The logic of innovative value proposition : a schema for characterizing and predicting business model evolution

Abstract

Innovations in business models involve a dynamic process that makes business values resilient against market and technology changes. We propose a schema that supports predicting the effect of innovation on business model values. The schema redefines the value proposition logic in business model innovations with five primary variables: business dependence structure, business value dominance, innovation dynamics, innovation domains, and innovation-resources-agility. Based on the schema, we have tested a set of hypotheses for 474 cases of business model innovations in four textile processing technology markets. We have estimated and modeled the data using two techniques: Cox modeling and temporal qualitative comparative analysis. The former predicts the business model that is destructed by innovation over time and the latter assesses the configurative conditions for innovation during the destruction period. The findings offer insights for predicting business model innovation as a value creation platform and for predicting innovative business models in industrial technology markets.