How much value is in business model reconfiguration?

Abstract

A large gap has opened up between expectations about the value of business model reconfiguration (BMR) and the evidence to support these views. To help close this gap, this paper examines the relationship between BMR and the performance of incumbent firms. We investigate this relation using regression analysis and unique survey data from a sample of 198 publicly-traded UK and US knowledge-intensive business service firms. We find that BMR, on average, has no effect on firm performance. However, we estimate an inverted U-shaped relation between the scope of BMR and performance for firms which are also engaged in technological innovation. We also show that, unlike firms in general, high performing firms tend to experience increasing returns to BMR. These findings contribute to the innovation and the emerging business model literatures by highlighting both the costs and the benefits associated with BMR, by developing a new measurement scale for BMR, and by elucidating the contingent nature of the BMR-perform...