Paving the way for a new composite indicator on business model innovations

Abstract

The paper conceptualises business model innovations (BMI) as a fundamental change of the mechanisms and arrangements of how a company creates, delivers and captures value. It translates this definition into a composite innovation indicator that consists of a combination of radical product and radical process innovations, or radical product innovations combined with marketing and organisational innovations. Implementing this definition with empirical data from the Community Innovation Surveys (CIS) in Europe, we find that roughly one out of 20 SMEs has introduced a BMI in the three-year period preceding the surveys. Deepening our understanding of the construct by means of an exploratory analysis of 60 BMI case studies, we find that revenue model innovations have not been captured sufficiently in the CIS datasets. At the same time, they constitute an essential element and characterize a significant number of BMI cases. We suggest that innovation surveys should introduce questions on revenue model innovations and add a few further changes to better capture business model innovations in the future.