Exploring the mechanisms of digitalization in business model innovation : A business model dimension perspective

Abstract: Background: How business is conducted is constantly developing and the design of the business model is a crucial part to have a clear vision of the company’s goals. Simultaneously, technologies are developed which generate new business opportunities. To fully exploit these opportunities, companies need to innovate their business model. The description of digitalization within previous literature has been mainly holistic, without much reference to specific mechanisms and activities enabling business model innovation. Little is known about the mechanisms of digitalization and their effect on business model innovation.  Purpose: The purpose of this is to understand how digitalization affects business model innovation in firms. It aims to identify mechanisms of digitalization and how they affect the underlying dimensions of business model innovation.  Method: An exploratory research design was applied within this qualitative study to fulfill the purpose. The data collection was done through nine semi-structured interviews with employees at manufacturing companies with good insight of the company’s digitalization process. Using an inductive approach, the data has been analyzed through a thematic analysis.  Conclusion: This study has shown what mechanisms of digitalization affect each of the dimensions of the business model. Further, it has contributed with an understanding of how the dimensions are affected by the mechanisms. The analysis resulted in the development of an emergent framework which depicts what the mechanisms are and how they can lead to a perceived positive effect on business operations.