Organizational Search, Dynamic Capability, and Business Model Innovation

Abstract

This paper explores how to promote business model innovation through intraindustry search and extraindustry search with the assistance of fit dynamic capabilities (internal coordination capability and stakeholder engagement capability). Based on evolutional learning and business model literatures, six hypotheses are proposed and examined with data from 204 firms in China. The results show that intraindustry search has an inverted U-shaped effect on business model innovation, whereas extraindustry search has a positive effect. Internal coordination capability strengthens the effect of intraindustry search but weakens that of extraindustry search. Stakeholder engagement capability strengthens the effect of extraindustry search but weakens that of intraindustry search. Our findings enrich the business model literature by identifying different roles of intraindustry search and extraindustry search as the antecedents of business model innovation and their fitness with different types of dynamic capabilities.