Business model design and firm performance

Abstract

PurposeThe purpose of this paper is to contribute to the literature on business model (BM) design by deepening the relationship between BM design themes and performance in a sample of firms based in a developing country. In particular, the authors deepen the relationship between business model novelty (BMN), business model efficiency (BME), the trade-off between novelty and efficiency – that the authors call BM ambidexterity – and performance.Design/methodology/approachData are drawn from a sample of 107 manufacturing and service firms based in a developing country (Albania). Hierarchical regression is used to assess the impact on firm performance from the two BM design themes and their interaction.FindingsThe authors find novelty-centred BM design is significantly related to firm performance while efficiency-centred design has no direct effect on performance. However, the authors also find that BME positively moderates the relationship between BMN and firm performance.Research limitations/implicationsThe relationship between BM design and firm performance can be better understood if contextualised. In the paper, the authors find that different types of BM designs have different impacts on the performance of firms based in a developing economy. While novelty matters, quite surprisingly the authors find no support for efficiency. Additionally, the authors find the interaction between the two design themes (BM ambidexterity) to have a positive impact on firm performance.Practical implicationsThe surveyed firms based in a developing economy appear to benefit from novelty-centred BM designs. Efficiency-centred designs have a more ambiguous role: while efficiency alone seems not to pay off, an efficient BM design may facilitate the market exploitation of a novel design.Originality/valueThis study responds to a precise call for additional quantitative empirical studies on the relationship between BM and performance. The study also contributes to an emerging stream of research focused on BM ambidexterity.