Business model innovation and SME performance and performance variability: The role of CEO persistence

Galina Shirokova, Arsenii Bystrov, Valeria Vlasova and Michael H. Morris

Journal of Small Business Management, 2025, vol. 63, issue 5, 2386-2421

Abstract: To achieve and maintain a competitive advantage, small and medium-sized enterprises (SMEs) are forced to constantly reconfigure their business models. This study aims to broaden the understanding of the role business model innovation (BMI) plays in shaping SMEs’ business outcomes and how the strength of this relationship is affected by persistence of a chief executive officer (CEO). Drawing upon the dynamic capabilities perspective and upper echelons theory (UET), we argue that BMI improves mean firm performance. However, as BMI can represent a risky endeavor, it also increases the variability of performance outcomes, making them less reliable. At the same time, it is hypothesized that CEO persistence strengthens the BMI–performance link and weakens the relationship between BMI and performance variability. Employing the multiplicative heteroscedasticity regression model on a sample of 314 Russian SMEs, we find full support for the proposed theoretical model, contributing to the growing body of literature on BMI and providing practical value for stakeholders involved in the examined relationship.

Date: 2025
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DOI: 10.1080/00472778.2024.2436978

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