Business model innovativeness: designing a formative measure for business model innovation

Abstract

Business model innovation is attracting increasing attention in corporate practice and academia. Despite strong interest in the phenomenon, no common understanding of the concept’s meaning has yet been established, hindering dialogue and progress in this research field. This study seeks to build a definition of business model innovation, and to provide a measurement index for the extent of innovativeness of a firm’s changed business model. Based on the business model, business model innovation and product innovation literatures, conceptualise business model innovation as a ‘new-to-the firm’ change that affects at least one out of three business model dimensions: value offering, value creation architecture and revenue model logic. Based on a study among 200 German firms, this study further offers an empirically validated measurement model for business model innovativeness comprising three dimensions and nine indicators. We also emphasise the opportunity-centric potentials of business model innovation as well as the potentials of integrating findings from related research streams into business model innovation research.