Business Model Innovation through Trial-and-Error Learning

By M. Sosna, R. N. Trevinyo-Rodríguez, S. Velamuri. 2010

905 citations recorded by the source corpus.

How does an established organization innovate its business model, which is still contributing revenues and profits, but whose future effectiveness is likely to be undermined by changes in its external environment? We study the antecedents and drivers of business model innovation in a Spanish dietary products business threatened by economic recession and heightened competition resulting from liberalization. We document the evolution of the firm's new retail-market business model in two distinct phases: 1) a five-year phase of experiment and exploration followed by 2) a high-growth exploitation phase when the firm outperformed its competitors by a wide margin and internationalized successfully, in spite of its products and final end customers remaining basically unchanged. The study, which takes a dynamic perspective, is situated in the organizational learning literature, and emphasizes the importance of trial-and-error learning for business model innovation. We also highlight the impact of the different types of learning that take place in these two phases, as well as the knowledge-transfer mechanisms from individuals to the organization and vice-versa.

Subfields: Economics and Econometrics, Management of Technology and Innovation, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/929e78ebd1740ccd6ba0448f407392c6c9f2f8d9

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Citations in the corpus

Responding to policy change: New business models for renewable energy cooperatives – Barriers perceived by cooperatives’ members (2017, background): “Barriers to business model innovation identified in the literature include internal factors such as a lack of awareness, perceptions of disruptive technologies, organizational inertia, culture, conflicts with existing business models and assets, as well as cognitive problems in understanding these (”
Business model innovation: The effects of exploratory orientation, opportunity recognition, and entrepreneurial bricolage in an emerging economy (2015, background): “For example, Sosna et al. (2010) took an in-depth case study of a Spanish dietary products firm and reported that experimentation is critical for business model innovation for that firm.”
Linking information systems and entrepreneurship: A review and agenda for IT‐associated and digital entrepreneurship research (2018, background): “Hence, entrepreneurs use trial‐and‐error learning to experiment with and search for business models that allow value creation and capture from new opportunities in a sustainable way (Sosna et al., 2010).”
Incumbents and business model innovation for the sharing economy: Implications for sustainability (2019, background): “This is particularly due to the fact that incumbents can rely on “a stable source of income from old business models that can cross-subsidize new business models” and support their growth (Sosna et al., 2010, p. 403).”
Strategic Entrepreneurial Internationalization: A Normative Framework (2017, background): “…45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 For Peer Review 5 frameworks to portray internationalization as a learning- and experimentation-driven process, during which the INV builds a transnational business model with built-in sources of sustainable competitive advantage (Sosna et al., 2010).”