Business Model Innovation

Research purposes- Two concepts of business model and dynamic capability have been undeniably brought to the forefront of business research and the significance of these two are increasingly acknowledged due to the importance of business models in formation and growth of the firms and critical role of dynamic capabilities in competiveness of today’s enterprises. In spite of this fact, there are still numerous unsettled perplexities in dealing with dynamics of business models and coping with internal challenges as well as environmental forces aiming at crippling firms. This paper aims to explore the mechanism of interaction between dynamic capabilities and business model innovation, and to explore business model innovation process from the perspective of dynamic capabilities.Research methods-The design model is named IBA-V4 mobile service innovate business model, which is based on V4 static mobile service business model and Teece’s dynamic capabilities framework. As a case study, the mobile payment service business model building process proves that the IBA-V4 is valid.Research findings-Through the study we draw the conclusion that there is interaction mechanism between dynamic capabilities and business model innovation, and the process of business model innovation can be dynamically divided into three stages:Identifying, Building, and Adjusting. The process of business model innovation and the process of dynamic capabilities formation are the corresponding relationship.Practical implications-IBA-V4 mobile service innovate business model can help telecommunication operators to design innovation mobile service. As well as, the comprehensive study of mobile payment business model gives China Mobile significant implications, which also is valuable for other operators.Research limitations- China Mobile launched mobile payment services for more than ten years of history, so the data for the research may be not complete, especially in the earlier development stages of the case company. What’s more, the business model combined with the dynamic theory is relatively new attempt, the model needs further improvement.