Business modeling for entrepreneurial firms: four cases in China

Purpose - Business model innovation is a new way for Chinese firms to compete in the global economy. Due to the unique context in China, the authors aim to clarify what is a business model, how to design a business model, and how different designs affect firms' competitive advantages in China. Design/methodology/approach - Literature review and multiple case studies (i.e. Dinghan Technology, Flush Network, Aier Eye, and Huayi Brothers) are used. Findings - After defining business model, the authors integrate the activity system approach and the configurational approach to construct a unique framework for business model design, and four different models for Chinese firms emerge, namely, focused cost innovation, integrated cost innovation, focused value innovation, and integrated value innovation. Then the authors explore the main mechanisms through which different designs could help firms achieve competitive advantages. Practical implications - Business model matters for Chinese firms. The authors' results provide a roadmap for Chinese entrepreneurs to design effective and efficient business models. Future success of Chinese new firms depends on the continuous improvement of their business model. Originality/value - The authors' results contribute to a better understanding of business model, particularly in the context of China. The authors also contribute to the entrepreneurship literature by providing insights of how to configure entrepreneurial activity system to gain competitive advantages