Abstract

Keywords

Introduction

Business model innovation, leadership, and SME internationalization

Business models, business model innovation, and SMEs

SME leadership styles

Method and data

Internationalization in SMEs: BMI and CEO leadership

Pattern 1. Large-scale BMI led by empowering leadership of the CEO: the case of Alpha

Pattern 2. Small-scale BMI led by directive leadership: the case of Beta

Peripheral patterns

Discussion

Conclusion

Acknowledgements

References

Vitae

Abstract

Drawing on the distinction between small-scale and large-scale business model innovation, and between directive and empowering leadership, we examine how CEOs in SMEs lead business model innovation during the process of internationalization. Building on eight cases of Japanese manufacturing SMEs, we develop a theoretical framework pointing to two different patterns in the articulation between CEO leadership style and business model innovation. We show that small-scale business model innovation led by directive leadership results in a timelier foreign market entry. However, in order to increase international sales, large-scale business model innovation is required. This is facilitated by an empowering leadership style of the CEO.

Introduction

Business model innovation (BMI), which Amit and Zott (2010, p. 2) define as the process of “designing a new, or modifying the firm’s extant activity system”, is considered a positive contribution to performance (Zott and Amit, 2007). Recognising BMI’s distinctiveness when compared with product or process innovation (Bucherer et al., 2012; Damanpour, 2010; Teece, 2010), scholars have investigated how established firms reconfigure their business models (Bocken and Geradts, 2020; Snihur and Wiklund, 2019), or how new ventures and start-ups develop innovative business models from the outset (Bocken and Snihur, 2020; Colovic and Schruoffeneger, 2021; Thompson and McMillan, 2010; Zott and Amit, 2007). Research has pointed to contingencies and factors leading to BMI, which can be external, such as environmental turbulence or technological evolution (Teece, 2018), or internal, such as institutional, organizational, or strategic (Bocken and Geradts, 2020). Because it involves dealing with different customers and different institutional conditions, as well as complying with different sets of rules and regulations, internationalization has arguably been identified as a critical moment in a firm’s existence, prompting firms to engage in BMI (Onetti et al., 2012; Rask, 2014). According to Bohnsack et al. (2020), the internationalization decision itself might depend on whether a firm can leverage advantages related to its business model to create and capture value in foreign markets.