Pioneering digital firms are often built on novel business models that differentiate them from their competition. Striving for the right business model is a challenge for entrepreneurs. In their digital endeavors, firms often experiment with multiple business models before converging on to a specific, focused model that they choose to pursue. An intriguing question in this domain is how do digital market pioneers gain strategic knowledge for the transformation of their business models? We develop an integrative framework that identifies strategic learning and its impact on the digital model adopted by the firm, as a core driver for business model transformation. We examine this framework through a case study of Wishberry, a crowdfunding startup in India that was the pioneer in this domain in India. Its active scanning of the business environment led to strategic learnings that helped transform its business model which was at the core of its sustained market advantages. The insights for this study, which are primarily focused on digital entrepreneurship, extend the theoretical frameworks of strategic learning to the context of market pioneers. The learnings from this study will help entrepreneurs design agile business models that are reactive to market needs.

Introduction

Heterogeneity of digital infrastructures offers the capability to develop novel models of doing business while simultaneously providing greater value for all stakeholders (Tilson et al., 2010). Businesses built on such infrastructures ease the entry of entrepreneurs with novel business models into the market. The idea of utilizing digital infrastructures to develop fundamentally new business models has rapidly gained traction in entrepreneurship literature recently (Mollick, 2014; Rayna and Striukova, 2016). Technologies like cloud computing have not only disrupted conventional businesses but have also resulted in standardization of nascent industries. These novel approaches to entrepreneurship have coincided with the recent trend of small ventures utilizing digital technologies to extend their core capabilities. For example, Etsy, an online marketplace for handmade goods that brings buyers and sellers together and provides recommendations for buyers, has adopted the cloud infrastructure to analyze data from its nearly one billion monthly website views. It is observed that “the cost flexibility afforded through cloud provides Etsy access to tools and computing power that might typically only be affordable for larger retailers” (Berman et al., 2012). While the premise of new business models offering competitive advantage as a result of adoption of digital infrastructure has been explored for existing businesses (Berman et al., 2012; Marston et al., 2011), it is unclear whether these digital infrastructural capabilities offer novel sources of advantage for fundamentally new businesses in pioneering markets as well. This is a gap in extant literature that we aim to address in this research. Although no competitive advantage lasts forever, firms that succeed in building durable first-mover advantages tend to dominate their product categories for many years, from a market’s infancy until well into its maturity.