Incumbent firms towards successfully innovating the business model : Applying strategic entrepreneurship with business model innovation

Business model and Business model innovation are highly crucial aspects for incumbent firms in today’s very fast paced and dynamic environment. In this thesis, we seek to integrate strategic entrepreneurship theory with business model innovation. By doing so, we show how entrepreneurship, strategy and business models all lies squarely at the intersection of innovation and change. Most of the research on business models have been in the context of startups. In this study, we, however, decide to explore the context of incumbent firms and how they explore and exploit opportunities to innovate their business model. This study contributes to a better understanding of how incumbent firms innovate their business models. It does this by answering three fundamental questions; - How does the incumbent firm explore and exploit opportunities to innovate their business model? - What are the drivers for innovating the incumbent firms business model? - How does the decision-making process look like during the business model innovation processes in the incumbent firm? To answer these questions, we have conducted a thorough literature review of the business model literature, business model innovation literature, as well as strategic entrepreneurship literature. By doing this, we highlight the most relevant aspects of these three concepts and theories, also providing the reader with a historical development of the concepts. To further build on towards answering our research questions we compliment the three central concepts with supporting theories of strategic management and innovation theory. We have answered these questions by conducting a qualitative study that is mainly explorative. Interviewing four incumbent firms that act in different industries; Banking Co, Technology Co, Productivity Co, and Software Co. Moreover, we interviewed two experts that together have over 70 years of experience in leading and consulting incumbent firms through different significant market changes. Thus, the six interviews together with internal and external organizational documents, triangulation has been used to produce the empirical results and analysis of this study. With the empirical findings, we contribute to a comprehensive picture of how incumbent firms can efficiently adopt strategic entrepreneurship together with their business model innovation process. By doing so incumbent firms can find an optimal balance between opportunity-seeking and advantage-seeking behavior. Our findings show that incumbent firms today have a culture and structure that does not optimally promote business model innovation. The empirical findings provide two different viewpoints; one from the incumbent firm showing the current process and culture. The other viewpoint shows how the experts describe the incumbent firms and how they should change. Thus, these two different perspectives provide two different realities that we connect back to the theoretical frameworks. Moreover, this thesis contributes by showing that strategic entrepreneurship and business model innovation needs to be combined for incumbent firms to succeed in today’s fast-paced and dynamic environment