Internationalization and the Need of Business Model Innovation

1. Introduction

The global market can be considered a volatile environment and the internationalization of a firm through the adoption of any entry mode represents a change in the way it operates. As argued by Schneider and Spieth, the effects of an increasing globalization in the business environment have been identified as a driver of a firm's need to innovate its business model (BM). A BM that efficiently supports a company's competitive advantage in one market, may be challenged in a different one. Therefore, the BM needs to be innovated or adapted to better fit specific contexts of international markets. In addition, a business model innovation (BMI) is a promising approach for firms to respond to changing sources of value creation in highly volatile environments.

A BM is the way companies can commercialize new ideas and technologies, and as the same technology can be commercialized in two different ways, it can lead to two different outcomes. Internally, it is motivated by the social capital of the company as it helps to achieve objectives, including apparent and potential resources and capabilities. Externally, it is motivated by market demand, technological advancement, and economic environment. The creation of value can go beyond the Schumpeterian innovation, the Porter's (re)configuration of the value chain, the formation of strategic networks among firms, and the exploitation of firm's core competences. It can be created through an innovative BM.

There is a current increase in the interest in BM and one of the main questions researchers have been trying to answer is how to innovate a BM. This interest opens a range of directions for further research in the field. Spieth, Schneckenberg and Ricart presented a set of future research directions. One of the topics listed by them is related to the antecedents for Business Model Innovation (BMI) and to the debate of whether volatile environments drive BMI of firms or vice versa. As argued by Chesbrough, even a successful BM cannot be assured as permanent given its dynamic environment. The circumstances of the environment may 'force' a company to reinvent its BM, and the ability to do so represents a source of competitive advantage in turbulent environments. The ability to innovate a BM represents a way to respond to changing sources of value creation in volatile environments.

Regarding the need for research on the processes and elements of BMI, Schneider and Spieth argue that there is a necessity to investigate what determines their specific contexts. The global environment can be considered a specific context for a research field. Despite the already identified lack of literature and even a specific demand for it, little is known, from an empirical perspective, about the adaptation of a BM to specific markets aside from Landau, Karna and Sailer's work. Putting aside this gap, BMI involves creation or reinvention to support internationalization. Entry modes are ways to materialize company's internationalization process and each one implies in different needs of changes in a company's BM. Even though entry modes have been deeply investigated during the last decades, the relation between BMI and entry modes is a new subject of study. Landau, Karna and Sailer investigated a single case study of internationalization and BM but no special aspects of the entry mode were highlighted. Rask carried out a theoretical investigation in which entry modes were considered antecedents, but the consequences of each one of them in the BM was neglected. Based on this, it is relevant to inquire if the internationalization of a company through the adoption of different entry modes generates the need for BMI. Considering so, this research questions: What are the different possibilities of BMI generated through the entry modes for internationalization?

This article assumes that the internationalization process triggers innovation. However, the literature about BM has very few studies about this relation, as previously mentioned. Besides that, most of the research regarding BM are related to technology-based companies or start-ups. There is also a gap regarding studies about more traditional business and well-established firms.

This article is a literature review and a proposed framework was developed based on the available literature about the researched topics. To analyze the contents, an integrative review was developed with the purpose to combine findings of different areas of knowledge. According to Torraco, the result of an integrative literature review may be the development of a new framework or the generation of new perspectives about a topic. The same author affirms that it is appropriated for mature and new or emerging topics. In this article, the effort was to integrate a mature topic (internationalization and entry modes) with an emerging one (BMI). We selected papers in a non-systematic way. We started the review through the main literature on BM, followed by a search in several databases as Ebsco, Elsevier, and Proquest, for example. We also looked for the most cited papers on the field. After reading the abstract, we selected those ones that were related with the research.

In the sequence of the article, the concepts of BM, BM design, BMI, and its relationship with internationalization are review with a descriptive approach. The section related with internationalization and entry modes presents the critical analysis that cross this knowledge with the previously presented ones. The elements of a BM proposed by Amit and Zoot and Zoot and Amit were used to relate entry modes and the need for a business model innovation in each element. At the same time, the work of Zhang, Zhao, and Xu was used to cross the type of BMI with the entry modes.