Hello Mohammad,

Your question cannot be answered in a few sentences as I think this was one of the main questions of recent business model research.

1. If you are looking for conceptual frameworks, you can virtually take any of the prominent business model frameworks and look for/measure change in the dimensions. Two overviews of frameworks are provided by 

Lambert SC, Davidson RA (2013) Applications of the business model in studies of enterprise success, innovation and classification: An analysis of empirical research from 1996 to 2010. European Management Journal 31:668-681.

and

Zott C, Amit R, Massa L (2011) The Business Model: Recent Developments and Future Research. Journal of Management 37:1019-1042. doi:10.1177/0149206311406265.

2. Business model research was often critisized for its very limited theoretical foundations. Recently, many papers link BMI to dynamic capability theory (e.g. Kindström D, Kowalkowski C, Sandberg E (2013) Enabling service innovation: a dynamic capabilities approach. Journal of Business Research 66:1063-1073.; Teece DJ (2010) Business models, business strategy and innovation. Long range planning 43:172-194.). It is very hard to identify a congruent theoretical basis for BMI. A promising attempt to link buyiness models with different theoretical roots was already propsed by Amit R, Zott C (2001) Value creation in E-business. Strategic Management Journal 22:493-520. doi:10.1002/smj.187. On page 511 they argue that their design themes can be linked to Value chain analysis; Schumpeterian innovation; Resource-based view; Theory of strategic networks and Transaction cost economics. This could be a starting point for further research.

Hope my ideas help!

Thomas

Hi Thomas,

Thanks a lot for such a detailed, comprehensive and insightful response. It is indeed very helpful, and I will surely dig into all these aspects to explore possibilities to conceptualize the foundations of BMI further.

Thanks once again :)

Best Regards,

TERMS IN USAGE: The terms "change" and "innovation" may be differentiated. Change of business model and innovation of business model may not have the same meaning. Corporate failure generally goes through restructuring in order to re-create value---this is change of existing business model. For instance, many US corporations would undertake restructuring in order to re-create value---not create new value, but re-creating value from existing resources, i.e. lay off workers to save labor cost or shifting manufacture base to other countries in order to cut cost and improve the bottom line. Innovation in business model, on the other hand, is not a therapeutic fixing of an existing problem. most innovation involves the improvement of a system that is normally operation---but driving value creation to the next level. In entrepreneurial firm or in entrepreneurship, both model change and model innovation are used. Their ultimate objective may be the same: value creation, but their function and the condition for their coming are not the same. Examples of change via restructuring include 4 basic models (see attached article):

(1) Restructuring Pentagon Model. Proposed by Copeland, Koller and Murrin, the model is comprised of two main elements: (a) internal improvement, and (b) external opportunities.

(2) Potential and resilience Evaluation (PARE) Model: This model looks at (a) the firm's potential to generate cash flows; and (b) resilience to risk and its ability to face risk.

(3) Porter's Value Chain Model: Look at the competitive forces of the firm and its ability to generate profit vis-a-vis bench-marking its profitability against its peers int he industry.

(4) Value network Model: Focusing on accounting and financial performance of the firm by looking at: (a) sales growth; (b) operating profit margin; (c) fixed capital investment; (d) working capital investment; and (e) cost of capital.

These 4 basic models are the tools to manage "change" of business model. Innovation in business model, on the other hand, is to use existing resources to recreate new and additional value with the objective of contributing to the firm's growth. Growth objective differentiates innovation from change---where extreme change in a form of restructuring has the objective of recapturing loss value or efficiency. Changing business model deals with solving current problem or inefficiency in resource utilization. Innovation business model deals with finding new use for the existing resource or finding new process for the current procedure---improvement of process for value creation. The test of effectiveness in "change" is the firm's own historical performance. The test for effectiveness of "innovation" is peer's bench marking, i.e. iPhone (US) is seen as innovative only when it is compared to Samsung (S. Korea) or Huawei (China); however, comparing iPhone 1, 2, 3, 4, and 5 to iPhone 6 would evidence changes and improvement within firm.

REFERENCES: Two articles on innovation and restructuring (change) are attached.

Thanks a lot Paul.. Analyzed with a lot of depth.