Implications of Business Model Innovation Separation and Integration in Incumbent Firms

Abstract

When implementing business model innovation (BMI), managers of incumbent firms can choose between two options. They can either separate BMI from the existing business, such as in a spin-off, or integrate it into existing structures, or business units. However, extant literature offers limited evidence on the nature of both options and their specific benefits. To address this research gap, in this article, we draw insights from eight cases of BMI in five large incumbent firms. This study makes several contributions to existing literature. First, it provides an in-depth account of the implementation factors employed during BMI in large incumbent organizations. Consequently, we show that factors, such as organizational climate, management support, patience, and implementation policies and practices, serve multiple purposes, ranging from providing expertise to the core implementation team to reducing widespread skepticism among the nonengaged workforce. Second, we illustrate how the cases account for the organizational assimilation of innovation (i.e., integration) or insulation from organizational influences (i.e., separation). Specifically, we illustrate the nature and benefits of integrating and separating BMI among the incumbent firms. Third, we shed light on strategies for BMI implementation, balancing separation and integration during BMI implementation, from an ambidexterity perspective.