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What makes firms innovate their business models? Why do they engage in innovating how they create, deliver, and capture value? And how does such innovation translate into innovation performance? Despite the importance of business model innovation for achieving competitive advantage, existing evidence seems to be confined to firm-level antecedents and pays little attention to the impact of industry structure. This study investigates how different stages of an industry’s life cycle and levels of industry competition affect firms’ business model innovation, and how such innovation translates into innovation performance. Based on a cross-industry sample of 1,242 Austrian firms, we introduce a unique measure for the degree of innovation in a firm’s business model. The results indicate that the degree of business model innovation is highest toward the beginning of an industry life cycle, that is, in the emergent stage. Competitive industry pressures turn out to be negatively related to the degree of business model innovation. Moreover, we find that the degree of a firm’s business model innovation, conditional on it having introduced a new product or process recently, positively influences innovation performance. Our findings contribute to the ongoing dialog on the role of industry structure in business model innovation, and provide implications for the management of business model innovation.

The purpose of this study is to examine the relevance of academic research, in terms of the topic match, to commercial practise in information technology, using the case study of a large and very rapidly growing supplier that uses leading-edge management approaches, Salesforce.com.

Academic literature review and review of commercial literature and information published by Salesforce.com.

Academics’ choice of topics matches the issues and topics present in the development of Salesforce.com, but suffers from the lack of interdisciplinary approach and particularly fails to integrate technical, marketing and financial approaches.

The case study is of only one company, though an important one, although other large companies are involved e.g. Amazon Web services. However, the approach could easily be widened to several companies.

The case study approach will help academics focus on creating more applicable research and help students to learn about companies and may also eventually help practitioners to create thought leadership.

If the financial and economic aspects of such case studies are integrated with other business aspects, these will provide a better view of the positive (or negative) contribution made by companies such as the one in the case study.

This is the first time that a case study has been examined in the context of the relevance/rigour debate.