A Research On Business Model Rigidity

Under the background of "Internet Plus" booming and dynamic environment,traditional and internet firms are both faced with growing urgency of business model innovation.But at the same time,the innovation process of business model is full of difficulties and challenges,manifesting a kind of "rigidity" which preserves the stability of existing structure.This dissertation focuses on the "business model rigidity" concept,studies business model innovation from a "reverse" perspective and explores the evolutionary mechanisms of business model rigidity through a multi-method comparison between traditional and internet firms using case study,simulation and survey methods.The main body of this dissertation is divided into "1+3".That is,one theoretical foundation and three comparative sub-studies.First of all,the structure of business model rigidity has been summarized through a literature research,which provides an important basis for this dissertation.Second,a qualitative comparison between business model rigidities of traditional and internet firms has been conducted through a cross-case study of 4 traditional firms and 4 internet firms.Third,a quantitative comparison between business model rigidities of traditional and internet firms has been conducted through a simulation method.Fourth,an empirical quantitative comparison between business model rigidities of traditional and internet firms has been conducted through a survey method.This dissertation draws the following main conclusions:First,business model rigidity is a new construct which is different from organizational inertia and core rigidities.Business model rigidity is a natural endogenous property of business model,which preserves the stability of existing structure of business model.It is a problem that every incumbent firm is faced with.A proper degree of business model rigidity is a "price" that must be paid for maintaining the operation of a business model.However,if the business model rigidity is too high,business model will get into an overly stable condition,which can hinder the occurrence of business model innovation.The process of business model innovation is in fact a process of managing business model rigidity.Therefore,business model rigidity can provide a key to understanding business model innovation.Business model rigidity is a multidimensional construct.The structure of business model rigidity consists of two dimensions:subjective rigidity and objective rigidity.Objective rigidity can be further divided into internal and external rigidity according to organizational boundary.Therefore,business model rigidity consists of three dimensions,namely subjective rigidity,internal rigidity and external rigidity.Moreover,the evolutionary mechanisms of the three sub dimensions are different,which can lead to opposite evolving directions of different dimensions.Thus,the evolution of business model rigidity is complex.Second,there are some similarities and differences between traditional and internet firms in business model rigidity.The business model rigidities of traditional and internet firms are both composed of subjective rigidity,internal rigidity and external rigidity.But the internal rigidity of traditional firms is usually higher than internet firms',and the external rigidity of internet firms is usually higher than traditional firms'.These differences can explain the different business model innovation performance of traditional and internet firms.Third,the differences between traditional and internet firms in business model rigidity reveal some common mechanisms of business model rigidity.The differences in business model rigidity are mainly from:first,the resource structures of the two types of firms are different.The proportion of physical capital of traditional firms is usually higher than internet firms' which makes traditional firms more vulnerable to the constraints of asset specificity.Therefore,the internal rigidity of traditional firms is usually higher than internet firms'.Second,the market characteristics of the two types of firms are different.Due to the boundary-spanning geographical characteristics of the Internet,internet firms are usually faced with nationwide or even worldwide competition,and are more obviously affected by the network effect,so internet firms need more market power to effectively control the external rigidity.Therefore,the external rigidity of internet firms is usually higher than traditional firms'.Overall,there are correlations between the subjective rigidity and the firm's perception of the market boundary,between the internal rigidity and asset specificity,and between the external rigidity and network effect.This dissertation contributes theoretical values as follows:First,the concept of "business model rigidity" has been developed to explain the failure and absence of business model innovation.A theoretical dialogue has been established between two previously unconnected streams of management literatures—business model literatures and inertia literatures.And a systematic study has been conducted on the concept,structural composition and evolutionary mechanisms of "business model rigidity".Second,"business model rigidity" provides a new "reverse" perspective and analysis unit for business model innovation.This dissertation argues that "reverse" and "obverse" are two aspects of a problem.In order to get better understanding of business model innovation,one should understand why business model cannot innovate in the first place."Business model rigidity" provides a new analysis unit and research tool for the research of business model innovation from a "reverse" perspective,which can be helpful for understanding the situationality,complexity and dynamics of business model innovation.Third,"business model rigidity" fills the gap that organizational inertia and core rigidities have left in interpretation of business model innovation failure.There are obvious differences in subjects and structures among business model rigidity,organizational inertia and core rigidities.Firms may encounter high business model rigidity and low organizational inertia simultaneously.Thus,business model rigidity can provide a proper interpretation of some business model innovation failures,while organizational inertia and core rigidities cannot.This dissertation provides management implications for managing business model rigidity and promoting business model innovation of both traditional and internet firms.Traditional firms need to configure a separate resource pool for business model innovation and explore the synergy effect of existing resources in order to manage internal rigidity of business model.Focusing on improving market power,internet firms need to get big fast(GBF),choose a proper market segment,try to merge with competitors and enhance user lock-in in order to reach the leading position in a certain segment as fast as possible.The resulting winner-take-all(WTA)will help internet firms manage the external rigidity of business model effectively.