Organizational Search and Novelty-centered Business Model Design

Abstract

This study explores how to promote novelty-centered business model design through intra-industry search and extra-industry search with the assistance of combinative capability and stakeholder management capability. Based on organizational learning and business model literature, 6 hypotheses are proposed and examined with data from 204 firms in China. The results show that intra-industry search has an inverted U- shaped effect on novelty-centered business model design, while extra-industry search has a positive effect. Combinative capability strengthens the effect of extra-industry search on novelty-centered business model design. Stakeholder management capability strengthens the effect of extra-industry search while weakening that of intra-industry search. Our findings enrich evolutionary learning stream of business model literature by identifying different roles of intra-industry search and extra- industry search as the antecedents of business model design and their fitness with different types of dynamic capabilities.