Value Creation Openness: A new Perspective on Business Model Design and Competitive Advantage

Abstract

Firms increasingly integrate external contributors from the ecosystem in their value creating processes while questions arise how these strategies can yield competitive advantage when resource control is given up. New concepts such as “strategic openness” can help to explain this phenomenon but are at odds with traditional resource-based views on competitive advantage which are based on resource control. Moreover, openness comes at the price of knowledge spillovers that ease hostile imitation and hence violate key RBV properties but may have different influence depending on the business model design choice and the underlying resource strategy. We analyze the relationship between openness and competitive advantage as well as the impact of business model design and knowledge spillover risk thereon. On the basis of a survey among 218 global manufacturing organizations and 14 interviews, we present quantitative evidence for a positive linear relationship between value creation openness and competitive advantage. However, while efficiency-centric business model designs have a positive effect on this relationship, we find that novelty-centric business model designs have a negative effect which is further amplified by knowledge spillover risk. In the subsequent qualitative study, we identify patterns of efficiency- and novelty- centric business models and show how companies use openness to increase their advantage but also protect their resource base. We discuss different concepts of openness and competitive advantage, namely traditional RBV, relational rents, and strategic openness, and show under which conditions of openness and business model designs they apply. Our paper adds to RBV literature by delineating and integrating concepts of openness in a framework and to the business model literature by linking it with resource strategies as well as presenting pattern of different business models in conjunction with openness.