Advancing a typology of business model innovation: A value-based perspective

Since the concept of business model (BM) - referred in general to the way a company does business - came into popular parlance in the mid-1990s, significant attention, especially in recent years, has been given to the strategies companies develop to adjust their BMs to changing demands. In this sense, business model innovation (BMI) emerged as a new soft (non-technological) type of innovation referring to the practice of innovating a firm's BM. Placing emphasis on a BMI typology, this paper aims to identify a certain set of BMI types and addresses the circumstances in which each type should be adopted in order for the firm to yield optimum results. Taking a value-based perspective, five types of BMI are proposed, each focused on one element of the company's BM: (1) innovating the operation processes and factors involved (value creation); (2) innovating the offerings to customers (value proposition); (3) innovating the way to reach and interact with customers (value delivery); (4) innovating the financial architecture (value capture); and (5) innovating the partnership arrangements (value network). Concrete examples are presented to illustrate each type of BMI and the paper ends with a discussion of the circumstances that lead companies to adopt each type of BMI. This study contributes to current literature by proposing a unique typology of BMI underpinned by a value-grounded theory of the firm. Furthermore, company owner(s) / manager(s) are provided with managerial implications on how and when to implement BMI strategies.