Title: Capability perspective of business model innovation: analysis in the software industry

Authors: Risto Rajala, Mika Westerlund

Addresses: Helsinki School of Economics, P.O. Box 1210, Helsinki FI-00101, Finland. ' Helsinki School of Economics, P.O. Box 1210, Helsinki FI-00101, Finland

Abstract: Prior research suggests that competitive advantages in environmental flux rely on a firm|s capacity for innovation and adaptation. Specialisation in core competencies has increased the importance of developing business model-specific capabilities in technology-intensive industries like the software business. In addition to developing required capabilities internally, capabilities increasingly are being obtained beyond company boundaries from a network of business partners. In this study, we analyse capabilities in conjunction with four basic types of business model, using two dimensions drawn from the prior literature. These two dimensions are (1) degree of involvement in customer relationships and (2) level of homogeneity in offerings. Our findings indicate that different types of business model vary significantly in their emphasis on internally-developed versus externally-obtained capabilities. These findings pinpoint the essential capability profiles for business model innovation.

Keywords: business model innovation; capabilities; business networks; software industry.

DOI: 10.1504/IJBIR.2008.015936

International Journal of Business Innovation and Research, 2008 Vol.2 No.1, pp.71 - 89

Published online: 02 Dec 2007 *

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