Does business model innovation enhance the sustainable development of new ventures? Understanding an inverted-U relationship

Abstract

Improving the sustainable development of new ventures and helping them survive and develop in the entrepreneurial environment are important research issues. Business model innovation is considered as a potential way for new ventures to enhance their sustainable development capability and performance. Although previous studies have pointed out that there is a positive linear relationship between business model innovation and sustainable development, little research has found the nonlinear relationship between them, as well as the moderating effects of competitive strategy innovation and strategy flexibility. In this study, an empirical model was established to test our hypotheses and answer our research questions. Analysis of data collected from 326 questionnaires shows that an inverted-U relationship exists between business model innovation and sustainable development such that new ventures with low or high business model innovation have worse sustainable development than new ventures with appropriate business model innovation. Moreover, this paper finds that competitive strategy innovation and strategic flexibility positively moderate the inverted-U relationship between business model innovation and sustainable development of new ventures. From a theoretical perspective, this study offers a model with which to understand the impacts of business model innovation, and contributes significantly to the research on new ven-tures. From a practical perspective, this paper provides new insights into the management of new ventures and recommends several practical strategies for managers and practitioners.