Exploring the causal complexity of business models with organizational performance: a study for the pharmaceutical industry

Abstract

Purpose

Authors analyze a business model (BM) based on organizational performance. BMs are strategic tools used to achieve high performance. This study is based on two characteristics of causal complexity: conjunction and equifinality. Authors also examine the applicability of causal asymmetry in the relationship between BMs and organizational performance.

Design/methodology/approach

Generally, the relationship between BM elements and organizational performance is analyzed using a correlational approach. This relationship is marked by causal complexity, which cannot be analyzed via such approach. Authors applied a fuzzy-set qualitative comparative analysis with data from three time-periods and two performance variables for pharmaceutical firms.

Findings

Qualitative comparative analysis revealed that high performance resulted from configurations (combinations) of BM elements and not from the effects of individual elements. In addition, multiple configurations are available for achieving high performance. Causal asymmetry was observed in the configuration of the BM elements for high and low performances.

Research limitations/implications

Using qualitative comparative analysis of data sets from three time-periods in the context of the pharmaceutical industry BM, authors integrated the theoretical constructs of causal complexity, namely conjunction, equifinality and causal asymmetry.

Practical implications

Findings related to conjunctions will help managers shift their focus from individual BM elements to combinations of BM elements. Additionally, the findings related to equifinality and causal asymmetry will allow flexibility in designing their company’s BM according to the resource constraints their company faces.

Originality/value

This was one of the first few studies on BMs using the twin indicators of the organizational performance relationship and causal complexity.

Citation

Panchal, D.B., Krishnamoorthy, B. and Bhattacharyya, S.S. (2024), "Exploring the causal complexity of business models with organizational performance: a study for the pharmaceutical industry", The TQM Journal, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/TQM-12-2023-0427