor and R. Climent Costa, "Five dimensions of business model innovation: A multi-case exploration of industrial incumbent firm’s business model transformations," Journal of Business Research, vol. 154, Jan. 2023, Art. no. 113352.
G. S. Banu, A. Dumitrescu, A. A. Purcărea, and S. W. Isărescu, "Defining Open Innovation Concept Using Business Process Modeling," Procedia Technology, vol. 22, pp. 1020–1027, Jan. 2016.
M. F. Mubarak, F. A. Shaikh, M. Mubarik, K. A. Samo, and S. Mastoi, "The Impact of Digital Transformation on Business Performance: A Study of Pakistani SMEs," Engineering, Technology & Applied Science Research, vol. 9, no. 6, pp. 5056–5061, Dec. 2019.
S. Delladio, A. Caputo, A. Magrini, and M. M. Pellegrini, "Italian entrepreneurial decision-making under lockdown: the path to resilience," Management Decision, vol. 61, no. 13, pp. 272–294, Jan. 2023.
S. Cavalcante, P. Kesting, and J. Ulhøi, "Business model dynamics and innovation: (re)establishing the missing linkages," Management Decision, vol. 49, no. 8, pp. 1327–1342, Jan. 2011.
C. Zott and R. Amit, "Business Model Design: An Activity System Perspective," Long Range Planning, vol. 43, no. 2, pp. 216–226, Apr. 2010.
S. Schaltegger, F. Lüdeke-Freund, and E. G. Hansen, "Business cases for sustainability: the role of business model innovation for corporate sustainability," International Journal of Innovation and Sustainable Development, vol. 6, no. 2, pp. 95–119, Jan. 2012.
A. Colovic, "Leadership and business model innovation in late internationalizing SMEs," Long Range Planning, vol. 55, no. 1, Feb. 2022, Art. no. 102083.
Q. Mohi Ud Din and L. Zhang, "Unveiling the Mechanisms through Which Leader Integrity Shapes Ethical Leadership Behavior: Theory of Planned Behavior Perspective," Behavioral Sciences, vol. 13, no. 11, Nov. 2023, Art. no. 928.
L. L. Martins, V. P. Rindova, and B. E. Greenbaum, "Unlocking the Hidden Value of Concepts: A Cognitive Approach to Business Model Innovation," Strategic Entrepreneurship Journal, vol. 9, no. 1, pp. 99–117, 2015.
M. T. H. Duong, D. V. Nguyen, and P. T. Nguyen, "Using Fuzzy Approach to Model Skill Shortage in Vietnam’s Labor Market in the Context of Industry 4.0," Engineering, Technology & Applied Science Research, vol. 10, no. 3, pp. 5864–5868, Jun. 2020.
S. da C. Fernandes, D. C. A. Pigosso, T. C. McAloone, and H. Rozenfeld, "Towards product-service system oriented to circular economy: A systematic review of value proposition design approaches," Journal of Cleaner Production, vol. 257, Jun. 2020, Art. no. 120507.
J. Stonig, T. Schmid, and G. Müller-Stewens, "From product system to ecosystem: How firms adapt to provide an integrated value proposition," Strategic Management Journal, vol. 43, no. 9, pp. 1927–1957, 2022.
N. Iheanachor, Y. David-West, and I. O. Umukoro, "Business model innovation at the bottom of the pyramid – A case of mobile money agents," Journal of Business Research, vol. 127, pp. 96–107, Apr. 2021.
X. Luo, D. Cao, B. Tjahjono, and A. Adegbile, "Business model innovation themes of emerging market enterprises: Evidence in China," Journal of Business Research, vol. 139, pp. 1619–1630, Feb. 2022.
B. Yu, S. Hao, and Y. Wang, "Organizational search and business model innovation: the moderating role of knowledge inertia," Journal of Knowledge Management, vol. 24, no. 7, pp. 1705–1718, Jan. 2020.
H. Li, Q. Hu, G. Zhao, and B. Li, "The co-evolution of knowledge management and business model transformation in the post-COVID-19 era: insights based on Chinese e-commerce companies," Journal of Knowledge Management, vol. 26, no. 5, pp. 1113–1123, Jan. 2021.
C. Battistella, G. Biotto, and A. F. De Toni, "From design driven innovation to meaning strategy," Management Decision, vol. 50, no. 4, pp. 718–743, Jan. 2012.
Y. Yi, Y. Chen, and D. Li, "Stakeholder ties, organizational learning, and business model innovation: A business ecosystem perspective," Technovation, vol. 114, Jun. 2022, Art. no. 102445.
D. J. Teece, "Business models and dynamic capabilities," Long Range Planning, vol. 51, no. 1, pp. 40–49, Feb. 2018.
T. Şimşek, M. A. Öner, Ö. Kunday, and G. A. Olcay, "A journey towards a digital platform business model: A case study in a global tech-company," Technological Forecasting and Social Change, vol. 175, Feb. 2022, Art. no. 121372.
L. A. Hussein, A. S. Baharudin, S. Kiumarsi, and M. F. Hilmi, "Factors Influencing the Intention to Continue using B2B e-Commerce in Manufacturing SMEs," Engineering, Technology & Applied Science Research, vol. 10, no. 2, pp. 5528–5533, Apr. 2020.
P. Ye, L. Liu, and J. Tan, "Creative leadership, innovation climate and innovation behaviour: the moderating role of knowledge sharing in management," European Journal of Innovation Management, vol. 25, no. 4, pp. 1092–1114, Jan. 2021.
O. Osiyevskyy and J. Dewald, "Explorative Versus Exploitative Business Model Change: The Cognitive Antecedents of Firm-Level Responses to Disruptive Innovation," Strategic Entrepreneurship Journal, vol. 9, no. 1, pp. 58–78, 2015.
D. J. Teece, G. Pisano, and A. Shuen, "Chapter 6 - Dynamic Capabilities and Strategic Management," in Knowledge and Strategy, M. H. Zack, Ed. Boston, MA, USA: Butterworth-Heinemann, 1999, pp. 77–115.
L. Hu and P. M. Bentler, "Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives," Structural Equation Modeling: A Multidisciplinary Journal, vol. 6, no. 1, pp. 1–55, Jan. 1999.
R. P. Bagozzi and Y. Yi, "Specification, evaluation, and interpretation of structural equation models," Journal of the Academy of Marketing Science, vol. 40, no. 1, pp. 8–34, Jan. 2012.
C. Fornell and D. F. Larcker, "Evaluating Structural Equation Models with Unobservable Variables and Measurement Error," Journal of Marketing Research, vol. 18, no. 1, pp. 39–50, Feb. 1981.
P. C. Fiss, "Building Better Causal Theories: A Fuzzy Set Approach to Typologies in Organization Research," Academy of Management Journal, vol. 54, no. 2, pp. 393–420, Apr. 2011.
V. De Crescenzo, D. E. Ribeiro-Soriano, and J. G. Covin, "Exploring the viability of equity crowdfunding as a fundraising instrument: A configurational analysis of contingency factors that lead to crowdfunding success and failure," Journal of Business Research, vol. 115, pp. 348–356, Jul. 2020.
C. Q. Schneider and C. Wagemann, Set-Theoretic Methods for the Social Sciences: A Guide to Qualitative Comparative Analysis. Cambridge University Press, 2012.
T. Greckhamer, S. Furnari, P. C. Fiss, and R. V. Aguilera, "Studying configurations with qualitative comparative analysis: Best practices in strategy and organization research," Strategic Organization, vol. 16, no. 4, pp. 482–495, Nov. 2018.
H. Chen and Z. Tian, "Environmental uncertainty, resource orchestration and digital transformation: A fuzzy-set QCA approach," Journal of Business Research, vol. 139, pp. 184–193, Feb. 2022.
S. Furnari, D. Crilly, V. F. Misangyi, T. Greckhamer, P. C. Fiss, and R. V. Aguilera, "Capturing Causal Complexity: Heuristics for Configurational Theorizing," Academy of Management Review, vol. 46, no. 4, pp. 778–799, Oct. 2021.
Y. Yi, Y. Wang, and C. Shu, "Business model innovations in China: A focus on value propositions," Business Horizons, vol. 63, no. 6, pp. 787–799, Nov. 2020.
A. P. Codini, T. Abbate, and A. Messeni Petruzzelli, "Business Model Innovation and exaptation: A new way of innovating in SMEs," Technovation, vol. 119, Jan. 2023, Art. no. 102548.
I. Carboni, R. Cross, and A. C. Edmondson, "No Team is an Island: How Leaders Shape Networked Ecosystems for Team Success," California Management Review, vol. 64, no. 1, pp. 5–28, Nov. 2021.
Z. He, S. Xu, W. Shen, M. Wang, and C. Li, "Exploring external and internal pressures on the environmental behavior of paper enterprises in China: A qualitative study," Business Strategy and the Environment, vol. 28, no. 6, pp. 951–969, 2019.
E. Albats, A. Alexander, M. Mahdad, K. Miller, and G. Post, "Stakeholder management in SME open innovation: interdependences and strategic actions," Journal of Business Research, vol. 119, pp. 291–301, Oct. 2020.
B. Best, K. Miller, R. McAdam, and S. Moffett, "Mission or margin? Using dynamic capabilities to manage tensions in social purpose organisations’ business model innovation," Journal of Business Research, vol. 125, pp. 643–657, Mar. 2021.
Downloads
How to Cite
License
Copyright (c) 2024 Yao Zhang, Mohi Ud Din Qaiser, Yuan Yuan
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain the copyright and grant the journal the right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) after its publication in ETASR with an acknowledgement of its initial publication in this journal.