Design leaps: business model adaptation in emerging economies

Abstract

PurposeFirms take design leaps when they imitate an established business model developed either by another firm or in another market to create business opportunities. While recent research has suggested the use of contextual intelligence for imitation, the exact process of adaptation of a business model is not fully understood. The purpose of this paper is to outline the process through which an emerging market firm adapts a developed market business model for creating business opportunities in the local market.Design/methodology/approachThis paper investigates the journey of Air Deccan, the pioneer low-cost airline in India, from its founding until its successful adaptation of a (Western) business model and eventual failure. The authors use a qualitative case-based approach to study business model adaptation.FindingsThe authors find that adaptation involves the incorporation of following design features: novelty to overcome problem of institutional voids, elasticity to exploit unexpected increase in demand and efficiency to serve large volumes. Based on the evidence, the authors suggest the introduction of global efficiency measures as the boundary conditions of business model adaptation in emerging markets.Research limitations/implicationsThe paper contributes to the literature on business models by suggesting elasticity as a unique design feature relevant for emerging markets. This paper provides granular understanding of business model toxicity.Practical implicationsEntrepreneurs and managers – looking to enter emerging markets through opportunity creation – should focus on providing contextually novel design features in the adapted business model. The authors also caution practitioners against the perils of toxicity arising out of combining contextual novelty with efficiency.Originality/valueRecent literature suggests that multinationals need contextual intelligence to successfully monetize their investment in emerging economies. This paper provides rich description of the challenges faced by entrepreneurs in emerging markets, local innovations used to overcome them and boundary conditions.