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Jiang, G.; Ji, X.; Zhang, A. Novelty and Sustainability. Encyclopedia. Available online: https://encyclopedia.pub/entry/52716 (accessed on 02 July 2024).
Jiang G, Ji X, Zhang A. Novelty and Sustainability. Encyclopedia. Available at: https://encyclopedia.pub/entry/52716. Accessed July 02, 2024.
Jiang, Guihuang, Xuehong Ji, Aonan Zhang. "Novelty and Sustainability" Encyclopedia, https://encyclopedia.pub/entry/52716 (accessed July 02, 2024).
Jiang, G., Ji, X., & Zhang, A. (2023, December 14). Novelty and Sustainability. In Encyclopedia. https://encyclopedia.pub/entry/52716
Jiang, Guihuang, et al. "Novelty and Sustainability." Encyclopedia. Web. 14 December, 2023.
Novelty and Sustainability
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This entry is adapted from the peer-reviewed paper 10.3390/su151914182

Compared to incremental business model innovation, the impact of original business model innovation on both enterprises and societal development is more significant. The process of its emergence has attracted considerable attention.

original business model innovation process analysis of generation startups

1. Introduction

In the 1990s, numerous companies achieved significant success by harnessing the power of the internet and embracing business model innovation. However, in today’s increasingly complex and digitally transformed competitive landscape, relying solely on technological innovation or strategic revisions is no longer sufficient for achieving profitability in the business arena. Companies now need to integrate technology and strategy into new business models to gain a competitive advantage in this new era [1]. Such a business model possesses distinct characteristics of originality. The process of its formation is considerably more intricate than that of incremental business model innovation. Start-up enterprises that fail to grasp crucial elements in this process are prone to encountering challenges that could lead to a state of failure. Consequently, delving into the formation process of original business model innovation holds significant importance in enhancing the likelihood of success in business innovation and entrepreneurship for enterprises.
After a period of “noisy theoretical debates” triggered by the wave of innovation brought about by the internet and information technology, researchers have gradually reached a consensus on the essence of business models. This consensus revolves around a set of business logics focused on value creation and value capture [2]. Extensive research has been conducted on various aspects of business model innovation, including its definition, characteristics, influencing factors, relationship with innovation strategies, and the innovation process [3][4]. However, there is a lack of in-depth research on the specific stages of the formation process of original business model innovation. To elucidate the concrete process of achieving original business model innovation, the study begins by establishing criteria for identifying original business model innovation. It then proceeds to define the concept of original business model innovation and employs a multiple case study approach to analyze six selected startup enterprises in the transportation industry that exhibit characteristics of original business model innovation.

2. Original Business Model Innovation

Given the absence of a well-established conceptual definition for original business model innovation, the theories of original innovation and business model innovation serve as important foundations for this research. Previous studies have defined original innovation as the proposal of unprecedented discoveries, inventions, or innovative outcomes through research [5]. This concept is commonly applied in the fields of fundamental research and technological innovation, representing the highest level of transformative requirements within autonomous innovation models. It typically involves a qualitative leap based on original accumulation and entails complex evolutionary mechanisms [6][7]. Generally, original innovation exhibits four characteristics: first, it addresses problems for which there are no previous references or precedents; second, it introduces original breakthroughs in terms of content or methodology [8][9]; third, it establishes a new innovation cycle or triggers a new wave of innovation, rather than merely extending the existing innovation cycle [10]; and fourth, the innovation process exhibits strong dynamism and unpredictability [11].
Business model innovation can be understood from three perspectives: content, structure, and context. From a content perspective, business model innovation can be defined as changes in the core elements of a business model [12]. From a structure perspective, business model innovation is reflected in the optimized configuration of various elements, forming a new structural system [13]. From a context perspective, business model innovation is the process of exploring or developing potential customer needs, creating and implementing a completely new value proposition that is recognized by the market, within the environmental background [14][15]. Based on the degree of innovation, business model innovation can be categorized as incremental innovation and disruptive innovation [16]. While original business model innovation shares some similarities with disruptive business model innovation, it may not have the same level of impact as disruptive innovation.
To determine whether a business model innovation is an original business model innovation, researchers have identified the characteristics of original business model innovation. These characteristics include the following: Firstly, the business model addresses a completely new problem or satisfies a completely new pain point and demand, resulting in a unique value proposition. Secondly, the method of realizing the value proposition is applied for the first time in that field. Thirdly, it has the potential to trigger a wave of business model innovations, which can be manifested in the pursuit of capital or imitation by followers [17]. Fourthly, the process of original business model innovation is dynamic and unpredictable. The first two characteristics can be combined into one criterion: novelty, which is reflected in the breakthrough innovation in value proposition and its implementation. The third characteristic can be understood as sustainability, which signifies the success and widespread acceptance of original business model innovation, ultimately leading to achieving a breakthrough in original business model innovation. The fourth characteristic indicates that original business model innovation is influenced by multiple factors and requires exploration of key elements in the implementation process.
The study employs novelty and sustainability as criteria to judge whether a business model belongs to original business model innovation, as depicted in Figure 1. The four quadrants of Figure 1 represent different types of business models. Those that lack novelty or sustainability belong to outdated, eliminated, or no longer applicable business models. Those that exhibit novelty but lack sustainability are still in the conceptual stage of original innovation, not yet validated or proven to be feasible business model prototypes. Business models that demonstrate sustainability but lack novelty are continuations, imitations, or iterative improvements of existing business models. Only when both novelty and sustainability are present can a business model be considered an original business model that has undergone breakthrough innovation.
Figure 1. Business model matrix based on novelty and sustainability.

3. The Process of Business Model Innovation

To proactively engage in business model innovation, companies must understand the process of business model innovation [18]. This process is often categorized into externally driven and internally driven approaches [19]. The externally driven perspective suggests that continuous changes in the external environment compel companies to improve their existing business models [20]. Through a reactive process of “trial-error-adjustment”, new business models are formed. On the other hand, the internally driven perspective argues that business model innovation is driven by the cognitive recognition of decision-makers within a company who take proactive measures based on perceived opportunities in the external environment [21]. In reality, the success of business model innovation relies on the synergy between external and internal factors during the innovation process [22].
Numerous scholars have explored the formation process of business models from a staged perspective and proposed various stage models. Morris (2005) identified five main stages of business model formation: clarification, refinement, adaptation, revision, and reinvention [23]. Casadesus-Masanell and Ricart (2010) identified two stages: business model establishment and business model strategy selection [20]. Cavalcante et al. (2011) divided the dynamic formation process of business models into three stages: idea generation, pattern creation, and ongoing adjustment or termination of the pattern [13]. Eyring and Johnson (2014) highlighted the stages of hypothesis, testing, and adjusting the blueprint for opportunity realization in business model development [24]. Wang Bingcheng et al. (2020) divided the business model innovation process into three stages: the period of business model ideation, application period, and lean period [25]. Blank and Dorf (2012) emphasized that startup companies need to reduce uncertainty by continuously narrowing down alternative options for their business model, gradually approaching a viable business model that meets both internal and external consistency requirements [26]. Recent research on the construction of business ecosystems has also emphasized the importance of enhancing the fit between elements, particularly the fit with the external environment, to make the business ecosystem more robust or build new types of business ecosystems [27][28][29].
From the above, it is evident that existing research has analyzed the dynamic formation process of business models from a procedural perspective [30]. However, these process divisions have primarily focused on generality and have difficulty reflecting the differences between original business model innovation and incremental business model innovation in the implementation process. Especially when original business model innovation faces challenges such as unclear constituent elements, undefined market rules and boundaries, and difficulties in capturing influencing factors, addressing and resolving these issues to achieve ultimate success requires answers to these detailed aspects.

References

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  3. Chen, Y.; Zhang, Z. Research on the Antecedents of Business Model Innovation: Perspectives of Decision Logic and Organizational Learning. Manag. Rev. 2022, 34, 81–92.
  4. Chen, J.; Yang, Y.; Yu, J. Review and Prospect of Research on Business Model Innovation. Soft Sci. 2022, 36, 1–7.
  5. Chen, J.; Xie, J. A Review of Research on Original Innovation. Philos. Sci. Technol. Manag. 2004, 25, 23–26.
  6. Chen, Y.; Zhang, X.; Dai, S.; Lu, Z.; Tong, X.; Chen, W. Research on the Relationship between Drivers of Original Innovation and Innovation Performance. Res. Manag. 2017, 10, 10–21.
  7. Wang, C.; Qureshi, I.; Guo, F.; Zhang, Q. Corporate social responsibility and disruptive innovation: The moderating effects of environmental turbulence. J. Bus. Res. 2022, 139, 1435–1450.
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  10. Li, J.; Yang, J. Current Situation and Review of Theoretical Research on Original Innovation in Enterprises. Sci. Technol. Manag. Res. 2013, 33, 15–19.
  11. Goldenberg, J.; Mazursky, D.; Solomon, S. Templates of original innovation: Projecting original incremental innovations from intrinsic information. Technol. Forecast. Soc. Change 1999, 61, 1–12.
  12. Liu, G. Multi-level Structural Innovation of Entrepreneurial Firm’s Business Model: A Case Analysis of Opal Polymers based on Strategic Entrepreneurship. China Ind. Econ. 2018, 11, 174–192.
  13. Cavalcante, S.; Kesting, P.; Ulhoi, J. Business model dynamics and innovation: Reestablishing the missing linkages. Manag. Decis. 2011, 49, 1327–1342.
  14. Wirtz, B.W.; Pistoia, A.; Ullrich, S. Business models: Origin, development and future research perspectives. Long Range Plan. 2016, 49, 36–54.
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  16. Yang, H.; Zhang, J. How does the Application of Disruptive Technologies Create Value Advantage?—Based on the Perspective of Business Model Innovation. Econ. Manag. 2019, 3, 21–38.
  17. Chen, L.; Garcia, M. Sustainable Business Models: Integrating Environmental and Economic Sustainability. Sustain. Manag. 2023, 15, 78–94.
  18. Zhao, Y.; Jing, R.; Dong, M. Business Model Innovation Process: A Case Study on the Construction of Core Elements. Manag. Rev. 2019, 31, 22–36.
  19. Wu, X.; Zhao, Z. Antecedents of Business Model Innovation: Research Review and Prospects. Foreign Econ. Manag. 2017, 39, 114–127.
  20. Casadesus-Masanell, R.; Ricart, J.E. Competitiveness: Business model reconfiguration for innovation and internationalization. Manag. Res. 2010, 8, 123–149.
  21. Gavetti, G.; Rivkin, J.W. On the origin of strategy: Action and cognition over time. Organ. Sci. 2007, 18, 420–439.
  22. Wang, B.; Ma, S.; Zeng, L. Research on the Linkage of Space Elements in Business Model Innovation. Manag. J. 2020, 1, 70–81.
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  24. Eyring, M.J.; Johnson, M.W.; Nair, H. New business models in emerging markets. Eng. Manag. Rev. IEEE 2014, 42, 19–26.
  25. Wang, B.; Yan, X.; Zhang, S.; Rao, W.; Zeng, L. Construction and Mechanism of Business Model Innovation Process: A Study Based on Grounded Theory. Manag. Rev. 2020, 32, 127–137.
  26. Blank, S.; Doff, B. The Startup Owner’s Manual: The Step by Step Guide for Building a Great Company; K&S Ranch Press: Pescadero, CA, USA, 2012.
  27. Han, W.; Yang, J.; Hu, X. How Does Business Model Innovation Shape the Differentiation of Business Ecosystem Attributes?—A Cross-Case Longitudinal Study and Theoretical Model Construction Based on Two Startups. Manag. World 2021, 37, 88–107+7.
  28. Cheng, X.; Yang, Y. Unleashing Business Model Innovation in Digital Reconstruction: The Power of Strategic Flexibility. Res. Sci. Technol. Manag. 2022, 42, 111–118.
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Subjects: Business
Contributors MDPI registered users' name will be linked to their SciProfiles pages. To register with us, please refer to https://encyclopedia.pub/register :
Guihuang Jiang
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Xuehong Ji
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Aonan Zhang
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Update Date: 14 Dec 2023
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