Factors of inertia in technology-triggered business model transformation process

Abstract

Business model (BM) innovation is one of the key competitive forces that companies must focus on. For established companies, BM innovation often means BM transformation and often it is triggered by new technological innovations. However, there can be many factors that prevents BM transformation process and concurrently block existing businesses’ ability to change. These different factors of inertia may arise from many different sources. This has not been considered in the current literature; therefore, this study attempts to address this gap. Not all BM transformation processes succeed. We found that inertia plays a major role in incumbent companies’ BM transformations and can contribute to a failure to implement the BM innovation. This is crucial for business executives, as they must understand how BM transformation is progressing, how they might speed up the process and how they might tackle potential inertia beforehand. In the existing BM transformation literature, inertia factors are rarely identified, and the understanding of these barriers is scattered. Based on the existing literature, we synthesized four types of inertia factors for incumbent companies. To validate our findings, we constructed two case studies of carefully selected technology companies. The companies’ BM transformation processes were already in their implementation phases. Therefore, we were able to gather deep insights about the prior phases of the transformation processes through interviews with the key decision-makers and key persons of the companies. The results of this study revealed a remarkable number of different types of inertia at every stage of the transformation process. Our findings address the assumption that inertia exists in all stages of the BM transformation process, yet the form of inertia differs in each stage. This point was not found in the existing literature. Therefore, by combining the results of the literature review and empirical studies, our contribution relies on the evidence that inertia can be categorized, that it exists in all stages of the transformation process, and that different stages entail distinct forms of inertia.