Business model innovation and export performance

Abstract

AbstractAlthough business model innovation (BMI) is generally beneficial for firms, few studies have investigated whether and under what conditions BMI benefits materialize in foreign markets. This research applies two complementary theoretical perspectives to understand the role of BMI in helping firms achieve enhanced performance in export markets. We argue that the effectiveness of the two types of BMI (novelty- and efficiency-centered) is influenced by factors such as relational embeddedness, international experience, and competitive intensity. Using primary data from 263 managers and CEOs from 194 exporting firms, we find that novelty- and efficiency-centered BMI boosts performance by strengthening exporters’ differentiation and cost advantages, respectively. We also show that for firms operating in mildly competitive environments and in a narrow set of countries, novelty-centered BMI is more likely to lead to a differentiation advantage. At the same time, exporters can attain greater cost advantages from efficiency-centered BMI if they have established strong relationships with their export customers/buyers and have been internationally active for a long time. Managers might need to pay close attention to the level of competition, as it can have both positive and negative implications for advantage-driven export performance outcomes.