The study of value network reconstruction and business model innovation driven by entrepreneurial orientation

Abstract

The impacts of business models on the successes of companies are convincing. Business Model Canvas (BMC) provides the basic framework that describes business logic. Yet it lacks an academic understanding of the internal structures of business models. This paper uses the grounded theory method, qualitative analysis as well as entrepreneurial orientation theory to conduct an individual case study on SHEIN’s business model. The research shows that SHEIN accurately addresses the customer pain points and customer benefits of fashionable women, and gains the trust of end-users by integrating its supply chain based in China. Entrepreneurial orientation drives SHEIN to set up its value network. From the perspective of value discovery, SHEIN accurately targets segmented customer groups. The enterprise reaches end users through social networks and establishes customer relationship with high viscosity. From the perspective of value creation, SHEIN reconstructs the value network, delivering great shopping experiences with low costs. From the perspective of value acquisition, SHEIN has scalability in cost structure and expandability in revenue source. The research found that SHEIN has occupied the low-end market of fast fashion through low-end entry, and is moving to the mainstream market of fast fashion through customer group upgrading, design upgrading and supply chain upgrading, bringing competitive challenge to the fast fashion market incumbents. The innovation of this research lies in: First, the Business Model Iterative Canvas (BMIC) could interpret the business models and their logic in-depth. Second, the research reveals how the competitive advantage is created through value network reconstruction.