Loading...

Managerial Opportunity Recognition in Business Model Innovation

Master's Thesis 2017 159 Pages

Business economics - Business Management, Corporate Governance

Excerpt

TABLE OF CONTENT

LIST OF ABBREVIATIONS

LIST OF ILLUSTRATIONS AND TABLES

1 Introduction
1.1 Problem position
1.2 Objective and course of the work

2 Literature Review
2.1 Goals, structure and rationale for structure
2.2 Methodology of the literature review
2.3 Identification and selection of relevant journals and articles
2.4 Reviewing the current state of research
2.4.1 Business Model literature
2.4.1.1 Understanding & Rise of Business Model
2.4.1.2 Definition of the term Business Model
2.4.1.3 Business models as role models, scale models and recipes
2.4.2 Innovation and Innovation Management
2.4.3 Business Model Innovation
2.4.3.1 Understanding of Business Model Innovation
2.4.3.2 Degree and competitive advantage of BMI
2.4.4 Opportunity recognition
2.4.4.1 Opportunity recognition: Basics and definition
2.4.4.2 Managerial Opportunity recognition & BMI
2.5 Literature findings and uncovering research gaps

3 Methodology of the expert interviews
3.1 Research Design
3.2 Data collection
3.3 Data analysis

4 Results
4.1 Background and conceptual understanding of the interview partners
4.2 Results: Managerial OR in Business Model Innovation
4.2.1 Main Drivers of managerial OR in BMI
4.2.2 Sources of Information of managerial OR in BMI
4.2.3 Deliberate vs. systematic processes of managerial OR in BMI
4.2.4 External help of managerial OR in BMI
4.2.5 Problems and hurdles of managerial OR in BMI

5 Discussion
5.1 Lessons Learned
5.1.1 Understanding of the interviewees regarding BM, BMI & OR
5.1.2 Main sources for information and data
5.1.3 Managerial OR as a process
5.1.4 The concept of dominant logic and its influence in practise
5.1.5 Key factors influencing managerial OR in BMI
5.2 Implementation/transfer of ‘lessons learned’ in practice

6 Conclusion
6.1 Summary & outlook &
6.2 Limitations & uncovering research gaps

BIBLIOGRAPHY

APPENDIX

LIST OF ABBREVIATIONS

Abbildung in dieser Leseprobe nicht enthalten

LIST OF ILLUSTRATIONS AND TABLES

List of Illustrations

Illustration 2-1: Steps literature review

Illustration 2-2: Hitting rate google scholar search term BM &

Illustration 2-3: Reference frame managerial OR in BMI

Illustration 3-1: Data anaylsis procedure

List of Tabels

Table 2-1: Databases &

Table 2-2: Definitions BM

Table 4-1: Interview partners´ background

Table 0-1: List of expert-interviews

Table 0-2: Interview cover sheet Company A

Table 0-3: Interview cover sheet Company B

Table 0-4: Interview cover sheet Company C

Table 0-5: Interview cover sheet Company D

Table 0-6: Interview cover sheet Company E

Table 0-7: Interview cover sheet Company F

Table 0-8: Interview cover sheet Company G

Table 0-9: Interview cover sheet Company H

Table 0-10: Interview cover sheet Company I

Table 0-11: Interview cover sheet Company J

1 Introduction

1.1 Problem position

In the last few decades, drivers such as globalization, technological change, rapid development, and open innovation systems have profoundly changed the competitive game (CasadesusMasanell & Ricart, 2010, p. 195). Due to these changes, previously closed competitive structures and value chains have been reorganized and new business opportunities have arisen (Bengtsson & Johansson, 2014, p. 418).

There are many examples to show how much a company’s success depends on the recognition of business opportunities. One famous example is the case of Apple. Near the end of the 1990s, the music industry was changing revolutionarily. The digitalization of the music data with new formats like MP3 and the illegal distribution of music CDs caused losses to run into billions. At this time, the California-based technology company Apple was under a lot of pressure. In contrast to competitors such as Dell and IBM, Apple was unable to use the booming PC market in its favour, and the company’s market share did not grow beyond its loyal followers (Gold- stein & Rodriguez, 2012, p. 178). The turning point in the history of Apple was the recognition of a business opportunity that had not yet been identified by its competitors in the music indus- try. The opportunity to have direct access to and easy availability of music through its own, easy-to-use Internet music store (iTunes) and an innovative device (iPod) was the beginning of a business development that would be very successful in the following years. The case of Apple shows how much corporate success depends on a company’s ability to recognize opportunities in an external environment and to make use of these changes for its own benefit. At the same time, this example clearly illustrates the competitive disadvantage that other music industry companies had to endure due to Apple's advance thinking, because they recognized this busi- ness opportunity much later than Apple and did not properly estimate its potential.

Considering the success of companies retrospectively, the recognition of successful opportuni- ties is attributed to personalities like Bill Gates, Steve Jobs († 2011 in Palo Alto, USA), or Jeff Bezos (to name a few). All those people started small, had to face many setbacks, and made several wrong decisions in their career. As Winston Churchill once said: “ It is a great ad- vantage, to make the errors from which we can learn quite early ”. Nonetheless, all these per- sonalities (in the position of managers and CEOs) have at least one other commonality: They recognized new business opportunities and implemented them successfully in their business models (BMs), or they created innovative BMs. To date, these companies—with their ever- changing BMs—are successful players and even market leaders in their industry. However, experienced managers also make mistakes in their decision-making process, or rather do not recognize opportunities that may contribute to the company's success. A famous example is the forecast by Microsoft co-founder and Harvard dropout Bill Gates regarding the Internet in the year 1993: “ The Internet? We are not interested in it. ” In his opinion, the World Wide Web was just a hype. Therefore, he ordered his staff to prioritize other things. But soon, the software giant recognized the WWW as a new business opportunity and aligned its business model (BM) appropriately. In 1995, the Internet Explorer browser was first preinstalled on computers with the Microsoft Windows operating system and became an important element in the Microsoft BM.

Another famous example of missing out on managerial opportunity recognition (OR) in busi- ness model innovation (BMI) is the case of Kodak, formerly one of the world's most important manufacturers of photographic equipment. Back in 1977, Kodak invented the first digital cam- era and held a patent for digital cameras that used magnetic cassettes to store images of about 100kb. Instead of recognizing this opportunity and changing its BM, Kodak did not introduce this technology. The managers continued to focus on traditional film cameras because they made huge profits from the sale of film. In the course of time, the landscape of photographic equipment changed from film to digital technology. When the company finally shifted its BM towards the digital market, it could no longer prevail against established competitors and lost its position as the leading manufacturer of photographic equipment (Lucas & Goh, 2009, p. 49). Whenever the landscape of an industry is redesigned by a new technology, there are some firms that adapt to the new technology in the form of business model innovation (BMI) and other firms that hold on to the old technology and the established BM until it is too late. Apple’s conquest of the music industry or Ikea's invasion of the furniture retail market are frequently cited examples to demonstrate the power of innovative business models (BMs). They represent disruptive market entrants and the repression of formerly dominant competitors in their industry (Giesen et al., 2007, p. 29).

In today's scientific understanding, BMI represents an important lever to attain competitive ad- vantage (Amit & Zott, 2012, p. 42). BMI is paraphrased as a key element for the successful commercialization of technology and as an important ingredient for the sustained success of a firm (Amit & Zott, 2012, p. 4; Chesbrough & Rosenbloom, 2002, p. 535; Chesbrough, 2010 p. 354). All essential components of BMs—as well as the design of new BMs and the redesign of existing BMs—are representations of recognition of opportunities and the specific decisions made at the management level. Managerial OR has a great influence on whether business op- portunities are identified and consequently implemented in the existing BM or whether they remain unrecognized. Missed opportunities can lead to dramatic consequences for even estab- lished market leaders, as the case of Kodak proves. The aim of this study is to deepen the un- derstanding of OR in companies, by examining the factors driving managerial OR in BMI.

1.2 Objective and course of the work

As is can be extracted from the examples above, the identification of innovative business op- portunities can be a great advantage for companies who recognize these opportunities in time. The goal of this Master’s thesis is to examine the relationship between managerial OR and business model innovations (BMIs) in established organizations. In order to meet the complex- ity of the topic, this thesis is focused on factors that hinder or help managers in recognizing business opportunities. Focusing on incumbent firms, this paper conducts further research to identify the main influencing factors, including challenges, vulnerabilities, and obstacles.

The thesis is divided into six parts, starting with a brief description of the research topic, in- cluding the problem position and objective. Second, a literature review is conducted to summa- rize the state of research, including theoretical foundations. In today's scientific literature the two fields of research BMI & OR are by no means treated independently from each other. For the time being BMI and OR are considered independently of each other. It is then shown exactly how current literature treats managerial OR with respect to BMI. The results are then synthe- sized into a summary, highlighting what is known and not known. The areas of controversy in the literature are identified and questions are formulated that need further research.

The third part of the thesis consists of expert interviews. Derived from the literature review, a guideline for interviews is developed to treat the research gaps in an appropriate way and to meet the complexity of the task setting. The explorative survey aims to identify the challenges and drivers of managerial OR in BMI and to identify approaches that have not yet been ad- dressed in scientific literature to a significant extent. The core of the analysis is the splitting of the BM into the elements value proposition, value creation, and value capture. This ensures that all the facets of a company s BM are accurately addressed and form the basis for high-quality results. In order to cover a broad range, the paper does not focus on a certain industry. The interviews are conducted with an array of decision-makers in organizations that have attempted or are currently attempting to innovate their BM at the business unit level or the corporate level.

On the whole, this paper presents 10 interviews with selected participants. The results of the interviews are presented in Chapter 4.

The discussion in the next chapter presents the analysis and interpretation of the results. There- after, the results of the interviews are compared with the current state of research in order to address current research gaps and illuminate the practical importance of this thesis. The paper closes with Chapter 6, which presents the limitations of this study—in order to avoid unex- plained questions or biased judgements of the listed results—and a brief list of topics that need further research in this context.

2 Literature Review

2.1 Goals, structure and rationale for structure

This literature review has two main goals. The first goal is to deliver a comprehensive overview of scientific research on managerial OR in conjunction with BMI. The second goal is to identify research gaps and to derive several research theses based on them, which are relevant for further scientific research in this field. The structure of the literature review can be described as fol- lows:

1. Reviewing the current state of research:

a) Business model and Business Model Innovation literature Business model:

The current state of BM research is reviewed. Some theories of BMs are presented, in order to describe the diverging nature of BM in the current academic discourse. Innovation and Innovation Management:

A brief description of innovation (plus invention) and innovation management is provided, in order to understand the innovation process in businesses.

Business model innovation:

This part examines BMI on different levels, in terms of definitions, classifications, and scope.

b) Opportunity Recognition and Managerial Opportunity Recognition in BMI

Starting with a brief description of idea generation a reconciliation is provided between OR and BMI. All together, these steps aim to build up the necessary understanding to examine the relationship between managerial OR and BMIs in established organizations.

2. Literature findings and uncovering research gaps

This section lists the main findings from reviewing the different research topics. In particular, those issues are presented that need further research.

2.2 Methodology of the literature review

This literature review is based on a comprehensive and systematic approach. The purpose is to analyse the existing literature on BMI in conjunction with managerial OR, in order to identify the next step and areas for further research. For two reasons, a thorough literature review is chosen as the appropriate methodological approach. First, for the identification, evaluation, and interpretation of the existing body literature, this kind of approach is systematic, explicit, and reproducible (Fink, 2005). The second reason is that it is a valid method for the compilation of knowledge by synthesizing existing journals, which could be of higher relevance and greater importance than new research (Cooper, 2010).

To ensure the coverage of relevant literature, eight steps are applied for this review. These steps discuss the issues of database, journal selection, and article selection. Illustration 2-1 briefly demonstrates the overall review process and provides an outlook of the review steps carried out.

Illustration 2-1: Steps literature review

Abbildung in dieser Leseprobe nicht enthalten

Source: Own representation

2.3 Identification and selection of relevant journals and articles

In order to find studies that are suitable for the research focus, appropriate keywords need to be found, to set the basis for a well-aimed scientific research. Through a combination of prior knowledge of the author, screening of relevant literature to identify appropriate keywords, and help from experts, four keywords relating to this research were elected:

- *business model*
- *business model innovation*
- *opportunity recognition*
- *managerial opportunity recognition*

At first glance, the four search terms do not seem to be comprehensive enough. However, con- sidering that for the search term *business model* alone, Ebsco1 provides 81,246 results, while

*opportunity recognition* gives 2,009 hits, they seem sufficient for a comprehensive literature review. Six different combinations of these search terms are used to identify relevant literature:

- *opportunity recognition* + *innovation*
- *opportunity recognition* + *business model*
- *opportunity recognition* + *business model innovation*
- *managerial opportunity recognition* + *innovation*
- *managerial opportunity recognition* + *business model*
- *managerial opportunity recognition* + *business model innovation*

Stage 1: Database search

For the search of relevant literature, different academic databases were utilized, in order to eliminate the risk of overlooking important papers and to cross-reference the results. The ma- jority of the investigations consist of ‘ searches ’ in the online databases Ebsco (the world's most- used reference source), Jstor, and Google Scholar, and additionally in the library of the Frie- drich Alexander University of Erlangen-Nürnberg. These databases were elected because of their broad coverage of economic, management, organizational behaviour, and other relevant disciplines, and hence are efficient and appropriate search tools for this literature review. The purpose of using these engines was to identify a representative sample of studies that treat the issues in the field of managerial OR in conjunction with BMI well aimed.

Table 2-1: Databases

Abbildung in dieser Leseprobe nicht enthalten

Source: Own representation

Stage 2: Using limiters

Stage 2.1: Time horizon for selection of papers

In the age of the ‘ dot-com boom ’ , the use of the term business model has exponentially increased (Burkhart et al., 2012, p. 88). Although the term has been commonly used in scientific literature since the mid-90s, it was first used in an academic article in 1957 (Bellman, Clark, Malcolm, Craft & Ricciardi, 1957; Magretta, 2002, p. 86; Osterwalder et al., 2005, p. 6; Sako, 2012, p. 22; Teece, 2010, p. 174). Considering the value provided for managers and entrepreneurs by dealing their own BM, it is even more astonishing that the academic research—with a few ex- ceptions— has neglected this subject for so long. Scholars attention in the field of BM has increased strongly in the past few years. The concept of BM can be considered as a rather young field of research.

Illustration 2-2: Hitting rate google scholar search term BM

Abbildung in dieser Leseprobe nicht enthalten

Source: Own representation

Illustration 2-2 proves the rapid rise in the number of articles published in the field of BM between 1990 and 2012. The absolute numbers correspond to the hit rate using the search en- gine Google Scholar2, with *Business Model* as set search term. This literature review com- prises a two-decade time horizon. Consequently, the dates of publication of the journal articles are between 1998 and early 2017. The year 1997 is chosen as the starting point, because by the end of the 1990s, there was an increase in the discussion regarding BMs, due to the rapid growth of the Internet and the related changes in global competition (Burkhart et al., 2011, p. 2; Zott et al., 2011, p. 1022). This fact can also be extracted from the illustration above, as the number of publications is strongly increasing since the end of the 90s. The end of January 2017 has been chosen as the end point, in order to include the most relevant and latest publications.

Stage 2.2: Source type

Furthermore, it has to be determined which publications should be used or sorted out. ). In the academic environment, some papers have stronger influence and reputation than others (McKinnon, 2013). According to Light & Pillemer (1984), the quality control of a study can be enhanced through restriction, due to the fact that most referred journals have strict requirements for their publication (Light & Pillemer, 2984, p. 35To ensure high quality of the literature re- view, the selection of journals, working papers, and articles is based on the following criteria:

- only scientific literature are to be taken into account
- only published journal articles are to be considered
- Bachelor’s or Master’s theses & information guides & textbooks are not to be considered

Stage 3: Reading abstracts

After using database searches (including limiters) and receiving an appropriate number of re- sults, all articles went through a certain scanning procedure. On the basis of the abstracts of the displayed journals, articles that were not orientated to the research field were discarded. More- over, articles from untrustworthy sources (such as low-quality journals) were not taken into account. If a title was classified as relevant for further research, the title was sent to a kind of basket, offered by every database (for further or later use of the publications, including their abstracts). This step was documented with Mendeley, via an interface between the program and the databases using the ‘ basket ’. While reading the abstracts, it was primarily observed whether the content meets the research stream.

Stage 4: Full-text reading

After the journals passed the abstract-reading process, the article itself was downloaded to a folder and named according to the author and year of publication. These papers were classified as being potentially relevant to this research on managerial OR in BMI. After this, the papers were read in their entirety in order to analyse whether they are relevant to the research field of managerial OR in BMI, and to select those papers that contribute to the goals of this paper. In addition, all journals must be ranked in the VHB-jourqual. The VHB-jourqual accurately rep- resents magazine ranking in the area of business administration. The ranking takes into account those magazines that are relevant for German-speaking scientists, including both international (particularly English) and German-language magazines. The latest version—VHB-JOUR- QUAL 3—which was published in February 2015, was used for this paper. This process led to 52 academic journals, which were elected for the literature review.

Stage 5: Snowball procedure

A snowball procedure of academic journals was also conducted in order to identify other publications. This represented just a partially systematic approach. The snowball procedure leaded to a host of relevant academic journals.

2.4 Reviewing the current state of research

2.4.1 Business Model literature

In the next chapters, the selected scientific literature in the field of BM, BMI, and managerial OR are reviewed. Starting with BM literature, at this point it can already be mentioned that there is a widespread confusion about basics, such as the definition of BM (Linder & Cantrell, 2001, p. 2; Osterwalder et al., 2005, p. 8; Zott et al., 2011, p. 1020). Due to the heterogeneity of the scientific approaches and the continuous further development of the BM concept, an overview of the BM concept is given in the following sections.

2.4.1.1 Understanding & Rise of Business Model

The early understanding of BMs was dominated by financial aspects, such as the financing and valuation of start-ups. In this context, BMs are used to represent—in simplified form—the strat- egy and business plan of a company, in order to illustrate the significance of a venture to po- tential investors. The question of how to make money with the business concept was neither addressed intensively nor considered as decisive, and was based on optimistic expectations (Afuah, A., 2004, p. 238).

Since the late 1990s, there has been a remarkable increase in the number of scientific publica- tions in the research field of BM (Zott et al., 2011). Although it was very fashionable to talk about BMs, many practitioners were unclear about which concepts are integrated in this dis- course and how the concepts can be used properly. According to Magretta (2002), only a few people can clearly explain what a BM is. Furthermore, Magretta says that the right application of the concept would force managers to think about their own business from a different point of view (Magretta, 2002, p. 88). Nevertheless, the ambiguous and inflationary use of the term BM is threatening to undermine the credibility of the concept. According to Porter (2001), a BM often represents a loose conception of how business is done and revenue is generated by a company. Because of the fuzziness associated with the term BM, renowned scholars have even questioned its added value within the management literature. Porter (2001) assesses the BM approach at the management level as an “ invitation for faulty thinking and self-delusion ” . A BM by itself is an insufficient basis for building a company. Porter (2001) clarifies in detail that generating revenue is a far cry from creating economic value, particularly due to that fact that no BM can be evaluated independent of industry structure (Porter, 2001, p. 73).

Although BM as a management concept has been critically discussed among scientists, it has not lost its influence. Rather, its importance in the daily praxis—especially in technological companies—is increasing. In this environment, BM is seen by managers, investors, and entre- preneurs as an integral part of economic activity and as an intelligent mutual tool in case of uncertainty. Along with this concept, the BM represents an innovative framework that provides a new perspective on the management field (Chesbrough & Rosenbloom, 2002, p. 533; Doga- nova & Eyquem-Renault, 2009, p. 1560). Furthermore, practitioners show interest in the con- cept and recognize BMs as a decisive lever for innovation, which goes beyond traditional prod- uct and process innovations (Amit & Zott, 2012, p. 42; Lindgardt et al., 2009, p. 2).

2.4.1.2 Definition of the term Business Model

Analysing today s scientific literature on BM, one does not get any clear answers about the meaning of the term BM. Among scientists, there is no consensus about what a BM is, since scholars adopt definitions that match the object of their research (Zott et al., 2011, p. 1020). Timmers (1998) highlighted very early in the evolution of BM literature that the term ‘ business model ’ is often used without explicit statement by various authors (Timmers, 1998, p. 2). Ac- cording to Linder & Cantrell (2001), executives, reporters, and analysts lack a clear understand- ing of what exactly the term ‘ business model ’ means. They use the term rhetorically in order to describe universally how a company gains revenue or how it structures its organization (Linder & Cantrell, 2001, p. 2). Zott et al. (2011) show through a comprehensive review that the number of published studies in recent years is continuously increasing. In academic research, the term business model ’ is widely used without an explicit definition (Zott et al., 2011, p. 1022). Fur- thermore, Zott et al. (2010) published a paper with the aim to provide a comprehensive and up- to-date literature review regarding BMs. They analyse 1,253 articles in this research area. In this study, they clearly state that scholars still do not agree on what exactly a BM is (Zott et al., 2010, p. 5). Table 2-2 provides a brief compilation of possible definitions. Thus, it appears that there is no shortage of interpretations of the BM concept, but a clear theoretical definition is missing.

One reason for this circumstance lies in the heterogeneity of previously conducted academic work. Thus, the present literature can be assigned to very different research areas, such as stra- tegic management, entrepreneurship, marketing, information management, or e-business. De- pending on the point of view, different priorities and research goals are formulated and pursued.

Table 2-2: Definitions BM

Abbildung in dieser Leseprobe nicht enthalten

In contrary to the heterogeneity of definitions, consciously or subconsciously, every firm has at least one BM and BMs represent an important element of a firm s competitive advantage (John- son et al., 2008, p. 57; Zott & Amit, 2007, p. 195). Hence, a uniform definition is needed for meeting the subject s complexity. Nevertheless, taking a wide arc around the scientific literature in this research area, scholars generally agree on three distinct but interrelated components of BMs—value proposition, value creation, and value proposition.

Value proposition:

A BM describes how customers or other stakeholders of the company benefit from their relationship with this company. The value proposition highlights the use, benefit, or value provided by the company. As is apparent from the description given by Chesbrough & Rosenbloom (2002), all those components of the range of products and services of a company are to be subsumed, which generate a benefit for the customer. In this sense, the value proposition basically aims to satisfy a specific customer need or to solve an existing problem (Chesbrough & Rosenbloom, 2002, p. 533; Johnson et al., 2008, p. 52).

Value creation:

Value creation is the process of creation value for customers, members, and other important stakeholders. In order to produce the value proposition and deliver it to the customer, certain resources, skills, and processes are needed. These can be combined into the so-called value chain of a company (Johnson et al., 2008, p. 55; Morris et al., 2005, p. 729; Timmers, 1998, p. 4). The architecture of the value creation provides information about the (work-sharing) pro- cesses, the product and service creation, and the coercion skills, resources, and relationships. It specifically describes the actors in terms of transaction and exchange relationships and their role in the value creation process (Demil & Lecocq, 2010, p. 228; Shafer et al., 2005, p. 206). The term ‘ value network ’ —often used in the context of the value chain—indicates that not all value-addition activities have to be carried out by the company itself, but instead can be taken over by a network of suppliers, partners, and other actors (Chesbrough & Rosenbloom, 2002, p. 534).

Value Capture:

In addition to ‘ what is the value ’ and ‘ how to create the value ’ , a BM also describes how the company generates revenues, and from which sources. The provision of the value proposition is associated with both costs and revenue. The interaction of these two variables is represented by the so-called value capture. The value capture shows the relevant mechanisms that lead to the emergence of costs and revenues, and therefore answers in sum why the BM of a company is profitable. In short it answers the question: ‘ How does the company make money? ’ (Chesbrough & Rosenbloom, 2002, p. 533; Dubosson-Torbay, 2002, p. 7; Johnson et al., 2008, p. 55).

According to Afuah and Tucci (2001), a BM is a system that consists of certain components, connections between those components, and dynamics (Afuah & Tucci, 2001, p. 4). Magretta (2002) mentions that BMs refer to a system of how the single parts of a business fit together (Magretta, 2002, p. 91). The three elements mentioned here are not completely separate units. Rather, it is a kind of system in which each element is influenced by another. Authors, for example, use the attributes “ interlocking ” (Johnson et al., 2008, p. 53) or “ interrelated ” (Mor- ris et al., 2005, p. 727) in order to illustrate the relationship between the BM elements. The logical consequence of this is that in order to maximize the value of the BM, it is decisive that the three elements of a BM are closely coordinated in their design and matched up closely.

Furthermore, it is necessary to consider the perspective of the researcher. In this paper, BMs are interconnected with managerial OR. Therefore, for further work, the definition developed by Amit & Zott (2001) is assumed: “ A business model depicts the content, structure [...] of transactions designed so as to create value through the exploitation of business opportunities ”

(Amit & Zott, 2001, p. 511).

2.4.1.3 Business models as role models, scale models and recipes

Baden-Fuller & Morgan (2010) describe in their paper ‘ Business models as models ’ several possibilities of using the concept BM as models. They observe that BMs are often used as a kind of typology or taxonomy for characterizing different kinds of businesses (Baden-Fuller & Morgan, 2010, p. 157).

Role models offer ideal cases to be followed, while scale models represent short-hand descrip- tions of things that are in the real world (Baden-Fuller & Morgan, 2010, p. 157). Role models are models to be copied, while scale models are copies of things. In the case of BMs, the two concepts come together (Baden-Fuller & Morgan, 2010, p. 159). Managers can use BMs as recipes when it comes to BMI in their organization. Furthermore, managers can make use of recipes in order to communicate strategic and organizational change. In this case, recipes pro- vide guidance about how to act so that results come out right (Baden-Fuller & Morgan, 2010, p. 166).

Baden-Fuller & Morgen s study concludes that BMs do not play just one of these roles (role models, scale models, or recipes); they can take up any of these different roles for different purposes and different companies, and thus unite all of these, usually at the same time (BadenFuller & Morgan, 2010, p. 168).

2.4.2 Innovation and Innovation Management

The term ‘ innovation ’ is derived from the Latin terms ‘ novus ’ and ‘ innovatio ’ , which mean ‘ creating something new ’. This word was coined by the economist Josef Schumpeter, who first mentioned this term in ‘ Business Cycles ’ in 1939. He was the first economist to define innovation as the establishment of a new production function or the new combination of production factors (Schumpeter, 1939, p. 84). In this way, Schumpeter introduced and popularized ‘ inno vation ’ as a term in the field of business and economic theory.

Innovation vs. invention:

In scientific literature, a strict distinction is made between invention and innovation. The former refers to an occurrence of an idea for a new product or process, while the latter arises only from the actual implementation and economic exploitation of a new idea or an invention (Fragenberg, 2004, p. 4). According to Drucker (1985), innovation is the core element of entrepreneurial activity. For him, innovation is “ the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth ” (Drucker, 1985, p. 30).

How ‘ new ’ is ‘ new ’:

In the course of the discussion so far, innovation has always been linked to terms such as ‘ new ’, ‘ improvement ’, or ‘ change ’. At this point, it must be illuminated how much ‘new’ is necessary to be able to speak of an innovation and how substantial an improvement or change must be to qualify for this category. Schumpeter defines innovation as the implementation of new combinations in reality: “The doing of new things or the doing of things that are already done, in a new wa y” (Schumpeter, 1947, p. 151). In order to be considered an innovation, it is enough if existing resources and abilities are combined or linked in a new way. These are, therefore, new combinations, which do not presuppose new resources, new know-how, or new skills. A useful approach to standardize investigations that deal with innovation is given in the ‘ Oslo Manual ’ of the OECD, which was developed in the early 1990s. The manual distinguishes between the following four categories (OSLO Manual, 2005, p. 17-18):

- New to the world
- New to the industry in the country of the operating market of the firm
- New only to the firm
- Non-innovation

Incremental vs disruptive Innovation:

Furthermore, one can subdivide innovations into incremental and disruptive innovations. Thus, innovations can have either disruptive or incremental character. While incremental innovations are only minor changes that have low chances and risks, disruptive innovations are usually associated with fundamental quantitative and qualitative changes, and therefore tend to have higher technical and economic risks (Henderson & Clark, 1990, p. 11; Romanelli & Tushman, 1994, p. 1143).

Product, process, and service innovation:

In terms of possible approaches or objects, innovation may refer to the renewal of products, processes, or services. Classic approaches are product or process innovations of a company. When it comes to product innovations, companies try to increase the value of their products and generate demand-driven growth. On the other hand, process innovations are aimed at increasing the efficiency of the company and thus serve to increase productivity and reduce costs (Utterback & Albernathy, 1975, p. 645).

2.4.3 Business Model Innovation

In the previous sections, the nature of BMs and innovation is illuminated and the angle under which the topic are investigated is revealed. Now that the content and purpose of BM and innovation have been clarified, the following section deals with the question of the relationship between the terms ‘ business model ’ and ‘ innovation ’.

2.4.3.1 Understanding of Business Model Innovation

According to Schneider & Spieth (2013), the research field focussing on BMI has no basis in terms of established definitions and the literature is not structured well. A recognized definition or an orderly stream of contributions—in which one could orientate oneself for the purpose of a better understanding of the essence of a BMI—is a fruitless search (Schneider & Spieth, 2013, p. 2). In recent years, with the growing interest in the field of BMI, scientists have intensively tried to define the term unambiguously. However, to date, the attempts on forming a definition in this context have not led to any general definition. Despite this circumstance, by comparing scientific literature on BMI, a consensus can also be found in this case. Several authors argue that a BMI can be interpreted as a change in the elements of the BM. In principle, each element of a BM can serve as a starting point for a BMI (Osterwalder & Pigneur, 2010, p. 138). Other definitions in the BMI environment refer to the extent and scope of the elements that are changed. On the one hand, some authors, such as Sawhney et al., consider the change of one element as sufficient to be able to speak of a BMI (Sawhney et al., 2006, p. 76). On the other hand, some definitions provided in scientific literature define that it only be considered a BMI when several elements of a BM have been changed. According to Lindgardt et al. (2009), innovations become BMIs if at least two elements of a BM are changed in order to deliver value in a new way (Lindgardt et al., 2009, p. 2).

Basically, it can be derived from scientific literature that there are no restrictions on which elements of a BM can be changed by the launch of a BMI. Merely the extend and scope of changes in order to become BMI must be defined at this point. In the further course of this work, BMI is defined as the action when at least one element of the BM (value proposition, value creation, and/or value capture) is changed. This is justified by the fact that BMIs generally involve the whole BM, since the elements are closely interlinked to each other (please refer to chapter 2.4.1.2) and the change in one element has a lasting effect on the other elements as well as on the overall business.

2.4.3.2 Degree and competitive advantage of BMI

The environment of companies is subject to constant change. The reasons for this are, inter alia, the development of new technologies, lasting change in consumer habits, and new legal regu- lations. If there are external changes undermining a model, it is necessary to construct a new model. A BMI represents the necessary lever for this and contributes to maintaining the long- term competitiveness of a company (Amit & Zott, 2012, p. 42; Lindgardt et al., 2009, p. 2). The degree of innovation of a BMI is measured on the basis of the BM which is renewed by an innovation. Generally, a distinction can be made between incremental and disruptive BMIs. Thus, a BMI that represents a novelty only for the BM of the company which carries out the innovation can be described as an incremental BMI (“ new to the focal firm ”). In contrast, a disruptive BMI refers to the modification of a business that has so far been regarded as estab- lished for a certain market or competition area. This case refers to the development of new hitherto unknown BMs—in other words “new to the state-of-the-art” (Amit & Zott,2010, p. 1).

According to the current state of research, BMIs—especially disruptive BMI—have numerous competitive advantages. The high potential for differentiation applies particularly to one of the central advantages typically associated with a BMI. Hence, BMIs are characterized by a higher complexity than product or process innovations. As a result, BMIs are usually more difficult to be imitated than innovations in products, processes, or services (Amit & Zott, 2012, p. 42; Lindgardt et al., 2009, p. 2).

Studies conducted by BCG and IBM confirm this thesis: The results of the BCG study show that on average, BM innovators are six percent more successful than pure product and process innovators, over a period of five years. In addition, the study also shows that the competitive advantages that can be traced back to BMIs are not only much more extensive, but also have significantly higher sustainability as compared to product and process innovations. Thus, the competitive advantages of most BMIs still existed after five years, whereas those of the product and process innovations investigated within the framework of the study were almost zero (Lind- gardt et al., 2009, p. 3). The competitive advantages in this study were measured by the per- centage difference between the average total shareholder return of the innovator and the branch average.

An empirical investigation conducted by IBM underlines the superiority of BMI. According to this study, the so-called “outperformers” of an industry innovate their BM twice as frequently as “underperformers”, which are more focused on product, service, or process innovation. The difference between the underperformers and outperformers was measured on the basis of the average annual growth rate of the operating margin (Pohle & Chapman, 2006, p.36).

2.4.4 Opportunity recognition

Many authors have pointed out the importance of opportunities in the context of entrepreneurship. Economists argue that entrepreneurial opportunities form the basis of entrepreneurship; i.e. there is no entrepreneurship without opportunities (Shane & Venkataraman, 2000, p. 220; Short et al., 2010, p. 40).

In order to provide an understanding of the relevance and the content of the topic in question, the following chapters provide further insights. Below, a definition is presented that meets the research purpose and fundamental basics of OR are outlined. After that, the two research fields—OR and BMI— are synthesized. Here, the focus is on whether managerial OR is a onetime action or a process. Finally, the main influencing factors and barriers for managers regarding OR in BMI are summarized.

2.4.4.1 Opportunity recognition: Basics and definition

Idea and opportunity recognition:

At the beginning is the idea. But the commonly held opinion is wrong that business ideas must be brilliant or ingenious in order to be successful. Innovations through spontaneous ideas are attested to have even lower chances than those that arise through a systematic process (Drucker, 1985, p. 130). At the same time, ideas that revolutionize entire industries are often very sim- ple—at least at the end of the thought process. If somebody is waiting for brilliant ideas, he will not get any closer to his goals. According to Drucker (1985), opportunities arise from new knowledge, process needs, incongruences, unexpected occurrences, changes in markets or in- dustrial structures, demographic changes, and changes in perception (Drucker, 1985, p. 35). Timmons (1994) mentions that an opportunity-rich environment is often complex and chaotic. The central challenge in recognizing an opportunity is buried in contradictory information, sig- nals, and chaos of the marketplace. Furthermore, it is mentioned that the more imperfect is the market, the more plentiful are the potential opportunities. Imperfect market, in this case, relates to asymmetries, inconsistencies, and gaps in knowledge and information (Timmons, 1994, p.1).

The underlying process of opportunity recognition:

In scientific literature, managerial OR is not associated with a one-time action but rather with a process. Companies daily face new opportunities and threats. As an iterative process, oppor- tunities arise on a continuous basis. For example, an opportunity could be the idea of selling a current product in a new market segment, or using an existing production facility to bring a new product to the market. Chandra et al. (2009) mention that the process behind OR consists of both discovery and deliberate and systematic search (Chandra et al., 2009, p. 32). Gregoire et al. (2010) focus on changes in the market regarding OR. Recognizing opportunities is the pro- cess of detecting changes in demand and supply in the markets. OR is not just identifying changes in the market. Rather, some important steps are necessary, such as the identification of appropriate resources including physical and managerial resources. These resources need to be allocated for the production of products or services, in order to treat the needs properly (Gregoire et al., 2010, p. 415). According to Ardichvili et al. (2003), OR consists of three steps. The first is to identify the needs and requirements of the markets. The second is to integrate market needs and resources and the third is the development of a business concept that focuses on the market gap (Ardichvili et al., 2003, p. 109-110). Furthermore, opportunities are created by the process of interactions with the stakeholder. It means that opportunities are co-created by the joint actions of a company and its stakeholders (Sarasvathy et al., 2003, p. 155).

Definition of opportunity recognition:

To ensure that further investigations are based on a firm foundation, a definition must also be provided for OR. In the further course of this work, OR is a summary expression for all actions that a company must undertake for the identification of opportunities (Ozgen & Baron, 2007, p. 175). In particular, this study defines opportunity as a situation in which new product services, organizing methods, and/or markets can be introduced by the setting up and formation of new means, ends, or means-ends relationships (Eckhardt & Shane, 2003, p. 336).

2.4.4.2 Managerial Opportunity recognition & BMI

Basically, OR contributes to BMI. As a consequence of recognizing and capturing opportuni- ties, a firm can innovate its BM (Chesbrough, 2010, p. 362). Owing to fast-changing market demands and customer preferences, as well as increased competition in markets, companies need to pay a higher level of attention to new opportunities. OR is key to identifying changes in market demands and customer preferences and to achieving higher firm s performance (Han- sen et al., 2011, p. 296 - 297). According to Sambasivan et al. (2009), OR leads to higher firm sales and sale growth (Sambasivan et al., 2009, p. 803). George & Bock state that companies need to identify emerging opportunities and manage their resources in an appropriate way to innovate the firm s BM (George & Bock, 2011, p. 106). Managers are the decision-makers in companies. They run companies and are responsible for the allocation of resources. In this the- sis the role occupied by the management level represents the ‘ human connection element ’ be- tween OR and BMI.

The function and role of OR in BMI by management level:

A study by IBM 2006 provides further insights into innovations by analysing what hinders companies to realise innovations. The hurdles are divided into external and internal hurdles. Through 765 interviews with executives from 20 different industries and 11 regions this study led to the result, that the majority of the barriers to innovation can be found inside the own organisation. Unsupportive culture climate was listed on the top of this ranking followed by limited funding investment, workforce issues, process immaturity, inflexible physical & IT in- frastructure and insufficient access to information. The results of the IBM study refer to a clas- sic case of “good news bad news”, because the most of these obstacles are within the control of the managers respectively CEOs. On the one hand, managers are responsible for overcoming external hurdles. On the other hand, executives have to create inside in the company a culture, that avoids and eliminates the listed obstacles or in best case to develop an environment, that is open to changes, improvements and innovations (IBM, 2006, p. 30).

Hulbert et al. (2015) examine different ways in which growth-minded SME managers can rec- ognize potential opportunities for their firms. This research was carried out using a qualitative methodology, consisting of in-depth interviews with the managers of 20 SMEs. The key result of this thesis was that SME business opportunities are especially driven by product develop- ment, marketing, and markets. Furthermore, it is pointed out that recognition of opportunities is not necessarily an entrepreneurial function. In the first instance, OR requires innovative in- dividuals (Hulbert et al., 2015, p. 639). This factor must not be neglected in the following anal- ysis, as innovative individuals at all corporate levels contribute to OR. Nevertheless, the focus of this thesis is on OR at the management level, also referred to herein as ‘ managerial OR ’. This includes all actions that managers must undertake in order to identify business opportuni- ties.

Amit & Zott (2001) confirm that BMI is facilitated by OR. More specifically, they mention that companies and their leading managers need to innovate their existing BMs in terms of content and structure of transaction, in order to take advantage of recognized opportunities (Amit & Zott, 2001, p. 511). Apart from the multiplicity of positive factors and potential changes asso- ciated with OR, there are specific challenges for managers. On the management level, the chal- lenge is to avoid jumping too quickly into conclusions about detailed product design, financial projections of capital expenses market analysis, cash flow, pricing options, or projected earn- ings. This could lead, on the one hand, to the creation of commitments to the wrong choices or, on the other hand, to shutting down promising opportunities too soon (Hargadon, 2015, S.36).

Influencing factors and barriers:

Scientific literature refers to several influencing factors in the context of OR. These are extrinsic factors such as environmental circumstances and intrinsic personal factors. A survey on a sam- ple of 68 firms led to the result that OR is highly influenced by extrinsic factors such as market analysis, competitor analysis, and industry analysis (Pech & Cameron, 2006, p. 63). George et al. (2016) summarize the four dimensions of environmental factors that are critical to OR. These are economic growth, social and political context, geographic location, and cultural values (George et al., 2016, p. 335).

Moreover, several intrinsic factors can be identified in scientific literature, which contribute to the recognition of opportunities. Ardichvili et al. (2003) identify information asymmetry and prior knowledge, entrepreneurial alertness, social networks, discovery vs. purposeful search, personality traits, risk-taking, optimism, creativity, and self-efficacy as the leading intrinsic factors (Ardichvili et al., 2003, p. 106). George et al. (2016) summarize these factors more succinctly and refer to prior knowledge, systematic search, alertness, cognition or personality traits, social capital, and environmental condition (George et al., 2016, p. 309). Brockmann mentions that there are particular intrinsic traits aiding OR, namely creativity, optimism, critical thinking, high psychological success, and risk-taking propensity (Brockmann, 2011, 49).

OR and innovative BM development entail many barriers in practice. Based on the frequency of mentions in the literature, as well as the negative extent of the innovative capacity of com- panies, one of the largest barriers to BMI is the so-called ‘ dominant logic ’ (Chesbrough, 2010, p. 359; Hacklin & Wallnöfer, 2012, p. 170; Sabatier et al., 2012, p. 949). The concept of dominant logic was introduced by Prahalad & Bettis (1986) into strategic management research in order to examine the link between the long-term development of a company and the cognition of managers from a scientific perspective.

In today’s scientific literature, dominant logic is described in this context as the totality of all those patterns of thought that are anchored in the minds of the managers. This means that dom- inant logic is how managers design their BM and make decisive resource allocation decisions (Lampel & Shamsie, 2000, p. 595; Prahalad & Bettis, 1986, p. 490). On the one hand, there are many advantages of dominant logic, such as the complexity-reducing effect, in order to solve problems through cognitive simplifications or the individual allocation of available vs. adequate information. On the other hand, there are great disadvantages connected to the concept of dom- inant logic, which inhibit companies in terms of their ability to innovate (Prahalad & Bettis, 1986, p. 492; Sabatier et al., 2012, p. 949). In concrete terms, the concept of dominant logic is connected with blindness to possible strategic change potentials. Prahalad (2004) suggests that dominant logic may keep an organization on the road; however, it can also act as a blind spot to peripheral view (Prahalad, 2004, p. 171). One of the main reasons for this is that dominant logic leads to a filtered perception, in which all information that does not coincide with the dominant logic is automatically rejected (Bettis & Prahalad, 1995, p. 7).

This innovation-inhibiting effect can be traced back to the past and the associated successes of a company. This means that the existing structures are only seldom critically questioned or checked if a BM was successful in the past. Logical consequence of this is that the information, impulses, or opportunities that would make the company aware of a possible need for change or would make a positive contribution to the BM, are not recognized. Furthermore, it can be derived from scientific literature on this subject that if a dominant logic has been developed once within a company, it is very difficult to change it. In addition, the more successful an organization has been in the past, the more difficult unlearning becomes. In this context, un- learning refers to the process by which organizations eliminate old behaviours and make room for new ones (Prahalad & Bettis, 1986, p. 498; Prahalad, 2004, p. 172).

2.5 Literature findings and uncovering research gaps

The central research interest of this work is the phenomenon of BMI in conjunction with managerial OR. It refers to the managerial competence or ability to recognize and realize opportunities and innovative business ideas. Section 2 provided the theoretical perspective through which the reality can be conceived in this scientific contest. The concept of scientific research is relatively unexplored, since the subject matter (especially BMI) has only been the subject of scientific debate since the turn of the millennium.

First of all, it is clear that managerial OR—in conjunction with BM or BMI—is a very young research area and scientists have not brought these two areas together. This can be seen in the initial search using Ebsco and Jstor; while searching for *opportunity recognition* and *busi- ness model innovation* as combined search terms, very few hits are displayed. A central basis for further analyses is the division of BM into three interrelated and closely connected elements—value proposition, value creation, and value capture—and the fact that it is considered as BMI when at least one of those three elements is changed. The innovation process—from the development of a business idea, strategy, or opportunity to the realization in the form of a suitable BM or BMI—is exposed to certain influences as it can be extracted form the illustration below.

Illustration 2-3: Reference frame managerial OR in BMI

Abbildung in dieser Leseprobe nicht enthalten

Source: Own representation

On the one hand, these can be internal influences such as company guidelines. On the other hand, external influences could be there, for example the pressure of other competitors or new environmental standards, as is often the case in the automotive industry. Direct influence on the managers in the context of OR follows the aforementioned concept of dominant logic. All in all, executives (management level) are responsible for processing these influences and—in the best case—finding opportunities for the benefit of the company and integrating these opportunities in the form of a successful BMI.

Illustration 2-3 represents a reference frame and shows the extent to which this work relates specifically. On the basis of the literature review, an innovation process is briefly described, which consists of the three elements—OR, managerial decision-making, and BMI. These three elements ultimately lead to company success. The further investigations focus on the beginning of the innovation process—the so-called managerial OR.

In the further course of the work, dynamic aspects are of particular interest:

- What are the key drivers for managers when in the context of OR in BMI?

- What helps managers in identifying opportunities for their BM?

- What hinders managers in identifying opportunities for their BM?

- What barriers and obstacles have to be faced?

3 Methodology of the expert interviews

In this section, the methodology of further investigations is outlined. The primary data is deliv- ered through expert interviews. According to Yin (2009), there are certain pros and cons in conducting interviews in the field of scientific research. One of the biggest hurdles in conduct- ing expert interviews is the fact that it can be biased, including inaccuracies due to poor infor- mation. Moreover, interviews could have issues of reflexivity. This means that the interviewee may give answers accordingly to what the interviewer expects. On the other hand, interviews are among the most important sources of data collection and are an effective method to get appropriate answers to ‘ why ’ and ‘ how ’ questions (Yin, 2009, p. 106). Yin mentions that inter- views are targeted; they focus and provide insights with perceived causal inferences and expla- nations (Yin, 2009, p. 102).

The main challenge for the interviews in this study is the fact that BMI covers an extremely widespread field. Due to this fact, the interviews in practice (with the help of an interview guideline) have to meet the subject’s complexity properly, in order to examine the research questions regarding managerial OR in conjunction with BMI.

The actual preparation, execution, and post-processing were carried out according to the procedure of Dubé & Paré (2003). Generally, the approach is divided into three sections (Dubé & Paré, 2003, p. 597):

- research design

- data collection

- data analysis

3.1 Research Design

Statistical vs. analytical generalization:

First, a distinction must be made between statistical and analytical generalizations (Yin, 2009, p. 38). In statistical generalization, an inference is made about a population on the basis of empirical data collected for a sample. On the other hand, an analytical generalization can be achieved by a small number of replications of a statement (Yin, 2009, p. 39). This study is based on analytical generalization, with several interviews (multi-cases) used as data surveys in the same context.

Qualitative vs. quantitative research design:

For the investigation of such complex objects of observations qualitative approaches should be preferred over quantitative approaches. Thus, this study is based on a qualitative research design (Flick, 2009, p. 25).

Comparative study:

For this study, a suitable methodological approach is the comparative study, since this is particularly suitable for comparing specific knowledge of experts. With a focus on individual, specific parts of the interviews, the comparative study allows the examination of a variety of arguments within a case (Flick, 2009, S. 135).

Explorative approach:

Since the interviews aim at the identification of procedures and methods of managerial OR in BMI, an exploratory approach is applied for the comparative study. Explorative approaches are methods that lead to new theories and/or new constructs (Dubé & Paré, 2003, p. 605).

3.2 Data collection

According to Schreier (2012), data must be collected through the most open, non-directional, and— above all—flexible methods, whereby no predefined response possibilities should be submitted to the interviewee (Schreier, 2012, p. 25). The data collection was carried out by means of semi- structured (expert) interviews and was fundamental to the information acquisi- tion.

Semi-structured interviews are more open, in contrast to standardized ones, since they do not run in strictly predefined paths. In the course of the expert interviews, it is advisable to conduct a ‘ normal ’ conversation with the interviewee, so as not to place him in an inquisition-like com- munication situation. The interviewee is guided by an interview guideline, which serves as an aid but offers adequate freedom to reformulate questions or extension into specific topics (Flick, 2009, p. 150). The semi-structured interviews allow the variance of the sequence, since inter- viewees partly answered subsequent questions along with a previously asked question. The questions were customized according to the interviewee and the conversation situation, so that the discussion remained flexible and thus could follow the natural course of argument. The opportunity was given to ask well-aimed questions, in order to collect relevant responses that meet the complexity of the subject and the research stream (Bryman & Bell, 2011, p. 205).

Each interviewee was asked in advance for permission to record the interview via a recording tape. This was allowed by all interviewees; thus, after the conversation a tape recording was available for evaluation. The advantages of recording the conversation—in contrast to writing a memo—is that the interviewer can focus more on the content during the conversation and not get distracted by the transcript (Flick, 2009, p. 164). In addition, the tape prevents the infor- mation from being lost and sets a solid base for the data analysis, because the conversation can be transcribed or the key parts of every conversation can be replayed several times.

The interviews for the collection of the primary data were carried out between the 23th of Jan- uary and 17th of February, 2017, and were held in German. Because of the mostly large spatial distances between the interviewer and the interviewees, the surveys were carried out exclu- sively via telephone. In all, 10 interviews were conducted with CEOs, managing directors, busi- ness unit leaders, and founders of established German and Austrian companies of different in- dustries. The average length of the interviews was 40 minutes and the time limits were in the range of 18 - 67 minutes.

Interview-guideline:

The interview guideline was mainly developed on basis of the literature review and the research questions derived from it. Furthermore, additional questions were asked in an open way in the course of the interview, so as to encourage the interviewees to share as much information as possible.

Every interview started with a short briefing, including the introduction of the thematic background of the research/thesis, the planned course of the conversation, the method of recording the conversation, and the planned use of the data material under aspects of data protection. The interview guideline can be divided into two main blocks.

The first block consists of questions concerning the information subject and the background of BMI and OR. This section serves to classify the interviewee and his statements in order to ensure comparability between different interviews. The second block comprises the main ques- tions to meet the research questions of managerial OR in BMI. This block is again divided into three parts. Each part can be assigned to one element (value proposition, value creation, or value capture) of the BM. Thus, the individual elements of the BM were discussed one after the other, in order to find out the relationship by which managerial OR and the individual elements of the BM are connected.

For the second block, six main questions were formulated. These questions refer to the drivers of OR, the information sources behind it, and whether there are processes to recognize opportunities and shape them concretely. Furthermore, questions were asked about which tools are used in the respective context and about the use of external support when it comes to OR. The issue of problems and obstacles in order to recognize opportunities formed the last part of the survey for every element of the BM. These six main questions were subsequently applied for each element of the BM. In all, the second block consists of 18 questions.

The overall survey closes with an open question as to whether the interviewees have something to add or suggestions for further ideas that could be added to the interview guideline.

3.3 Data analysis

The analysis methods used here are based on the recommendations of comparative case study research by Yin (2009) and the method of qualitative data analysis given by Miles & Huberman (1994). Miles & Huberman (1994) group data analysis into the following three simultaneous steps: (1) data reduction, (2) representation of the data, and (3) conclusion and review of the consequences.

Illustration 3-1: Data anaylsis procedure

Abbildung in dieser Leseprobe nicht enthalten

Source: Miles & Huberman, 1994, p. 12

The analysis—which must be understood as an iterative process—is based on the collected data from the expert interviews. At the beginning, the names of people and companies were pseudonymized to ensure the anonymity of the interviewees. In order to lay the foundation for further analysis, each interview (recorded on tape) was translated into a textual representation via a transcription process. For the transcription process, the software program MAX QDA was used. Subsequently, the transcripts of the interviews were unified with regard to their formal layout and line numbers were added to the text.

For the actual data analysis, the transcripts were read sequentially, in order to identify relevant text sections. Codes were assigned to these individual relevant text sections. In the next step, the assigned codes were checked with regard to meaningfulness and redundancy, and were par- tially combined or renamed. The codes help to quantify the qualitative data; subsequently, the codes were subsumed into categories. These categories—filled with information in the form of codes—indicate how many of the 10 interviewees have a certain characteristic, such as applying a special process to identify opportunities for their value proposition. The last step consists of identifying the correlations and concepts that reflect the content and meaning of the collected data.

4 Results

This chapter presents the results of the expert interviews. First, a brief overview of the interviewees backgrounds is presented and their general understanding regarding OR in BMI is outlined. All out of the 10 interview-partner are from 10 different companies. The company´s ID can be found in the appendix.

This is an exploratory study with a comparative character. At the end of Section 4.1, a table is provided. In this table, single background information is assigned to each interviewee. In this way, all answers of the interviewees can be placed in relation to background information (e.g. duration of employment) and factors like the dynamism of their industry or their field of activ- ity. The main part of the results is divided into five blocks. Here, it is shown more accurately how the interviewees treat OR in the context of main drivers, sources of information (which lead to OR), processes (which support OR), external support, and problems and hurdles.

4.1 Background and conceptual understanding of the interview partners

Six interviewees have been working in their company for more than 10 years, five for more than two years, and one interviewee has been employed for less than one year. Regarding their position and scope, seven of them are managing directors in their company and one is a business unit leader in one of the largest companies in Germany. The remaining two interviewees have the position titles Head of Operation and CSO (Chief Sports Officer).

The interviewees are from various industries. Three interviewees are active in the automotive industry, while three others have their field of activity in the sports industry (one of them is purely active in the sports article industry). The remaining four interviewees are assigned to the information technology, construction, food, and petrochemical maintenance industries respec- tively.

For this explorative study, it was important to set basic principles as the dynamism of the in- dustry. The interviewed people had to rate the dynamism of their industry on a scale from 1 to 5 (1 refers to very static and 5 to very dynamic industry). Four of the interviewees rated their industry as very dynamic (5), two interviewees rated their industry 4, and two others 3. Two person rated their industry 2, explaining their industry is static but not totally resistant to changes. In the table below, it can be extracted how each person has rated the dynamism of his industry. For example, respondent J.P. and respondent S.S. with the rating 5 (very dynamic) have their areas of activity in the automotive respectively information technology industries.

[...]


1 Ebso-Search dated from 2017-01-21

2 Google-Scholar-Search dated from 2017-02-07

Details

Pages
159
Year
2017
ISBN (eBook)
9783668562608
ISBN (Book)
9783668562615
File size
952 KB
Language
English
Catalog Number
v372482
Institution / College
Friedrich-Alexander University Erlangen-Nuremberg
Grade
Tags
managerial opportunity recognition business model innovation

Author

Share

Previous

Title: Managerial Opportunity Recognition in Business Model Innovation