The impact of open business model, innovation types and firm’s capital structure on product’s time-to-market and firm performance

Abstract: For decades, globalization has introduced both opportunities and pressures for companies around the world by introducing freer trade, increasing foreign direct investment and the international use of intellectual property that boosted the diffusion of knowledge and technology. As a result, the international competition has become more intense for many firms. Hence, putting a good or service into the market has never been as demanding as now and the demand to be early mover and have a low time-to-market is increasingly important for first be successful. This research will focus on determining whether a low time-to-market will contribute to a higher firm performance and what relation the time to market has with a firm’s business model framework and business model openness, preference for external funding and type of innovation. A theoretical framework was created based on relevant literature to be able to reach the objective of this thesis. The conceptual model was created from the literature which consisted of the hypotheses and variables that the study aimed to investigate. From the theoretical framework using a confirmatory approach, a survey was designed that was shared online to available network that the authors had. In summary, 43% of respondents had some sort of managing positions (upper management, manager and project management), 83% were mainly based in Sweden but also in Denmark, Germany, USA etc. and the work experience of the respondents was fairly distributed. Overall, 50% of the firms were between 0 to 30 years (1% did not respond) and more than 50% were considered to be a large firm depending if the classification was based on turnover with 51% as large firms (17% did not respond) or based on the number of employees with 58% as large firms. Data with 200 applicable responses (eight were removed i.e., 3.8%) was collected over four weeks of time. With the use of structural equation modeling and exploratory factor analysis, the collected data could be analyzed, and the hypotheses relevance could be answered. The final model was concluded to be adequate, as GOF indices and standardized factor loadings were on a sufficient level. As a result, the research showed that a fast time-to-market had a positive impact on firm performance measured in monetary measures (sales, profit, and market share) and that marketing innovation had a positive mediating effect on time to market and thus financial performance. The hypotheses regarding business model framework and capital structure correlating positive time to market were removed since the model was reworked. However, the study showed that technological innovation (product and process innovation) had a positive correlation to preference for external funding such as debt or issuance of equity. Since the construct validity of open business model and technological innovation was proved to be non-convergent, any deeper conclusion of this must be carefully reviewed. The results reinforced what other studies had shown, which is that open innovation or a more open business model contributes to both technological and marketing innovation. In summary, this demonstrated that a positive mediating effect existed for an open business model and marketing innovation which will speed up the time-to-market and hence increase the financial performance. Suggestion of future work could be to conduct similar studies in specific industry sectors to observe whether there is a difference in time-to-market depending on industry and what effect innovation and business model framework has.