Business Model Design and the Performance of Entrepreneurial Firms

Christoph Zott () and Raphael Amit ()
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Christoph Zott: INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, France
Raphael Amit: The Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, Pennsylvania 19104-6370

Organization Science, 2007, vol. 18, issue 2, 181-199

Abstract: We focus on the design of an organization’s set of boundary-spanning transactions---business model design---and ask how business model design affects the performance of entrepreneurial firms. By extending and integrating theoretical perspectives that inform the study of boundary-spanning organization design, we propose hypotheses about the impact of efficiency-centered and novelty-centered business model design on the performance of entrepreneurial firms. To test these hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial firms that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. Additionally, we find indications of potential diseconomies of scope in design; that is, entrepreneurs’ attempts to incorporate both efficiency- and novelty-centered design elements into their business models may be counterproductive.

Keywords: organization design; new organizational forms; business model; design themes; organization performance; environmental munificence (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (294)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:18:y:2007:i:2:p:181-199

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