The Business Model Transparency Paradox in Innovative Growth Ventures: Trade-offs between Competitive Advantages and Agency Costs

Johansson Jeaneth M. () and Malmstrom Malin ()
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Johansson Jeaneth M.: Department of Business Administration, Technology and Social Sciences, Luleå University of Technology, Lulea 97187, Sweden
Malmstrom Malin: Department of Business Administration, Technology and Social Sciences, Luleåniversity of Technology, Lulea 97187, Sweden

Entrepreneurship Research Journal, 2013, vol. 3, issue 2, 238-263

Abstract: Innovative ventures aiming for rapid growth will require substantial financial capital. Accessing external financial capital requires a high business model transparency, potentially weakening the competitive advantages of the venture. The transparency of the business model can be better understood in terms of two complementary research paradigms: resource-based theory and agency theory. The theories drive transparency in opposite directions and produce a business model transparency paradox that explains the challenges of achieving growth.Acknowledging the implications from one theory can lead to harmful practical implications regarding the challenge of business model transparency and cause a risk of unintended consequence and in the worst case venture failure. A conceptual model and aligned propositions are outlined for comprehensive understanding of the trade-offs suggested by the two theories for ongoing venture exploitation of innovation and growth. An inverted u-shaped function on business model transparency based on a combination of the two theories is proposed for achieving optimal opportunities for venture growth. This conceptual article contributes with implications on financial gaps, business model management, and entrepreneurship education.

Keywords: business model; innovation; transparency; growth orientation; agency theory; resource-based theory (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1515/erj-2012-0011

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