Title: Does business model experimentation in dynamic contexts enhance value capture?

Authors: Ferran Vendrell-Herrero; Glenn Parry; Marco Opazo-Basáez; Francisco J. Sanchez-Montesinos

Addresses: Birmingham Business School, University of Birmingham, Edgbaston, Birmingham B152TT, UK ' Bristol Business School, University of the West of England, BS16 1QY Bristol, UK ' Deusto Business School, University of Deusto, Hermanos Aguirre 2, 48014 Bilbao, Spain ' Department of Business Administration, Complutense University of Madrid, Somosaguas 28223, Madrid, Spain

Abstract: Established theory suggests that firms experiment with business models in dynamic contexts. However, the relationship between business model experimentation and organisational performance remains unclear. For this purpose, we propose an assessment of the economic value of business model experimentation in dynamic contexts by defining the unit of analysis at the industry level. Analysis draws upon a unique panel dataset from the recorded music industry composed of 414 observations from 32 countries for the period 1998-2010. The results show two optimal modes for maximising value capture in dynamic contexts. First, if a dominant format exists, a 'network' effect becomes prevalent which has a positive impact upon revenue. Second, when firms engage in experimentation leading to a highly diversified set of business models the industry sector becomes better able to capture value from diverse and changing consumer needs.

Keywords: business model; experimentation; value capture; music industry; format density; FD.

DOI: 10.1504/IJBE.2018.093301

International Journal of Business Environment, 2018 Vol.10 No.1, pp.14 - 34

Received: 19 Mar 2018
Accepted: 21 Mar 2018

Published online: 24 Jul 2018 *

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