The role of entrepreneurial orientation and modularity for business model innovation in service companies

Abstract

The phenomenon of business model innovation (BMI) is taking up speed in researchers' attention. Specifically service firms find it difficult to protect their intellectual property and need dynamic capabilities to invent and launch their new business models. This study on service firms' BMI applies the dynamic capability view (DCV) to understand how two capabilities, entrepreneurial orientation (EO) and modularity produce BMI. These two capabilities consider two sides of BMI. BMI relates to opportunity-seeking behaviour, creating new values and opportunity exploitation that then allows monetising and capturing value. In this respect, BMI takes advantage of the two dynamic capabilities: EO and modularity. The results of our study of 299 international service firms show that EO and modularity trigger BMI, and that EO is especially favourable for BMI in the context of high environmental uncertainty.