Morrison, Alastair, He, Jie, Morrison, Alastair ORCID: 0000-0002-0754-1083 , De Domenici, Michael and Wang, Yaozhong (2022) Entrepreneurial networks, effectuation, and business model innovation of startups: the moderating role of environmental dynamism. Creativity and Innovation Management, 31 (3). pp. 460-478. ISSN 0963-1690 (Print), 1467-8691 (Online) (doi:https://doi.org/10.1111/caim.12514)

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Abstract

Business model innovation is the reconfiguration of existing business models based on external and internal resources (Foss & Saebi, 2017; Micheli, Berchicci, & Jansen, 2020; Schaltegger, Hansen, & Lüdeke-Freund, 2016; Zhang, Xiao, Wang et al, 2020), and is critical for startups to achieve competitive advantage and sustainability (Massa, Tucci, & Afuah, 2017; McDonald & Eisenhardt, 2020; Snihur & Zott, 2020; Tykkyläinen & Ritala, 2020). Specifically with the presence of COVID-19, dynamic entrepreneurial environment and decision-making processes are aggravated. Therefore, the determinants of startup business model innovation are attracting great attention, especially in the dynamic environments (Ma, & Hu ,2021; Wirtz, Pistoia, Ullrich, & Göttel, 2016; Foss & Saebi, 2017; George & Bock, 2011).
Previous research has revealed that startups, restricted by new entrants’ weaknesses, insecure foundations, difficulties in acquiring financing, and questionable legality, greatly depend on entrepreneurs with innovative business models (Zacca, Dayan, & Ahrens,2015; Baker, Grinstein, & Harmancioglu,2015). Therefore, entrepreneurial networks are important resources for startups (Partanen, Kauppila, Sepulveda, & Gabrielsson, 2020; Breuer & Lüdeke-Freund, 2017; Neergaard, 2005; Wassmer, 2010), and may impact business model innovation (Micheli et al., 2020; Zhang et al., 2020).
In addition, entrepreneurial psychology is as an important personal factor in business model innovation (Zhang et al., 2020). Entrepreneurs are startups’ main decision makers, and their mindsets and mental states impact business model innovation (Foss & Saebi, 2017; Amoroso, Lim, & Santamaria, 2021). Entrepreneurial networks are an external factor, and along with managerial psychology and personality, help fledgling firms to access diverse resources and identify opportunities for business model innovation (Zhang et al., 2020). Effectuation or entrepreneurial decision-making and understanding brings together entrepreneurial networks and business model innovation in startups (Long, Wang, & Wang, 2021; Peng, Liu, Jiao, Feng, & Zheng, 2020; Spieth, Schneckenberg, & Ricart, 2014; Venkataraman, Sarasvathy, Dew, & Forster, 2012).
Effectuation is a series of heuristic logic about how entrepreneurs think, make decisions and act in dynamic environments, including individual understanding, thinking models, practices, and behavioral logic (Sarasvathy, 2001; Mitchell, Busenitz, Bird, Gaglio, McMullen, Morse, & Smith, 2007). Business model innovation may be subjectively constructed, and reflects entrepreneurial will and cognition (Martins et al., 2015; Reymen, Berends, Oudehand, & Stultiëns, 2016; Taeuscher, & Abdelkafi, 2017). Entrepreneurial networks are a decision-making starting point for effectuation, and effectuation is a personal factor that triggers business model innovation behavior in firms (Futterer, Schmidt, & Heidenreich, 2018; Reymen, Andries, Berends, Mauer, Stephan, & Van Burg, 2015; Martins et al., 2015). It is reasonable to suggest that effectuation offers insights into the ways through which entrepreneurial networks are transformed into business model innovation (Harms, Alfert, Cheng, & Kraus, 2021; Chesbrough, 2010; Futterer et al, 2018; Velu & Jacob, 2016; Reymen et al., 2016).
However, the existing research separately focuses on impact of entrepreneurial networks and cognition; few studies combine entrepreneurial networks (external) and entrepreneurial cognition and understanding (personal). The relationship between entrepreneurial networks and business model innovation remains in an elusive “black box” (Cai, Anokhin, Yin, & Hatfield, 2016; Partanen et al., 2020), especially in dynamic environments (Ojala, 2016; Cai, Guo, Fei, & Liu, 2017). Therefore, this research examines entrepreneurial networks and effectuation, and explores how entrepreneurial networks impact business model innovation in startups.

Item Type:	Article
Uncontrolled Keywords:	business model innovation; effectuation; environmental dynamism; network size; network strength, start-ups
Subjects:	H Social Sciences > H Social Sciences (General)
Faculty / School / Research Centre / Research Group:	Faculty of Business
Last Modified:	03 May 2024 08:00
URI:	http://gala.gre.ac.uk/id/eprint/46938

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