What drives business model adaptation Flashcards
Failure to adapt business models can occur for two main reasons
- Managerial cognition- in particular the interpretation of changes in the environment
- Past experience of a firm can result in path dependencies
Important drivers of BMA
- The need to adapt to external stakeholders
- Changes in the competitive environment
- Opportunities brought by new IT technologies
- Can occur during a threat or opportunity
Threats
negative situations over which doesn’t have much control
Opportunities
positive situation in which gain is likely and over which one has a fair amount of control
Threat rigidity theory
firms confronted with external threats are more likely to respond with caution, exhibit an inward-looking tendency, and to fall back on known and routinized patterns of actions.
Under threat-rigidity theory
firms are less likely to adapt their business model under conditions of perceived threat than under conditions of perceived opportunity.
Under prospect theory
firms are more likely to adapt their business model under conditions of perceived threat than under conditions of perceived opportunity
Strategic orientation
reflects what set of actions the firm believes will lead to superior performance
Split into two:
- Market development - continuously seek to find and exploit new market opportunities
- Domain defence - maintain their territory by engaging in competitive pricing and developing a single core technology that is highly cost-efficient
The more a firm’s strategic orientation emphasizes market development over domain defence…
the more it is likely to adapt its business model to external threats and opportunities
The more a firm’s strategic orientation emphasizes domain defence over market development,
the more it is likely to uphold the status quo in lieu of threats or opportunities.
