1.

Introduction

1.1 Background

1.1.1 Overview of digital technology and its impact on businesses

In recent years, digital technology has emerged as a powerful force that is transforming the

business landscape at an unprecedented pace. The rapid advancements in digital technologies

such as artificial intelligence, big data analytics, cloud computing, and the Internet of Things

(IoT) have disrupted traditional business models and created new opportunities for innovation

and growth (Vial, 2019). As Nambisan et al. (2019) point out, digital technologies have become

ubiquitous, permeating every aspect of business operations and strategy. This digital

transformation has led to the emergence of new business models, products, and services that

leverage the capabilities of digital technologies to create value for customers and stakeholders

(Verhoef et al., 2021). For example, platform-based business models such as Uber, Airbnb, and

Amazon have disrupted traditional industries by leveraging digital technologies to create new

forms of value creation and capture (Cusumano et al., 2019). Similarly, data-driven business

models that rely on the collection, analysis, and monetization of vast amounts of data have

become increasingly prevalent across industries (Günther et al., 2017).

The impact of digital technology on businesses is not limited to the creation of new business

models but also extends to the transformation of existing ones. As Vial (2019) notes, digital

technologies have the potential to fundamentally alter the way businesses operate, interact with

customers, and create value. This digital transformation requires businesses to rethink their

strategies, processes, and capabilities to remain competitive in the digital age (Bharadwaj et al.,

2013). For instance, the adoption of cloud computing and software-as-a-service (SaaS) models

has enabled businesses to reduce their IT infrastructure costs and improve their agility and
scalability (Marston et al., 2011). Similarly, the use of big data analytics has allowed businesses

to gain insights into customer behavior, optimize their operations, and make data-driven

decisions (McAfee et al., 2012). The impact of digital technology on businesses is not without its

challenges. As Vial (2019) points out, the adoption of digital technologies often requires

significant investments in infrastructure, skills, and capabilities. Moreover, the rapid pace of

technological change means that businesses must continuously adapt and innovate to stay ahead

of the curve (Nambisan et al., 2019). There are also concerns about the ethical and social

implications of digital technologies, such as data privacy, security, and the impact on

employment (Royakkers et al., 2018). Despite these challenges, the transformative potential of

digital technology for businesses cannot be ignored. As Verhoef et al. (2021) argue, businesses

that fail to embrace digital transformation risk being left behind in the digital age. Therefore,

understanding the impact of digital technology on businesses and how to leverage it for

innovation and growth has become a critical imperative for managers and researchers alike.

1.1.2 Importance of business model innovation in the digital age

In the context of the digital age, business model innovation has emerged as a critical strategic

imperative for businesses seeking to remain competitive and create value in the face of disruptive

technological change (Amit & Zott, 2001). As Chesbrough (2010) argues, the advent of digital

technologies has rendered many traditional business models obsolete, necessitating the

development of new and innovative business models that can leverage the capabilities of digital

technologies to create and capture value. Business model innovation refers to the process of

creating new or transforming existing business models to better align with changing market

conditions, customer needs, and technological advancements (Foss & Saebi, 2017). It involves a

fundamental rethinking of how a business creates, delivers, and captures value, often challenging
established industry norms and assumptions (Massa et al., 2017). In the digital age, business

model innovation has become particularly important due to the disruptive nature of digital

technologies. As Rachinger et al. (2019) point out, digital technologies have the potential to

fundamentally alter the value proposition, target customers, and revenue streams of businesses,

rendering existing business models obsolete. For example, the music industry has undergone a

significant transformation due to the advent of digital streaming services such as Spotify and

Apple Music, which have disrupted the traditional business model based on the sale of physical

albums (Hesmondhalgh et al., 2019). Similarly, the retail industry has been transformed by the

rise of e-commerce and omnichannel business models that seamlessly integrate online and

offline channels (Verhoef et al., 2015).

Business model innovation is not only a response to the disruptive potential of digital

technologies but also a means of leveraging these technologies to create new forms of value and

competitive advantage. As Bouwman et al. (2018) argue, digital technologies offer businesses

new opportunities to create value through the development of innovative business models that

leverage data, platforms, and ecosystems. For instance, platform-based business models such as

Uber and Airbnb have created new forms of value by connecting buyers and sellers in a two-

sided market, leveraging digital technologies to facilitate transactions and create network effects

(Cusumano et al., 2019). Similarly, data-driven business models such as Netflix and Amazon

have used the vast amounts of data generated by their platforms to gain insights into customer

behavior and preferences, enabling them to offer personalized recommendations and optimize

their operations (Günther et al., 2017). The importance of business model innovation in the

digital age is not limited to the creation of new forms of value but also extends to the

sustainability and resilience of businesses in the face of technological change. As Chesbrough

unlikely to survive in the long run, necessitating the continuous innovation and adaptation of

business models to changing market conditions. Moreover, as Wirtz et al. (2016) argue, business

model innovation can help businesses to diversify their revenue streams, reduce their dependence

on a single product or market, and improve their overall resilience to external shocks and

disruptions.

1.2 Current research gaps

Despite the growing recognition of the importance of business model innovation in the digital

age, there are still significant research gaps in our understanding of how digital technologies

shape and enable business model innovation. One of the main research gaps is the lack of a

comprehensive and integrative framework that captures the complex and multifaceted

relationship between digital technologies and business model innovation (Foss & Saebi, 2017).

While there have been numerous studies examining the impact of specific digital technologies

such as big data analytics (Trabucchi et al., 2018), artificial intelligence (Garbuio & Lin, 2019),

and the Internet of Things (Metallo et al., 2018) on business model innovation, there is still a

need for a more holistic and integrative approach that takes into account the interplay between

different digital technologies and their combined impact on business model innovation

(Rachinger et al., 2019).

Another research gap is the limited understanding of the organizational and strategic factors that

enable or hinder the successful adoption and implementation of digital technologies for business

model innovation. As Foss and Saebi (2017) point out, business model innovation is not only a

technological challenge but also an organizational and strategic one, requiring significant

changes in organizational culture, processes, and capabilities. While there have been some
studies examining the organizational and strategic enablers of business model innovation in the

digital age (e.g., Bouwman et al., 2018; Rachinger et al., 2019), there is still a need for more

empirical research on the specific organizational and strategic factors that facilitate or inhibit the

successful adoption and implementation of digital technologies for business model innovation. A

third research gap is the limited understanding of the performance implications of business

model innovation in the digital age. While there is a growing recognition of the potential benefits

of business model innovation for firm performance and competitive advantage (Amit & Zott,

2001; Chesbrough, 2010), there is still a lack of empirical evidence on the specific performance

outcomes of business model innovation in the context of digital transformation (Foss & Saebi,

2017). Moreover, there is a need for more research on the contingency factors that may influence

the relationship between business model innovation and firm performance, such as industry

characteristics, market conditions, and firm capabilities (Clauss et al., 2019).

Finally, there is a need for more research on the social and ethical implications of business model

innovation in the digital age. As Rachinger et al. (2019) point out, the adoption of digital

technologies for business model innovation may have significant social and ethical implications,

such as the impact on employment, data privacy, and social inequality. While there have been

some studies examining the social and ethical challenges of digital transformation (e.g.,

Royakkers et al., 2018; Vial, 2019), there is still a need for more research on how businesses can

address these challenges and ensure the responsible and sustainable adoption of digital

technologies for business model innovation. Addressing these research gaps is critical for

advancing our understanding of how businesses can successfully leverage digital technologies

for business model innovation and create value in the digital age.

1.3 Research objectives and questions

understanding of how digital technologies shape and enable business model innovation.

Specifically, this research aims to achieve the following objectives:

1. To develop a comprehensive and integrative framework that captures the complex and

multifaceted relationship between digital technologies and business model innovation.

This framework will take into account the different types of digital technologies (e.g., big

data analytics, artificial intelligence, Internet of Things) and their interplay in shaping

business model innovation. It will also consider the organizational and strategic factors

that enable or hinder the successful adoption and implementation of digital technologies

for business model innovation.

2. To empirically investigate the organizational and strategic enablers of business model

innovation in the digital age. This research will examine the specific organizational and

strategic factors (e.g., organizational culture, leadership, capabilities) that facilitate or

inhibit the successful adoption and implementation of digital technologies for business

model innovation. It will also explore how these factors may vary across different

industries and contexts.

3. To examine the performance implications of business model innovation in the digital age.

This research will investigate the specific performance outcomes (e.g., financial

performance, market share, customer satisfaction) of business model innovation in the

context of digital transformation. It will also explore the contingency factors (e.g.,

industry characteristics, market conditions, firm capabilities) that may influence the

relationship between business model innovation and firm performance.

age. This research will examine the potential social and ethical challenges (e.g., impact

on employment, data privacy, social inequality) associated with the adoption of digital

technologies for business model innovation. It will also investigate how businesses can

address these challenges and ensure the responsible and sustainable adoption of digital

technologies for business model innovation.

To achieve these objectives, this research will address the following research questions:

1. How do digital technologies shape and enable business model innovation?

2. What are the organizational and strategic enablers of business model innovation in the

digital age?

3. What are the performance implications of business model innovation in the digital age?

4. What are the social and ethical implications of business model innovation in the digital

age?

By addressing these research questions, this research aims to provide a comprehensive and

nuanced understanding of the complex and multifaceted relationship between digital

technologies and business model innovation. It also seeks to offer practical insights and

recommendations for businesses seeking to leverage digital technologies for business model

innovation and create value in the digital age.

1.4 Research significance and innovation

This research has significant theoretical and practical implications for understanding and

managing business model innovation in the digital age. From a theoretical perspective, this

research contributes to the growing body of literature on digital transformation and business

model innovation by developing a comprehensive and integrative framework that captures the
complex and multifaceted relationship between digital technologies and business model

innovation. This framework extends existing research by taking into account the interplay

between different types of digital technologies and their combined impact on business model

innovation, as well as the organizational and strategic factors that enable or hinder the successful

adoption and implementation of digital technologies for business model innovation (Foss &

Saebi, 2017; Rachinger et al., 2019). By doing so, this research provides a more holistic and

nuanced understanding of the drivers, processes, and outcomes of business model innovation in

the digital age. Moreover, this research contributes to the literature on firm performance by

examining the specific performance implications of business model innovation in the context of

digital transformation. While previous research has recognized the potential benefits of business

model innovation for firm performance (Amit & Zott, 2001; Chesbrough, 2010), this research

provides empirical evidence on the specific performance outcomes of business model innovation

in the digital age, as well as the contingency factors that may influence the relationship between

business model innovation and firm performance (Clauss et al., 2019). By doing so, this research

offers a more granular and contextualized understanding of the performance implications of

business model innovation in the digital age. From a practical perspective, this research offers

valuable insights and recommendations for businesses seeking to leverage digital technologies

for business model innovation and create value in the digital age. By identifying the

organizational and strategic enablers of business model innovation, this research provides

guidance on how businesses can successfully adopt and implement digital technologies for

business model innovation, as well as how they can overcome the challenges and barriers

associated with digital transformation (Bouwman et al., 2018; Rachinger et al., 2019). Moreover,

by exploring the social and ethical implications of business model innovation in the digital age,
this research offers recommendations on how businesses can address the potential challenges and

ensure the responsible and sustainable adoption of digital technologies for business model

innovation (Rachinger et al., 2019; Royakkers et al., 2018). Overall, this research has the

potential to make a significant contribution to the theory and practice of business model

innovation in the digital age. By developing a comprehensive and integrative framework,

examining the organizational and strategic enablers of business model innovation, investigating

the performance implications of business model innovation, and exploring the social and ethical

implications of digital transformation, this research provides a more holistic and nuanced

understanding of how businesses can successfully leverage digital technologies for business

model innovation and create value in the digital age. Moreover, by offering practical insights and

recommendations, this research has the potential to inform and guide the strategies and practices

of businesses seeking to navigate the challenges and opportunities of digital transformation and

business model innovation.