Established theory suggests that firms experiment with business models in dynamic contexts. However, the relationship between business model experimentation and organisational performance remains unclear. For this purpose, we propose an assessment of the economic value of business model experimentation in dynamic contexts by defining the unit of analysis at the industry level. Analysis draws upon a unique panel dataset from the recorded music industry composed of 414 observations from 32 countries for the period 1998-2010. The results show two optimal modes for maximising value capture in dynamic contexts. First, if a dominant format exists, a 'network' effect becomes prevalent which has a positive impact upon revenue. Second, when firms engage in experimentation leading to a highly diversified set of business models the industry sector becomes better able to capture value from diverse and changing consumer needs.
Bibliographical noteFunding Information:
The authors would like to acknowledge the guidance and review provided by Duane Ireland, Will Mitchell, Steve Tallman, and Nick Zubanov. Ferran Vendrell-Herrero acknowledge financial support from H2020-RISE project ‘MAKERS: Smart Manufacturing for EU Growth and Prosperity’, and grant ECO2014-58472-R.
© 2018 Inderscience Enterprises Ltd.
- Business model
- Format density
- Music industry
- Value capture
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management
- Management Science and Operations Research
- Management of Technology and Innovation