Business model innovation and international performance of emerging market international businesses

Abstract

This article is set to examine the effects of foreign market conditions – i.e. foreign market customer demandingness and foreign market stakeholder engagement – on business model innovation of emerging market international businesses (EMIBs) during the COVID-19 pandemic. First, it examines the impact of foreign market customer demandingness and foreign market stakeholder engagement on business model innovation of EMIBs. Second, it tests the moderating roles of international marketing agility and entrepreneurial bricolage on these relationships and third, it looks into the (direct and indirect) impact of business model innovation on EMIBs' international performance. We use the COVID-19 pandemic as a context and the dynamic capabilities view to formulate and test our hypotheses using longitudinal survey data between March and December 2020, on 211 Vietnamese manufacturing businesses engaged in cross-border activities. The results provide robust empirical support for all our hypotheses. Our findings suggest that foreign customer demandingness and foreign market stakeholder engagement can determine the adoption of new business models by EMIBs'. We also provide evidence on the mediating role of EMIBs' business model innovation in the relationship between foreign market conditions and international performance during the COVID-19 pandemic. Additionally, while international marketing agility can moderate positively the relationship between local market exposure and business model innovation by international businesses, entrepreneurial bricolage was found to moderate negatively this relationship. Our findings have important theoretical and practical implications for both international businesses and EMIBs.