5. Business Model Innovation and Internationalization

Little is known about BMI and internationalization. Rask, for example, presented an interesting critic on Osterwalder's model stating that it is important to distinguish between domestic and international markets, as Osterwalder's model does not present any comments about these market differentiations. Rask argues that the nine points can be separated into two dimensions: the kind of activity - upstream or downstream, and the kind of globalization - globalization of production or of markets. Based on this, he identified four types of international BM with specific strategies and entry mode elements:

  • Domestic-based BM: It relies on overcoming differences by taking a standardized strategic approach to domestic demand and supply markets through domestic sales, indirect export, and local production activities;
  • Import-based BM: It focuses on domestic markets with a specialized strategic approach through import, contract manufacturing/outsourcing, and production subsidiaries abroad;
  • Export-based BM: It focuses on domestic production with an adaptive strategic approach to globalized markets through direct international sales, direct export through agents, and sales subsidiaries abroad;
  • Semi-global BM: It relies on the globalization of markets and production with coordination of strategic approaches through licensing, franchising, joint ventures, and sales and production subsidiaries abroad.

Lee, Shin, and Park studied globalization as a driver of BMI. They selected four BM components as relevant keys in emerging markets: offering; strategy; capability; and globalization. As a result, they identified four main business models, which are distinct when regarded their innovativeness: global champion; focused R&D; global niche market; and global infant. The current paper investigates globalization as a requirement for BMI; however, it does not investigate how globalization influences the innovation process. Indeed, when researching about the elements and the process of BMI, Schneider and Spieth realized that the already published papers only presented frameworks and hypotheses derived from theoretical explorative research

Through the investigation of a single case study, Landau, Karna, and Sailer found that companies adapt their BM to international markets. The internationalization process was investigated through the analysis of the following components: value proposition (to target a market segment); value creation and delivery; value capture; activity system content; activity system structure; activity system governance; and activity system design theme. They identified the three first ones as the most important in the context of BMI and they used the degree of adjustment in each one to propose a four-phase adaption process to develop a local emerging market BM. The first phase 'International Extension' focuses on adjusting value proposition and value capture. The 'Local Emergence' is the second phase and its focus is on adjusting downstream value delivery. The third is 'Local Expansion' which focuses on adjusting upstream value creation. The 'Local Consolidation' presents equal emphasis on value proposition, creation and delivery, and capture.

Johansson and Abrahamsson investigated how business models were used and innovated by three born global companies of service to catch new business opportunities. They identified that sensing capabilities, entrepreneurship, and relational capabilities represent the core to manage and to innovate a BM. The companies used the BM concept as a tool to 'navigate' their value chains to achieve international success. Casadesus-Masanell and Ricart analyzed innovative companies in Catalonia to understand the need for adapting BM to changes in the environment so they could keep their competitiveness. The researchers considered the companies' paths to innovation and internationalization. Each of the investigated companies had followed a different route to it, but they all needed to adapt their BM to remain competitive. The three mains 'lessons' learnt from these companies are: to be alert and take advantage of changes in the environment, to search for robust virtuous cycles and support them with complementary choices, and to focus on virtuous cycles that generate added value. As presented, the linkage of the internationalization through different types of entry modes and the need for BMI is a new study field. To start establishing the connection between the subjects, the next section presents the entry modes and a critical literature review with an analysis considering the literature previously presented in this article, in special the studies by Amit and Zoot, Zoot and Amit and Zhang, Zhao, and Xu, as we use them as the base for the theoretical model.