Business Model Implementation and New Venture Performance: An Integrating Perspective of Internal Resources and External Networks

Liu Gang; Kong Wenbin

doi:doi:10.16538/j.cnki.fem.20210521.401

Summary

Based on the integration of resource-based view and external network theory, this paper divides business model implementation into two types: One is based on internal resource coordination; the other is based on external network coordination. It studies the relationships between business model implementation, environmental dynamics and firm performance, and tests these relationships with 200 Chinese listed start-ups.

The conclusions are as follows: First, both types of business model implementation can effectively improve firm performance, and the product effect of the two types of implementation has a positive impact on firm performance as well. Second, the higher the environmental dynamism, the lower the firm performance produced by the implementation based on internal resource coordination, and the higher the performance produced by the implementation based on external network coordination. However, the product effect of the two types of implementation has no significant impact on firm performance.

These conclusions provide the following implications: First, in the rapidly changing environment, firms need to consider different types of business model implementation according to their own resource allocation and utilization characteristics in value creation, so as to ensure the coordination between business model components. Second, as the product effect of the two types of business model implementation has a certain role in promoting firm performance, firms also need to choose different types of implementation in different departments. For example, for departments with higher efficiency of internal resource allocation, firms can choose the implementation based on internal resource coordination; while for departments with lower efficiency of internal resource allocation, firms can choose the implementation based on external network coordination. Third, in the high environmental dynamism, firms should strengthen the implementation based on external network coordination; while in the low environmental dynamism, firms should strengthen the implementation based on internal resource coordination, so as to improve the value creation ability of firms and their adaptability to the dynamic environment.

This paper contributes to the literature in the following aspects: First, it identifies two types of implementation and their commonness and individuality from the perspectives of internal resources and external networks, and reveals the diversity and complexity of business model implementation. Second, it tests the positive impact of the two types of implementation on firm performance, and the positive impact of the product effect of the two types of implementation on firm performance, which enriches the basic content of business model implementation. Third, it shows that the implementation based on internal resource coordination has high value creation ability and low dynamic environment adaptability; while the implementation based on external network coordination has low value creation ability and high dynamic environment adaptability. It explains why some previously successful firms will get into trouble in the rapidly changing environment, and also contributes to the success of some firms.