Parallel Business Models in Firms: Utilisation of Dynamic Capabilities in Their Management
Hård, Harri (2022)
Hård, Harri
2022
Tuotantotalouden DI-ohjelma - Master's Programme in Industrial Engineering and Management
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2022-10-17
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202209167119
https://urn.fi/URN:NBN:fi:tuni-202209167119
Tiivistelmä
Firms have begun to employ multiple business models in parallel to each other for achieving new ways of value creation, but the theoretical field is still lacking detailed understanding of the phenomenon to support managerial decision making. Dynamic capability theory has been suggested to be fruitful in explaining the behaviour of firms attempting to innovate through adopting additional business models, but currently the research field is missing studies that would analyse the relationship between parallel business models and dynamic capabilities from a systemic perspective with the specific empirical context in incumbent firms. The aim of this research was to analyse the development and portfolio interactions of parallel business models, and the effects of dynamic capabilities in their management.
The research was conducted as a qualitative embedded case study, by using a deductive approach for theory development. Multiple embedded cases enabled assessing the replicability of the findings across them, and the embedded context allowed more generalisable findings to be made about the firm specific dynamic capabilities. The study followed a pragmatic research philosophy with exploratory purposes, to create understanding for sup-porting managerial decision making, even though the phenomenon is not yet fully under-stood in the theoretical field. Data collection included in-depth interviews of the key managerial personnel regarding both cases, and interview data was analysed by thematic analysis based on the theoretical background of this research. Results across cases were com-pared and discussed for building explanations about the phenomenon.
Results show that business models create portfolio interactions regarding activity, re-source, and customer sharing within firms. The primary conflicts emerged from sharing of in-ternal critical resources and customer channels, and activity system connections increased the between complexity of the portfolio. Dynamic capabilities had a pivotal role in enabling the concurrent development, and they were utilised for enabling and moderating the inter-actions. Seizing capabilities were used for managing resource conflicts with solution harvesting and investing prioritisations in the presence of scarcity, and they allowed aligning the business practices and establishing activity system connections. Sensing capabilities were used to pace the resource usage according to external demands, and transforming capabilities allowed building and separating critical resources and sustaining balance between re-source flows. Transforming capabilities were used for controlling, guiding, and separating shared activity systems, and they allowed increasing the sharing efficiencies. The sharing conflicts regarding customer channels were mitigated through balancing their usage or over-riding them through transforming and seizing capabilities. Dynamic capabilities allowed the firm to develop its business model portfolio towards increased alignment.
Findings of this study advance the literatures of dynamic capabilities about their effective mechanisms, and parallel business models by developing understanding about portfolio interactions. Increased value creation is possible through establishing parallel complementary business models, and dynamic capabilities can be utilised effectively in their management. Competing business models with low sharing of non-critical assets are recommended to be established in separate organisational structures, without dependencies with firm’s other business models. Further theoretical studies are required for strengthening the foundation of parallel business model and dynamic capability literatures. Empirical research should study the topics in different industry contexts, but also in the light of alternative theoretical lenses, such as strategic entrepreneurship.
The research was conducted as a qualitative embedded case study, by using a deductive approach for theory development. Multiple embedded cases enabled assessing the replicability of the findings across them, and the embedded context allowed more generalisable findings to be made about the firm specific dynamic capabilities. The study followed a pragmatic research philosophy with exploratory purposes, to create understanding for sup-porting managerial decision making, even though the phenomenon is not yet fully under-stood in the theoretical field. Data collection included in-depth interviews of the key managerial personnel regarding both cases, and interview data was analysed by thematic analysis based on the theoretical background of this research. Results across cases were com-pared and discussed for building explanations about the phenomenon.
Results show that business models create portfolio interactions regarding activity, re-source, and customer sharing within firms. The primary conflicts emerged from sharing of in-ternal critical resources and customer channels, and activity system connections increased the between complexity of the portfolio. Dynamic capabilities had a pivotal role in enabling the concurrent development, and they were utilised for enabling and moderating the inter-actions. Seizing capabilities were used for managing resource conflicts with solution harvesting and investing prioritisations in the presence of scarcity, and they allowed aligning the business practices and establishing activity system connections. Sensing capabilities were used to pace the resource usage according to external demands, and transforming capabilities allowed building and separating critical resources and sustaining balance between re-source flows. Transforming capabilities were used for controlling, guiding, and separating shared activity systems, and they allowed increasing the sharing efficiencies. The sharing conflicts regarding customer channels were mitigated through balancing their usage or over-riding them through transforming and seizing capabilities. Dynamic capabilities allowed the firm to develop its business model portfolio towards increased alignment.
Findings of this study advance the literatures of dynamic capabilities about their effective mechanisms, and parallel business models by developing understanding about portfolio interactions. Increased value creation is possible through establishing parallel complementary business models, and dynamic capabilities can be utilised effectively in their management. Competing business models with low sharing of non-critical assets are recommended to be established in separate organisational structures, without dependencies with firm’s other business models. Further theoretical studies are required for strengthening the foundation of parallel business model and dynamic capability literatures. Empirical research should study the topics in different industry contexts, but also in the light of alternative theoretical lenses, such as strategic entrepreneurship.