No 2018/4 The Role of Business Model Innovation for Product Innovation Performance

Abstract

We analyze the effect of Business Model Innovation (BMI) on the product innovation performance of firms, based on a dynamic capabilities theoretical framework. Our empirical study is based on a large-scale representative sample of cross-industry Swedish firms participating in the last three waves of the Community Innovation Survey (CIS) from 2006–2012. Our findings provide support for the dynamics capabilities theoretical framework as well as broad evidence of a significant and positive association between BMI and product innovation performance. Our results imply that BMI in the form of product innovations combined with different complementary innovations will act as isolating mechanisms towards replication by competitors. Therefore, managers should frame product innovations as part of a business model innovation and dynamically adapt the key elements of the firm’s business model.