Business Model Innovation and Organizational Design: A Dynamic Capabilities Perspective

Dynamic capabilities are deeply enmeshed with business model innovation and implementation. Dynamic capabilities reside in the collective learning and culture of the organization and in the entrepreneurial skill of the top management team. Entrepreneurial managers bear the primary responsibility for recognizing the need for business model change, for adjusting or inventing business models, for orchestrating the necessary assets, and for (re)structuring the organization as needed. They are also responsible for strategy formulation, which is separate from, but related to, dynamic capabilities. The organization’s structure, incentives, and culture can, in turn, be more or less well suited to the recognition of new opportunities and the implementation of new structures that are integral to the dynamic capabilities of the firm. In short, the generation of new business models requires entrepreneurial managers to balance attention to customer needs and technological possibilities with the logic of organization.