Conference Agenda

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Session Overview
Session
19-PM2-10: G1 - Business Model Innovation
Time:
Wednesday, 19/Jun/2019:
2:45pm - 3:45pm

Session Chair: Rémi Maniak, Ecole Polytechnique
Location: Amphi Grégory

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Presentations

Business Models of RTOs in the area of microelectronics and semiconductors: A Case Study Analysis

Nizar Abdelkafi, Cornelia Schindler, Alexander Schwind

Fraunhofer Center for International Management and Knowledge Economy IMW

Context

Microelectronics lies at the base of technological trends such as Industry 4.0, Artificial Intelligence, and Blockchain. It is a fundamental technology for digitization. Because of a growing pace of innovation, industry needs support from Research and Technology Organizations (RTOs). These RTOs have different business models that we propose to analyze.

Literature

Research in the area of semiconductors and microelectronics needs a sophisticated infrastructure that is not necessarily available in companies, especially SMEs (Almeida and Kogut, 1997; Macher et al., 2002).

Therefore, these RTOs are conducting basic and practice-oriented research for private companies. To be active in the microelectronics value chain, RTOs should execute certain activities that define their roles. The roles of the RTOs define their business models. Thus, the literature that we rely on in this work is threefold.

The first is related to business models. A business model as the way organizations create, communicate, deliver, and capture value out of a value proposition (e.g. Abdelkafi et al., 2013). The second stream of the literature deals with value chains, in particular in the area of microelectronics, and the third is the literature related to RTOs, especially in semi-conductor and microelectronics (e.g. Gover, 1993).

Literature Gap

This contribution extends the use of the business model construct to research organizations. So far, there have been no attempts in this regard. Whereas the pressure on research institutions grows to do research that is relevant to the practice, there have been no attempts to transfer this perspective to RTOs.

Research Questions

- What is the value chain structure in the area of microelectronics, and what are the value chain activities that can be supported by RTOs?

- What are the best RTOs of Microelectronics worldwide, and what business models did they establish?

- How do RTOs interact with other stakeholders?

Methodology

With a patent analysis, we rank RTOs located outside Germany according to their innovativeness level. The number of patents is a proxy for the innovativeness level. We select the most innovative RTOs: five RTOs from Europe, five from Asia, and four from the USA.

The RTO business models are analyzed based on data that is accessible on the internet such as websites and annual reports. Based on this data, we generate single case studies by analyzing value proposition, value creation, and value capture of each RTO. Then, we conduct a cross case analysis to compare the cases and identify patterns.

Empirical Material

Not relevant as it is about an analytical paper.

Results

Our results are structured according to the business model elements:

Value proposition

Our analysis shows that the European, Asian, and American RTOs follow different business models. Whereas the European RTOs have a broad orientation in their research, the Asian RTOs conduct more focused activities. In addition, the European RTOs seem to do more practice-oriented research than the Asian organizations, which are more oriented on basic research.

Value capture

In general, Asian RTOs in the area of semi-conductors and microelectronics get a bigger portion of public funding than their European counterparts.

Value creation

Furthermore, European institutions focus on research and exploitation at the same time, whereas the Asian RTOs are clearly separating between these activities. In the Asian context, research is transferred to practice by dedicated institutes, not necessarily by the institutes that generated the research results. Research on semiconductor microelectronics in the United States, however, is rather located at universities, which developed sophisticated structures in order to ensure the involvement of the industry in their research.

Contribution to Scholarship

First, this work extends the application of the business model construct to RTOs. Second, it reveals possible roles of RTOs in the microelectronics value chain. The role of an RTO depends on the services it delivers to actors in the value chain. Third, RTOs use different business models. As the pressure on RTOs to do research that is closer to practice grows, they increasingly need adequate business models to sell their research to industry. Forth, our analysis makes it clear that European, Asian and US American RTOs pursue different business models and approaches to transfer.

Contribution to Practice

With transfer of the business model approach to RTOs in the field of semiconductors and microelectronics, we provide RTOs a framework for analyzing the way they do business. The results can enable RTOs to position themselves with respect to others in Europe, Asia, and the United States. The results can be also of interest to policy makers that look for an overview of the functioning of RTOs in different regions.

Fitness

The topic is closely related to this year’s conference theme “The Innovation Challenge: Bridging Research, Industry & Society”, as it focuses on transfer of research from RTOs to Industry. Furthermore, the results can support for RTOs to understand and develop their business models to increase innovation transfer to industry.

Bibliography

Abdelkafi, N., Makhotin, S., & Posselt, T. (2013). Business model innovations for electric mobility—what can be learned from existing business model patterns?. International Journal of Innovation Management, 17(01), 1340003.

Almeida, P., & Kogut, B. (1997). The exploration of technological diversity and geographic localization in innovation: Start-up firms in the semiconductor industry. Small Business Economics, 9(1), 21-31.

Gover, J. E. (1993). Strengthening the competitiveness of US microelectronics. IEEE transactions on engineering management, 40(1), 3-13.

Macher, J. T., Mowery, D. C., & Simcoe, T. S. (2002). e-Business and disintegration of the semiconductor industry value chain. Industry and Innovation, 9(3), 155-181.



Business Model Innovation and Firm Performance: Assessing the impact of incremental and radical innovation

Matthias Menter, Christopher Zeeb

Friedrich Schiller University Jena, Germany

Context

The digital transformation enables firms to expand their portfolio of capabilities and generate customer value (Berman, 2012). Despite the importance of this topic, business model innovation remains “a slippery construct to study”, caused among others by a missing common theoretical framework and construct clarity (Zott et al., 2011).

Literature

In their comprehensive literature review on business model innovation, Foss and Saebi (2016) conclude that current studies do not directly link business model innovation to performance outcomes, whereby the causal structure in the theory is missing, even though there is an increasing consensus that business model innovation is key to firm performance (Zott et al., 2011). Aspara et al. (2010) found that large firms that have a strong strategic emphasis on business model innovation and business model replication exhibit a higher average value of profitable growth than firms that do not. However, for small firms, they suggest the contrary. Karimi and Walter (2015) identified a non-linear association with the adoption of disruptive business model innovation on business model performance: both high and low levels of business model innovation adoption have a high impact on performance, while a medium business model innovation adoption only has a marginal impact on performance.

Literature Gap

The goal of our study is to address recent calls in the literature for more empirical analyses on the impact of business model innovation. We thereby follow Foss and Saebi (2016) who recommend starting with collecting cross-sectional data on business model changes and regress those against business or corporate performance.

Research Questions

We specifically want to address the question whether incremental and radical business model innovation imply divergent effects on firms’ financial performance.

Methodology

We employ propensity score matching estimation techniques in order to assess the impact of incremental and radical business model innovation on firms’ financial performance.

Empirical Material

Set in the German context and based on a hand-collected dataset capturing firm and industry specifics over the last 15 years from 2002 to 2016, we consider the product portfolio of a firm (both changes in a vertical or horizontal direction), its organizational design as well as its overall innovation performance enable us to operationalize the already mentioned classification by Clauss (2017). We further control for firm and industry specifics as well as time effects.

Results

Our preliminary results suggest that business model innovation has a significant impact on financial performance indicators. Especially incremental business model innovation thereby seems to have stronger effects on firms’ financial performance. Interestingly, rather unprofitable firms have a higher tendency for radical business model innovation compared to previously profitable firms, suggesting that a radical transformation is perceived as competitive strategy for firms lacking behind.

Based on our results, we discuss and develop strategies for both managers and policy makers how to best stimulate and guide the digital transformation of firms in the context of business model innovation. It is not only about internal organizational resources and capabilities, but also the industrial environment that has a huge impact on the successful implementation of business model innovations. Thus, more research needs to be devoted to the importance of the internal and external context with regard to business model innovation.

Contribution to Scholarship

The contribution of our study is thereby threefold. First, we contribute to building up the missing congruence and identify the cause-effect relationship of business model innovation and firm performance, starting with identifying antecedents and outcomes of business model innovation. Second, we extend existing studies having a single industry focus by utilizing an operationalization of business model innovation that is suitable for various industries, enabling us to derive more generalizable results. Third, we distinguish between incremental and radical business model innovation, adding to the rather vague definitions on business model innovation in the existing literature.

Contribution to Practice

Based on our results, firm managers are enabled to ground their decisions with regard to business model innovation on empirical results, hence are guided through rather difficult strategic decisions on firm orientation. Our study thus addresses increasing calls of practitioners for more evidence-based decision-making.

Fitness

This research is one of the first attempts to empirically assess the impact of radical and incremental business model innovation on firm performance, hence offers new insights into the strategic decision-making of firm managers.

Bibliography

Aspara, J., Hietanen, J., & Tikkanen, H. (2010). Business model innovation vs replication: financial performance implications of strategic emphases. Journal of Strategic Marketing, 18(1), 39-56.

Berman, S. J. (2012). Digital transformation: opportunities to create new business models. Strategy & Leadership, 40(2), 16-24.

Clauss, T. (2017). Measuring business model innovation: conceptualization, scale development, and proof of performance. R&D Management, 47(3), 385-403.

Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: how far have we come, and where should we go?. Journal of Management, 43(1), 200-227.

Karimi, J., & Walter, Z. (2016). Corporate entrepreneurship, disruptive business model innovation adoption, and its performance: the case of the newspaper industry. Long Range Planning, 49(3), 342-360.

Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future research. Journal of Management, 37(4), 1019-1042.



Maturity of business models – A conceptual model for analyzing the maturity level

Stefan Vorbach, Christiana Müller, Elisabeth Poandl, Michael Rachinger, Martin Glinik, Ines Korajman

Graz University of Technology, Austria

Context

Today, the professional design of business models (BM) is regarded as decisive for success. However, the maturity of these BM is difficult to determine. Maturity models (MM) offer organizations an effective possibility to measure the quality of BM. This article therefore deals with the conception of a MM for BM.

Literature

Mateu, J. M., & March-Chorda, I. (2016). Searching for better business models assessment methods. Management Decision, 54(10), 2433-2446. doi:10.1108/MD-07-2015-0325

Wendler, R. (2012). The maturity of maturity model research: A systematic mapping study. Information and Software Technology, 54(12), 1317-1339. doi:10.1016/j.infsof.2012.07.007

Biloshapka, V., Osiyevskyy, O., & Meyer, M. (2016). The value matrix: A tool for assessing the future of a business model. Strategy and Leadership, 44(4), 41-48. doi:10.1108/SL-04-2016-0026

Brooks, P., El-Gayar, O., & Sarnikar, S. (2015). A framework for developing a domain specific business intelligence maturity model: Application to healthcare. International Journal of Information Management, 35(3), 337-345. doi:10.1016/j.ijinfomgt.2015.01.011

Colli, M., Madsen, O., Berger, U., Møller, C., Wæhrens, B. V., & Bockholt, M. (2018). Contextualizing the outcome of a maturity assessment for industry 4.0. IFAC-PapersOnLine, 51(11), 1347-1352. doi:10.1016/j.ifacol.2018.08.343

Literature Gap

The maturity of BM has so far mainly been measured in selected domains, e.g. in terms of the degree of digitisation of the BM, or in specific sectors, e.g. production. Although MM's research is already well advanced, a generally applicable maturity measurement for BM is not yet known.

Research Questions

The aim of this article is therefore to develop a MM for BM conceptually. The following research questions will be answered:

(1) How must a model be designed to appropriately measure the maturity of business models?

(2) What maturity levels and elements does an MM have to contain?

Methodology

The MM will be developed using a design science approach. The goal of design science is to improve problem-solving capabilities by creating artefacts such as constructs, models or others (Hevner et al. 2004). As an expansion of prior research Peffers et al. (2007) created a process methodology known as Design Science Research Methodology (DRSM). In our research we follow the six key steps (idenfify problem and motivate, define objectives of a solution, design and development, demonstration, evaluation, communication). For the demonstration of the applicability of the MM we apply this model to a real-world BM.

Empirical Material

The authors operate a Business Model Lab, which aims at the development of novel business models for companies. For the demonstration of the applicability of our MM we will use a case study from this Business Model Lab. Interviews and workshops are used to obtain the necessary information.

Results

The MM described in our contribution builds on the BM assement of Mateu and March-Chorda (2016) and further develops the 8 indicators of these authors. The indicators are assigned to the elements of a business model. The BM of Gassmann et al. (2013) offers a good framework (who?, what?, how?, value?) for allocating the indicators to the BM elements and therefore is used as a reference. The aim of the model developed is, that companies are able to carry out a self-assessment of the maturity level of their BM. This is done with the help of a configurable set of questions, which define the maturity level of each element of a business model.

Contribution to Scholarship

The MM developed represents a novel approach for evaluating the maturity of BM. In contrast to existing MM (an overview provides for example Wendler (2012)) it is generally applicable, has no domain-specific reference and can be applied by companies without prior knowledge. Our contribution expands the existing knowledge of both domains, MM and BM.

Contribution to Practice

The strength of the developed model lies in its simple application as well as its general applicability. Practitioners are provided with a tool that enables a simple determination of the degree of maturity and shows starting points for BM innovation.

Fitness

This article helps companies to systematically assess the maturity level of their BM. From small improvements to radical innovations, companies and society can be improved. The MM helps to win the Innovation Challenge.

Bibliography

Gassmann, O., Frankenberger, K., & Csik, M. (2013). Revolutionizing the business model. Management of the fuzzy front end of innovation (pp. 89-97) doi:10.1007/978-3-319-01056-4_7

Hevner, A. R., March, S. T., Park, J., & Ram, S. (2004). Design science in information systems research. MIS Quarterly: Management Information Systems, 28(1), 75-105

Mateu, J. M., & March-Chorda, I. (2016). Searching for better business models assessment methods. Management Decision, 54(10), 2433-2446. doi:10.1108/MD-07-2015-0325

Peffers, K., Tuunanen, T., Rothenberger, M. A., & Chatterjee, S. (2007). A design science research methodology for information systems research. Journal of Management Information Systems, 24(3), 45-77. doi:10.2753/MIS0742-1222240302

Wendler, R. (2012). The maturity of maturity model research: A systematic mapping study. Information and Software Technology, 54(12), 1317-1339. doi:10.1016/j.infsof.2012.07.007



 
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