Business Model Innovation and Experimentation in Transforming Economies: ByteDance and TikTok

Yue Hu and Yulun Ma

ABSTRACT Firms from transforming economies can leverage the characteristics of their location to develop innovative business models before internationalizing. This note showcases ByteDance’s innovative business model for its TikTok app, which became one of the most downloaded apps globally. ByteDance used its large and increasingly demanding home market to experiment with creative combinations of business model elements to develop a unique business proposition that positions the TikTok app as a hybrid of social networking and video-sharing. In addition, TikTok benefitted from China’s IT strength supported by national high-tech policy to an AI-based recommendation algorithm as a non-location bound resource. TikTok shows that firms from transforming economies can launch successful global products through business model innovation.

KEYWORDS business model innovation, globalization, international strategy, TikTok, transitional economy

How Business Model Designs Influence Firm Growth in a Transforming Economy: A Configurational Perspective

Jun Wu, Wenwen An, Xin Zheng, and Jianqi Zhang

ABSTRACT This study adopts a configurational perspective to examine how business model designs and contextual factors in transforming economies combine to create value. We investigate configurations of efficiency-centered and novelty-centered business model designs, corporate ownership, development stage, and external regulatory volatility associated with high growth in a transforming economy. Using a fuzzy-set qualitative comparative analysis of Chinese firms, we find five solutions associated with superior growth, suggesting that the effective configurations of business model designs vary in different contexts. Our study offers a holistic understanding of the relationship between business model designs and firm growth, and yields useful insights for business model designs for practitioners.

KEYWORDS efficiency-centered business model design, fsQCA, novelty-centered business model design, regulatory volatility

The Role of MNE Subsidiaries in the Practice of Global Business Models in Transforming Economies

Michael Ngoasong, Jinmin Wang, Rolv Petter Amdam, and Ove Bjarnar

ABSTRACT This study provides new insights into the role of subsidiary managers in the practice of global business models of multinational enterprises in transforming economies. Drawing on the global business model literature and through semi-structured interviews with a leading Norwegian maritime multinational enterprise in China, we have developed and critically explored a theoretical framework for uncovering how subsidiary managers understand and manage the tensions between the headquarters based in a western country and the subsidiaries based in a transforming economy. More specifically, when implementing the global business model in the transforming economy, subsidiary managers need to undertake effective management of structural, behavioural, and cultural tensions along with the global integration-local responsiveness dilemma. Subsidiary managers can contribute to solving structural tensions between the headquarters and subsidiary by undertaking effective market sensing and knowledge transfer activities to integrate the transforming economies into the MNE’s global production networks. Meanwhile, they need to make effective relationship management to solve behavioural and cultural tensions.

KEYWORDS China, global business models, global integration-local responsiveness dilemma, multinational enterprises, subsidiary managers, tensions, transforming economies

Multidexterity: Combining Competing Business Models in Transforming Economies

Robert Demir and Duncan Angwin

ABSTRACT In an attempt to respond to recent calls for better understanding the coexistence of multiple business models, we develop the concept of ‘multidexterity’ – the ability to develop, nurture, and execute several distinctive BM strategies simultaneously across different levels and functions of the MNC and its host markets. To illustrate this approach, we describe a European healthcare firm entering the rapidly transforming economy of China and facing regulatory constraints and ambiguities in the application of industry standards. This situation is a generic challenge for MNCs entering rapidly transforming economies, which they help in turn to substantially alter and develop. We argue multidextrous business models are effective entry strategies for MNCs. They also help resolve two conceptual limitations in the BMI literature: (1) the problem of environmental contingencies and (2) the interrelatedness of factors at the macro, meso, and micro levels. We address these problems from a practice approach. We provide some implications for the concept of multidexterity and business models and address managerial challenges and prospects in developing multidextrous organizations.

KEYWORDS business models, China, industry standardization, internationalization, market regulation, multidexterity, practice

Institutional Voids and Business Model Innovation: How Grassroots Social Businesses Advance Deprived Communities in Emerging Economies

Ana Colovic and Marion Schruoffeneger

ABSTRACT Despite the growing interest in social businesses, knowledge about and theorization of how these businesses change social and institutional conditions in emerging economies is scarce. This research investigates how an innovative social business model acts on institutional voids and creates social value for deprived communities. Building on insights from the literature and a longitudinal case study of a local, grassroots social business venture operating in Brazilian slums and shantytowns (favelas), we uncover and theorize eight mechanisms by which an innovative social business model brings about institutional change and creates social value. These mechanisms are: orchestrating local business networks, developing local business networks, upgrading and building cognitive capacity, legitimizing, assigning multiple roles, empowering, building a positive territorial identity (territorial de-stigmatization), and boundary spanning. Our findings have important implications for social entrepreneurs and organizations supporting social business ventures in transforming economies.

KEYWORDS Brazil, business model innovation, emerging economy, institutional voids, social entrepreneurship

Secondary Business Model Innovation in Emerging Economies

Sonia Mehrotra and S. Ramakrishna Velamuri

ABSTRACT We study two quick-service restaurant (QSR) chains based on regional ethnic foods that were launched in China and India. The products that these QSR ventures offered had hitherto been sold by fragmented street vendors who typically operated single outlets. Inspired by the successful business models of international QSR brands, these entrepreneurs developed business models to popularize their chosen regional ethnic foods in multiple new regions and grew their organizations to 1,400 and 300 outlets in China and India, respectively. We build on the recently coined concept of ‘secondary’ business model innovation (SBMI), which is based on inter-organizational learning, break down its constituents into creative and imitative, specify the mechanisms through which it is achieved, and propose that it is a specific case of the more general construct of creative imitation.

KEYWORDS business model innovation, contextual learning, creative imitation, secondary business model innovation, vicarious learning

Pursuing Frugal Innovation for Sustainability at the Grassroots Level

Mokter Hossain, Jarkko Levänen, and Marleen Wierenga

ABSTRACT Firms are often criticized for their reluctance to embrace sustainability in their business strategies. Frugal innovation is a recent concept that represents a new way for firms to serve underserved customers in developing countries while also promoting sustainability. Based on three cases of frugal innovation at the grassroots level in India, this article demonstrates how frugal innovation presents a promising way to tackle some of today’s pressing societal problems with new business models. We use a range of parameters for economic, social, and environmental sustainability to strengthen the case for frugal innovation. This article attempts to inspire scholars to consider frugal innovation further in their future research endeavors and encourage firms to integrate it into their existing business models.

KEYWORDS business model, emerging markets, entrepreneurship, frugal innovation, grassroots innovation, sustainability