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Double ambidexterity: How a Telco incumbent used business‐model and technology innovations to successfully respond to three major disruptions


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We leverage the business model innovation and ambidexterity literature to investigate a contradictory case, the Swedish-Finnish Telecom operator TeliaSonera. Despite being challenged by three major disruptions, the company not only still exists but also enjoys remarkably good financial performance. Building on extant archival data and interviews, we carefully identify and map 26 organizational responses during 1992–2016. We find that the firm has overcome three critical phases by experimenting and pioneering with portfolios of business models and/or technological innovations. We describe this behaviour as double ambidexterity. We use an in-depth case study to conceptualize double ambidexterity and discuss its impact on the business's survival and enduring success.
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Double ambidexterity: How a Telco incumbent used business
model and technology innovations to successfully respond to
three major disruptions
Matti Kaulio
|Kent Thorén
|René Rohrbeck
Department of Industrial Economics and
Management at KTH Royal Institute of
Technology in Stockholm, Sweden
Aarhus School of Business and Social
Sciences, Aarhus University, Denmark
Matti Kaulio, Department of Industrial
Economics and Management, KTH Royal
Institute of Technology, Lindstedtsvägen 30,
SE114 28 Stockholm, Sweden.
We leverage the business model innovation and ambidexterity literature to investigate a contradic-
tory case, the SwedishFinnish Telecom operator TeliaSonera. Despite being challenged by three
major disruptions, the company not only still exists but also enjoys remarkably good financial perfor-
mance. Building on extant archival data and interviews, we carefully identify and map 26 organiza-
tional responses during 19922016. We find that the firm has overcome three critical phases by
experimenting and pioneering with portfolios of business models and/or technological innovations.
We describe this behaviour as double ambidexterity. We use an indepth case study to conceptu-
alize double ambidexterity and discuss its impact on the business's survival and enduring success.
One stream of business model research has addressed the relationship
between technological innovation (TI) and business model innovations
(BMI) (BadenFuller & Haefliger, 2013; Chesbrough & Rosenbloom,
2002; Tongur & Engwall, 2014). This stream of inquiry has its roots
in the 1970s, although it only gained momentum when existing theo-
ries were unable to explain new phenomena emerging from Internet
based companies (Wirtz, Pistoia, Ullrich, & Gottel, 2016). During this
time, companies such as Google were unable to capture the value from
their search customers directly. Instead, they had to capture the value
created from a second group of customers: companies seeking to
advertise to the first customer group (Teece, 2010). These early arti-
cles from 2000 onwards investigated the role of business models in
unlocking the value of technology. For example, based on a study of
six successful spinoff companies from Xerox, Chesbrough and
Rosenbloom (2002) meritoriously describes both what the fundamen-
tal constituents of a business model are and how BMI has made cap-
turing value from underutilized technology possible. More recently,
BadenFuller and Haefliger (2013) suggest that the relationship
between BMI and TI is bidirectional. While they agree that business
models mediate the relationship between TI and firm performance (or
value capture), they also emphasize that BMIwith open business
models, in particularis able to boost the ability to develop the right
technology. In a similar vein, Tongur and Engwall (2014) argue that
BMI is necessary to manage technology shifts and that the manage-
ment of technology shifts is a process of managing bothTI and BMI.
Furthermore, the study of business models has also been con-
ducted on different levels of analysis, and Wirtz et al. (2016) show that
it has moved from the product level to the level of business units and
organizations. Studies on the organizational level have also looked into
the role of TI and BMI in transforming industries, such as newspapers
(Holm, Gunzel, & Ulhøi, 2013; Rohrbeck, Günzel, & Uliyanova, 2012) or
electric mobility (Abdelkafi, Makhotin, & Posselt, 2013). Thus, the
question of how TI and BMI interplay has implications not only for
the management of firms but also for the dynamic of industry transfor-
mation (Bidmon & Knab, 2014).
Through our study, we want to contribute to the academic debate
on BMI and the longterm performance of firms, taking into account
the dynamic interplay of TI and BMI over time (Achtenhagen, Melin,
& Naldi, 2013; Amit & Zott, 2012; BadenFuller & Haefliger, 2013;
Björkdahl, 2009; Cavalcante, Kesting, & Ulhøi, 2011).
For our study, we sought an industry that has undergone multiple
phases of discontinuous change and in which companies are expected
to be particularly exposed to path dependency (Bidmon & Knab,
2014; Tushman & O'Reilly, 1996). We chose the telecommunication
industry because it has been challenged by multiple market and tech-
nologyside disruptions. As an industry, telecommunication can seem
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This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided
the original work is properly cited.
© 2017 The Authors. Creativity and Innovation Management Published by John Wiley & Sons Ltd
Received: 4 October 2016 Revised: 4 October 2017 Accepted: 4 October 2017
DOI: 10.1111/caim.12246
Creat Innov Manag. 2017;26:339352. 339
paradoxical. On the one hand, it can be regarded as mature (that is to
say, with fierce competition among existing players based mainly on
price and performance); on the other hand, it can be seen as an emerg-
ing industry in which new technologies and new business logics emerge
and converge, while it also provides a generic infrastructure for the dig-
ital society. For example, Skype has redefined the longdistance and
videocall market seemingly unhindered by traditional entry barriers.
Through the introduction of the iPhone in 2007, Apple has successfully
created an enlacement of content and handset, thereby establishing
itself as a key player in the telecommunication industry in which it
was a new entrant. With the introduction of the Android operating sys-
tem, which has already gained a 75% market share, and the subsequent
acquisition of Motorola, Google has also established itself as a major
player, which contributes to the migration of revenues from traditional
to new market actors. Incumbent national operators had to witness
their margins shrinking despite massive costcutting efforts, and the
leading device manufacturer, Nokia, has nearly been wiped out. The
dinosaursin the industry are the telecommunication operators, which
have dominated the industry even without being particularly innovative
(Rohrbeck, Hölzle, & Gemünden, 2009). Theory predicts that such
incumbents would be particularly affected by rigidity and hence in dan-
ger of being displaced by new entrants (Aspara, Lamberg, Laukia, &
Tikkanen, 2011; Chandy & Tellis, 2000; Doz & Kosonen, 2010).
We report on a longitudinal case study of the SwedishFinnish
Telco operator TeliaSonera. More specifically, we investigate how an
incumbent used a portfolio of organizational responses (BMI and TI)
to survive three waves of external discontinuous change (market
and/or technology). We aim to shed light on the interplay of TI and
BMI over time in order to investigate, in particular, its impact on firm
performance, which has been identified as an important avenue for
future research (DaSilva & Trkman, 2014; Massa, Tucci, & Afuah,
2016). We further aim to use the empirical richness of the single case
study to provide more insights into the antecedents and outcomes of
BMI (Foss & Saebi, 2017). Finally, we expect to be able to explore
the conditions in which TI and BMI allow our focal firm to capture
value (Massa et al., 2016; Zott, Amit, & Massa, 2011).
Our paper is structured as follows: we first present the theoretical
backbone of our research, which rests on the BMI and (organizational)
ambidexterity literature and form our conceptual model. We then
present the research method: a longitudinal case study using three
phases as embedded cases. This is followed by the detailed description
of the discontinuous change encountered and the organizational
responses. We then interpret our findings in the light of the predic-
tions of the BMI literature and, based on the contradictions, develop
the conceptualization of double ambidexterity. The article closes with
a discussion of future research trajectories.
2.1 |Business model innovation
The research interest in business models and BMI has increased
steeply with the emergence of new value capture frameworks
introduced by Internet companies (Foss & Saebi, 2017; Teece, 2010;
Wirtz, Schilke, & Ullrich, 2010). In parallel, the rising attention toward
open business models, in which focal organizations collaborate with
users, thirdparty developers, and complementary partners to create
value, have further catalyzed this interest (BadenFuller & Haefliger,
2013; Chesbrough, 2006; Thomke & von Hippel, 2002). However,
the proliferation of research has also led to ambiguity in the descrip-
tion of what a business model is and the way in which it is a useful con-
struct that justifies scholarly interest (Björkdahl & Holmén, 2013;
Klang, Wallnöfer, & Hacklin, 2014; Massa et al., 2016; Massa & Tucci,
2013). To make sense of this situation and thereby create a foundation
for cumulative research, it has been recognized that the scholarly
debate around business models can be broken down into different
substreams in which crossfertilizing occurs within each stream but
only to a lesser extent across each stream. Wirtz et al. (2016) distin-
guish between technologyoriented, organization theoryoriented,
and strategyoriented debates. They further note that all three streams
start to converge in what they call the modern business model
sphere,which discusses business models in a company, at the busi-
nessunit level, and at the intersection between the process and strat-
egy domains (Wirtz et al., 2016).
Our research builds on this research, which has suggested that
BMI not only mediates the relationship between TI and firm perfor-
mance but may also influence the ability to develop technologies, par-
ticularly through open business models (BadenFuller & Haefliger,
2013). Such a twoway relationship opens up questions about when
and under what conditions firms are able to create and capture value
(Amit & Zott, 2012; Björkdahl, 2009; Günzel & Holm, 2013).
Past research has shown that companies not only need to obtain
new technologies but also find new business models (Björkdahl &
Holmén, 2013; Calia, Guerrini, & Moura, 2007; Chesbrough &
Rosenbloom, 2002). This is done through experimentation with new
business models (Rohrbeck et al., 2012; Sosna, TrevinyoRodríguez,
& Velamuri, 2010; Tongur & Engwall, 2014). Magretta (2002), for
example, points to the need for hypotheses, tests, and revisions.
Chesbrough (2010) argues that companies must experiment with their
business models while knowing that some will fail and that even failure
will provide learning that can be applied in the future. Accordingly,
successful experimentation is therefore an important catalyst for
exploration of new possibilities, i.e., activity in which a firm engages
commercially in a new market and/or technology space (Knab &
Rohrbeck, 2015; March, 1991).
Moreover, BMI has been proposed as one of the main explana-
tions both for the success of new entrants and for the ability of incum-
bents to fight back (Osterwalder & Pigneur, 2010; Teece, 2010).
Consequently, using BMI is expected to be a key success factor that
is particularly relevant when organizations become increasingly inert
(Barnett & Carroll, 1995) and as their lifespan appears to decrease
dramatically (Foster & Kaplan, 2001; Louca, 2002). While the argument
is compelling that incumbents should respond to discontinuous change
through BMI, it appears that this has rarely been observed, with some
notable exceptions such as Dell and IBM. One explanation for the lack
of successful parallel BMI and TI may be that firms are not able to man-
age multiple business models and accept (partial) cannibalization of
parallel business models (Velu & Stiles, 2013). Another explanation
may also be that they are not good at discontinuing established busi-
ness models as they build new ones (Mehrizi & Lashkarbolouki, 2016).
2.2 |Toward double ambidexterity
When dealing with multiple business models in a firm, it has been sug-
gested that the (organizational) ambidexterity literature may provide
useful theoretical grounding (Markides, 2013). Organizational ambi-
dexterity was introduced by Tushman and O'Reilly (1996) to empha-
size the fact that firms need to master both evolutionary and
revolutionary change to ensure longterm success and survival. Draw-
ing on March's (1991) theory of organizational learning, they further
specify that ambidextrous organizations have the ability to both
explore and exploit, i.e., compete in mature technologies and markets
where efficiency, control, and incremental improvements are impor-
tant, and also compete in new technologies and markets where flexibil-
ity, autonomy, and experimentation are needed (O'Reilly & Tushman,
2013). Even after more than two decades of research on, and practice
of, organizational ambidexterity, it is doubtful whether Tushman and
O'Reilly need to alter their original observation from 1996 in which
they stated: While there are clear benefits to proactive change, only a
small minority of farsighted firms initiate discontinuous change before a
performance decline.This lack of proactivity has been attributed to
the difficulty in overcoming three fundamental tensions: diverging
strategic intents (profit vs. breakthroughs), customer orientation (tight
vs. loose coupling), and personal drivers (discipline vs. passion)
(Andriopoulos & Lewis, 2009). Some authors have argued that ambi-
dexterity should be sought through organizational separation (O'Reilly,
Harreld, & Tushman, 2009); others have argued that it can be achieved
by building processes or systems that support individuals to overcome
the tensions associated with ambidexterity (Gibson & Birkinshaw,
2004); and finally, ambidexterity might also be achieved through exter-
nalization, such as promoting exploration through venturing schemes
(Michl, Gold, & Picot, 2013; Raisch, Birkinshaw, Probst, & Tushman,
2009; Rohrbeck, Döhler, & Arnold, 2009; Thorén, 2014).
For our research, we build on BMI and ambidexterity theory to
build our analytic framework (see Figure 1). The framework is spanned
by two dimensions: TI and BMI. As mentioned earlier, this distinction is
discussed in the extant literature. In line with ambidexterity theory,
each of these two dimensions is then divided into exploitation and
Regarding the TI dimension, we considered an organizational
response to be placed in the exploitative technology category when
it was closely related or included only minor adaptations to existing
technology. Conversely, a TI that was explorative included a major
change in the technology in terms of novelty for the firm or major
investments in R&D.
Similarly, regarding the BMI dimension, we considered an organi-
zational response to be exploitative if it consisted of fine tuning or a
minor alteration in one or several of the business model's constituents
(i.e., value capture, value creation, or value proposition). The final cat-
egorization can be found in the Appendix.
To capture even more nuances in our analytic framework, we
introduced another subscale. We considered an explorative response,
independently of whether it is a TI or BMI, to be incremental if it con-
cerns an existing product, process, or service that has been signifi-
cantly enhanced or upgraded. Conversely, we considered an
explorative response, independently of whether it is a TI or BMI, to
be radical if the product, process, or service had either unprecedented
performance features or introduced such dramatic changes in features
or cost that new application domains became possible (O'Connor &
Rice, 2013).
An important detail is that we used incremental and radical for
denoting actions (i.e., organizational responses), not outcomes. This is
in line with Wheelwright and Clark's (1992) categorization of product
development actions but contrasts with other studies that consider
incremental and radical to be outcome related. It can be expected that
the framework will map responses to market discontinuities (such as
liberalization, competitive pressure, and changing regulatory frame-
works) to BMI (Sosna et al., 2010) and responses to technological dis-
continuities to TI (Taylor & Helfat, 2009). However, there can also be
comprehensive responses that combine TI and BMI (Chesbrough,
2010; Raisch et al., 2009).
3.1 |Research strategy
To investigate the relationship between TI and BMI over time, we
required an empirical setting in which: (i) we had more than two exter-
nal discontinuities covering at least one market and technology discon-
tinuities; (ii) we could observe and assess multiple organizational
responses covering both TI and BMI; and (iii) we could study a focal
firm that survives long enough to provide a longitudinal case
(Eisenhardt, 1989).
We found this setting in the telecommunication industry, which in
the past 20+ years has been affected by frequent marketand technol-
ogyside discontinuities (Rohrbeck, Hölzle, et al., 2009). The industry
has passed through a number of major technological and marketside
transformations such as liberalization of the state monopoly market,
the introduction of mobile telephony, the Internet bubble, the intro-
duction of smartphones (i.e., the introduction of Apple's iPhone), and
the introduction of streamed services (i.e., Spotify and Netflix). During
FIGURE 1 The double ambidexterity framework
the investigation period of 27 years, our focal firm has changed organi-
zational form and has also both expanded to and withdrawn from geo-
graphic markets. Direct competitors, such as other Telcos, are easy to
identify, yet they do not pose a major strategic threat. Instead, new
entrants had a much greater impact on shifting the status quo in the
industry, specifically overthetop players (or OTTs) such as Skype,
Spotify, Netflix, and Apple.
Furthermore, the use of an indepth longitudinal case study was
dictated by the need to track the development over time and the need
to induce variance (Åhlström & Karlsson, 2009). As the main aim of the
study was to explore how our focal firms used TI and/or BMI
responses to survive and prosper when faced with strategic challenges,
the study required sufficient variance in both external changes and
responses. Using the three phases of disruptions as embedded cases
further supported variance and the analysis by allowing for the con-
trasting of findings between them (Flyvbjerg, 2006; Yin, 2003).
3.2 |Data collection
The case study covered the period 19912017. The unit of analysis
was organizational responses, i.e., critical events, which is in line with
Åhlström and Karlsson's (2009) suggestion for longitudinal case stud-
ies. The list of critical events formed the basis for categorizing and
studying organizational responses. Business model changes were
investigated without describing the entire business model in detail at
each stage. A similar approach has been used, for example, by Calia
et al. (2007) and Björkdahl (2009).
Empirical material was obtained from multiple sources such as: (i)
interviews with internal respondents inside TeliaSonera that had key
positions in the different periods; (ii) interviews with external telecom
experts; and (iii) secondary material such as annual reports, presenta-
tions, and industry white papers (see Table 1).
The respondents were chosen to cover the entire time period and
to provide information on the key perspectives: technology (CTO
Europe, corporate CTO), strategy (director corporate strategy, head
of corporate strategy) and market (managing director of a new busi-
ness). Findings were triangulated with interviews with two indepen-
dent industry experts to confirm the major industry disruptions and
to validate the organizational responses from an external and unbiased
perspective. Twelve of the respondents were main informants who
gave their interviews in order to develop the case descriptions. Four
respondents gave complementary information during the writing of
the case in order to clarify specific details that remained unclear.
The main interviews, both for TeliaSonera respondents and the
industrial experts, followed a semistructured format: starting with
background questions and then moving on to questions about the
organizational response taken by TeliaSonera. Background questions
were used to map the limits of the knowledge sphereof each respon-
dent and covered the respondent's professional experience and tenure
related to the telecom industry, i.e., what business areas and/or tech-
nologies s/he had been working in, what positions s/he had held, and
how long s/he had been in TeliaSonera and the telecom industry,
The questions about organizational responses were posed as
open questions. The respondents were asked to draw a timeline
starting from the present day and backtracking events until the
respondent had entered TeliaSonera. This approach can be compared
with the critical incident techniques in which respondents are asked
to recall critical events (Chell, 2004; Flanagan, 1954). Recall of critical
incidents is considered to be valid, as it often contains important and
emotionally engaging events, and it helps respondents remember the
events in more detail (Chell, 2004; Kaulio, 2008). However, the
weakness of this approach is that it alone does not guarantee com-
prehensiveness. By focusing on events, other organizational pro-
cesses, such as processes that respondents consider to be routine,
could be left out of the analysis. Triangulation through complemen-
tary interviews and secondary material was the primary method of
counteracting this weakness.
Respondents were identified using two criteria: First, we wanted
respondents who were carriersofthehistory,meaning that they
should have been within the organization for a long time and should
have been engaged in central activities within the firm. Second, we
aimed for complementarity, and thus we used a snowballing method
(Biernacki & Waldorf, 1981) to contact respondents who worked in
other parts of the organization or had another vantage point for
other reasons.
Our secondary data consisted of annual reports, newspaper arti-
cles, internal presentations, and corporate training material. The last
category was very useful as it dealt with the challenges the company
wanted to communicate to its employees. As training in TeliaSonera
was perceived as a component of a change process rather than per-
sonal development, the content of the major training programs
TABLE 1 Overview of used data
Phase No. of interviews
Secondary data Total
Focus on network quality (19921998) 7 Financial reports
Internal presentations
Industry white papers
Value through convergence (19982007) 10 Financial reports
Internal presentations
Industry white papers
Company training material
(presentations, reports, etc.)
Partnering for speed and novel value
propositions (2007 onwards)
12 Financial reports
Internal presentations
Industry white papers
Company training material20082017
Total no. of interviews: 12 (some respondents were able to comment on multiple phases)
revealed many critical challenges. However, this material had a limited
scope, as it only covered the period 20062017.
3.3 |Data analysis
The data was analyzed from three perspectives. First, we identified
organizational responses. To identify the most significant responses,
frequency of recall was used in combination with probing whyques-
tions that revealed arguments for the importance of initiatives. Second,
in parallel with the identification of organizational responses, a timeline
was composed after each interview. These timelines were aggregated
continuously and complemented with new responses and verification
of existing ones. Third, in order to look for patterns in the portfolios
of the business model and technological innovations, individual
responses were analyzed for categorization into phases.
A core issue in our analysis was how to define an organizational
response. To be regarded as an organizational response, the event
had to fulfill the following criteria:
It had to be related to TI and/or a BMI.
It had to be regarded as a strategic action in the sense that it had to
have a competitive purpose, i.e., either to defend against emerging
threats or to pursue an opportunity (cf. Saebi, Lien, & Foss, 2017).
It had to be an action possible for competitors to perceive in order
to exclude, e.g., internal performance programs.
It had to include a decision that was difficult to reverse, at least
without substantial costs in money or image.
The resulting timeline was discussed and refined through four iter-
ations within the research group. Additional respondents were
interviewed where gaps or inconsistencies in the data appeared. The
timeline was also used to assess relationships between external events
and organizational responses and to check for meansends relation-
ships. We also investigated the relationships between organizational
responses and position and performance outcomes, providing us with
the ability to link antecedents, organizational responses (BMI, TI), and
3.4 |Data validation
Three measures were employed to increase reliability. First, we
exposed all of our main respondents to the critical incident technique
to ensure the completeness of the major events. Second, when com-
bining events or dropping events from the major eventsstatus, it
was always thoroughly discussed within the research team and, where
appropriate, with respondents as well. Third, coding and interpreting
was consistently done by teams of at least two researchers.
To increase validity, preliminary analysis results were discussed
with the respondents, in particular with the industry experts. Both
industry experts had a technical background, deep insights through
both industry and academic affiliations, and more than 20 years of
experience in the industry. Transcripts and field notes were frequently
compared between the researchers. Finally, the research team had a
favorable composition with two researchers who had more than 10
years of industry experience in Scandinavia and within the
telecommunication industry, and one researcher who had more than
10 years of experience in the German telecommunication industry.
This allowed for deep insights into the focal company and a good over-
view of the European competitive landscape and the impact of the
focal company's strategic moves.
In our process of identifying the discontinuities, three phases emerged.
All respondents mentioned the launch of the iPhone as a major game
changer in the industry. Several referred to events as occurring pre
or post the iPhone.Accordingly, this was a major event that without
a doubt could be regarded as the initiation of a new phase. The other
starting point of a new phase was more difficult to demarcate precisely
in time. The market liberalization was clearly disruptive and occurred
from 1991 to 1993, but the respondents who lived through the liber-
alization period concurred that the disruption from liberalization only
impacted TeliaSonera much later. The consensus among respondents
was that the liberalization resulted in a competitive market with rivals
that could not seriously challenge TeliaSonera until 1998. From 1998,
the postliberalization race was ongoing, and all Telcos changed their
competitive strategy and entered the race toward mobile Internet
technology. This disruption gradually continued well into the year
2000. The financial crisis was yet another milestone event; however,
the respondents did not highlight this as sufficiently important. We
hence conclude that the industry was affected by three phases of dis-
continuous change (see also Figure 2):
1. The first phase started with liberalization (from 1991 to 1993),
which terminated the state monopoly and opened the markets
to new competitors. This marketside discontinuity triggered the
need for differentiation and costeffectiveness.
2. The second phase (from 2000) started with a technological disrup-
tion in which the rotationbased (copper) networks were stated as
being replaced by IPbased technology. This technological conver-
gence provided important potential for cost reductions but also
lowered the market entry barriers for overthetop providers,
such as Skype, which now could offer voice services without buy-
ing access to the core network. In this second phase, mobile tele-
phony also started to grow rapidly, initiating a convergence of
fixed and mobile networks of both voice and data services.
3. The third phase started with the introduction of the iPhone (from
2007). The emergence of smartphones led to an increasing migra-
tion of profits to the higher levels of the technology stack, i.e.,
from the operators of the core network to the device manufac-
turers and later to service and app providers. This upward profit
migration continued with the introduction of the Apple App Store,
which became a powerful platform for thirdparty developers
introducing their valueadding services to the market. This discon-
tinuity occurred on the technology side (new device and appcen-
tric operating systems) and on the market side (shift of market
power from the network operator to the device and service pro-
viders). Both effects combined placed the traditional Telcos under
increasing commercial pressure (Henrich, 2014).
Figure 2 provides a detailed overview of the different events that
contributed to the three phases of discontinuity. The blackcolored
discontinuity events are the major milestones signifying phase shifts.
The loss of the auction for the 3G licence represented the culmination
of competitive pressure. At the same time, 3G was also the starting
point for the rapid convergence of fixed and mobile networks of voice
and data services.
Figure 2 also shows the timeline of TeliaSonera's strategic responses.
In addition to position in time, we also classified the responses into
three groups. The first group (white) included responses to liberaliza-
tion and the associated competitive pressure. The second group (light
grey) included responses to the technological convergence. The third
group (dark grey) included responses to the upward profit migration.
This grouping already showed that many responses occurred with a
considerable time lag after the disruption. In the following, we will dis-
cuss the responses in detail.
5.1 |Responses to the liberalization of the industry
(phase 1)
When GSM (Global System for Mobile communication) replaced the
previous NMT (Nordic Mobile Telephony) analogue mobile network
in the Nordic countries in 1992, it made mobile telephony accessible
to the mainstream public. The NMT challenger AB Företagstelefon i
Stockholm,led by entrepreneur Jan Stenbeck, changed its name to
Comviq and started offering GSM subscriptions at lower prices. In
1994, it even introduced a semifree subscription called Comviq
Compis(Comviq Buddyin English). A new entrant, Europolitan
(acquired by Vodafone in 2002), added to the emerging price pressure,
and it also competed with innovative valueadded services. For
instance, Europolitan introduced SMS and voicemail to the Swedish
market. Comviq, on the other hand, introduced the market's first pre
paid card in 1997. In addition, the entrants had a regulatory advantage
against TeliaSonera, as the fees for those entrants to terminate calls in
TeliaSonera's network were lower than the fees for TeliaSonera to ter-
minate calls in its own network.
TeliaSonera's main response to this challenge was to compete
with a premium offer with better coverage and customer support,
while also attempting to minimize churn (customer defection)
(response 1). Respondents reveal that it was also important not to have
margins that were too high, as executives worried it would lead to fur-
ther unfavorable regulations.
With the increasing coverage of rival competing networks, compe-
tition in the home market was intense for TeliaSonera. Another draw-
back came in September 2001 when a regulation enforced number
portability for mobile subscriptions, thus lowering the switching costs
for customers even further. The same year, TeliaSonera acquired all
remaining shares of a mobile portal collaboration project with Oracle,
called Halebop, which was later turned into a freestanding brand for
mobile subscriptions in the lower cost bracket (R6).
After losing market share in Sweden, in 1994 TeliaSonera started
buying stakes in both mobile and Internet operators in other countries
(Baltic States and Eurasia (R2)). Many of the deals were unprofitable or
otherwise unfavorable for the corporate portfolio, leading to an
increasing geographic footprint and a shifting business portfolio.
Over time, mobile telephony started to cannibalize fixed voice rev-
enues. More and more users have cancelled their fixed voice subscrip-
tions with their high monthly fees and rely only on cellular connection.
As of 2010, Swedish consumers have made more voice calls on cell
phones than on fixed lines.
On the fixed network side, the Internet started to become main-
stream in Scandinavia by the mid1990s. The access to this new
generic digital infrastructure led to large changes in the handling and
transmission of information. The impact on business, science, and soci-
ety in general has been enormous. The technology enabled new chan-
nels for business between businesses (B2B), between business and
customers (B2C), and between customers and customers (C2C). Sev-
eral spectacular ventures that exploited the new business models
attracted large amounts of capital in the late 1990s. Some failed; how-
ever, more often it was investor expectations that were unrealistic or
changed faster than the startups could build market positions.
FIGURE 2 Timeline
Consequently, when financial markets became more strained, inves-
tors became unwilling to wait for profits, and the great Internet Bub-
bleburst in 2001, sending shock waves through the global economy.
New ways for individuals and businesses to collect, create, and distrib-
ute information prevailed, and ebusiness has had a steady growth
ever since (much at the same pace as the prebubble predictions).
Several telecom companies and other types of firms became Inter-
net service providers (ISP) to exploit the strong demand for fixed Inter-
net access. TeliaSonera was pressured to allow other operators to use
its infrastructure, particularly the copper access net, because it was
considered a natural monopoly. Nevertheless, in ADSL and fibre tech-
nology, TeliaSonera was successful in incorporating fixed broadband
services into its product portfolio and has had a steady market share
of just below 40% ever since (R3). One early innovation that profited
from this development was HomeRun, a service initiated in October
1999 that primarily allowed business people to connect to the Internet
via WiFi with laptops and handheld devices at hotspots all over the
country (R5). This service is still available today.
A number of freestanding broadband and dialup Internet services
were centralized in 2000 to a freestanding company called eBolaget
(R7). In addition to the subscription services, the associated business
development initiatives, such as portals and ondemand services, were
gathered into the unit, which was given substantial freedom to try new
business models and ways to operate. After approximately two and a
half years, the unit was absorbed by the consumer segment division.
Figure 3 illustrates the categorization of these responses and they
can also be found in the Appendix.
5.2 |Responses to the technological convergence
(phase 2)
Realizing that the company's traditional markets were so mature that
there was little room for growth, TeliaSonera made a number of efforts
to launch new services. From 1997 onwards, many services, such as
video conferencing, virtual call centers, TV over the Internet (R13),
and consumer Internet portals, were developed to generate more rev-
enues from the fixed networks. Many of these services were later
offered as bundles, also called triple play, as they combined fixed
and mobile telephony with Internet Protocol television (IPTV)
offerings (R14).
With multiple networks available all over the world through acqui-
sitions and investments in fiber, TeliaSonera established International
Carrier in 2003 to offer B2B wholesale of telecommunications services
and infrastructure (R10). International Carrier is a tier1 network pro-
vider that, in 2014, became the secondlargest carrier in the world.
The increasing connection of computers to adequate Internet ser-
vices (i.e., the convergence of telecom and IT) propelled growth in all
sectors of the digital industry. Some users started to take advantage
of the IP protocol to connect voice calls with zero marginal cost all over
the globe. However, when TeliaSonera was forced to open the copper
access net for rivals, people could start using IP telephony with their
regular phone, paying only for a local call regardless of where they
called from. Firms such as Glocalnet and others thrived.
Skype launched its easytouse IP telephony PC client in 2003,
with the advantage of simple search and contact organization func-
tions and with free calls between computers all over the world.
Despite inferior quality and unreliability, IP telephony delivered a hard
blow to the telecom business; it took important longdistance reve-
nues away from the fixednetwork operators, substantially lowering
their margins. Analysis firm Ovum estimates that the industry lost US
$386 billion in revenues between 2012 and 2016 due to Skype,
Lync, and other Voice over Internet Protocol (VOIP) services
(Henrich, 2014).
With price pressure on both fixed and mobile voice services, Telia
merged in 2003 after long negotiations with the Finnish exmonopolist
Sonera (R11). CEO Anders Igel was given the difficult task of realizing
the synergies of the two large companies, which involved much inter-
nal friction and massive downsizing. However, the merger also brought
a wider set of international activities into the corporate portfolio due
to Sonera's stakes in the East together with Turkcell. These became
the main area for business growth for some time, primarily by provid-
ing mobile voice services in Eurasia.
On the mobile side, the GSM networks, at the end of the century,
made it possible to transmit digital signals, allowing for the transfer of
data. This function was incorporated in cell phones, referred to as
WAP services. Many of the early WAP phones were rather complex.
Handset competition was primarily based on smaller size and longer
battery life, and Nokia emerged as the market leader. The operators'
prevalent business model was a subsidized handset with lockin sub-
scriptions and complicated price structures. For WAP, TeliaSonera
had an early version of an app store with approximately 80 applica-
tions (R4). It required a special premium subscription called Depart-
ment of the Future,or DoF. App development at this time was a
closed activity controlled by few actors. With low bandwidth, a limited
range of apps, and low user friendliness, WAP's success was limited.
However, the basic digital infrastructure and the idea of freestanding
downloadable applications had been established.
The first technology that was called broadbandon mobile
devices was 3G, which was launched in 2002 (R9). With a download
speed up to 40 times faster than GSM, it became possible to use the
Web, to download music, and to use social media apps on the phone.
3G also led to a large increase in broadband connectivity for
computers, both laptops and stationary PCs, as several operators
aggressively promoted it as a fixed connection substitute. The net-
works became quite congested after a few years due to the large
FIGURE 3 Portfolio of strategic responses to liberalization (1st phase)
number of simultaneous connections, making them sometimes
barely accessible.
The technology shifts to 3G did not start well for TeliaSonera.
When the 3G spectrum licences were allocated in 2000, the regulator
awarded them to Europolitan, Hi3G, Orange, and Tele2; and
TeliaSonera was left without a licence. This was somewhat of a shock
to the executives at the incumbent former monopolist, whose leader-
ship in telecom had been taken for granted. It was a real awakening.
A shock almost. And it led to a noticeable change in attitudes. And we
had to realize that we were just a company like all the others,the head
of corporate strategy reported. Fortunately, entrepreneur Jan
Stenbeck approached TeliaSonera and offered to share the licence he
acquired for Netcom. They built a successful joint network together.
In order to handle the new mobile Internet capabilities and profit
from them, TeliaSonera invested heavily in achieving an early solid
position. The strategic logic was to acquire a critical mass of users so
that other businesses would benefit from buying traffic from them
through TeliaSonera rather than attracting it on their own (Paulsen,
2000). To attract and redirect users, the portal business model was
borrowed from the fixed Internet. The most notable initiative was
Speedy Tomato, a heavily marketed WAP portal in which SEK2 billion
were invested (R8). Speedy Tomato was the panEuropean portal
brand corresponding to Halebop in Sweden. The spectacular launch
and subsequent lack of success made this initiative a wellknown fail-
ure in the Internet community and beyond. A later attempt, Surf Port
was launched in 2005 and, being more mature, had greater success
(R12). This was the first mobile portal to be propelled in all
TeliaSonera's main markets: Scandinavia, the Baltic States, and Spain.
The technology enabled users to access both the regular WWW
and WAP, which, up until that point, had been practically two
separate Internets.
TeliaSonera had a different strategy for the launch of 4G: rather
than being passive, it took the initiative and was the first operator in
the world to open 4G networks, which happened simultaneously in
Norway (in collaboration with Huawei) and in Sweden (in collaboration
with Ericsson) (R18). Promising 100 MB/sec for mobile users and 1
GB/sec for stationary users as the top possible speeds, 4G offered
substantial improvements in performance. As the 4G systems only pro-
vided a packetbased infrastructure, all their voice communication was
made through IP telephony. The Swedish licences were awarded to
TeliaSonera, Hi3G, Intel Capital Cooperation, Tele2, and Telenor in
2008; the first consumer usable networks became accessible in
December 2009. Figure 4 illustrates the categorization of these
responses and they can also be found in the Appendix.
5.3 |Responses to the upward profit migration
(phase 3)
The launch of Apple's iPhone in 2007 marked the start of the conve-
nient use of the Internet on handheld devices. Userfriendly browsers,
services, and apps became available. The first version arrived in Swe-
den in 2008: the iPhone 3G. This completely changed the device
industry by successfully combining elegant design, a userfriendly
interface, and a wellfunctioning touch screen (which companies such
as Neonode, Palm, and Nokia had previously attempted). From 2008,
the Apple app store allowed users to customize their device by
downloading apps that offered a wide range of functions. Apple's
app store, which was first only accessible to developers, quickly accu-
mulated hundreds of thousands of applications, many harboring a cre-
ativity that had never been seen before.
First, Google and later Microsoft, launched their own smartphone
operating systems, with Google's Android emerging as the global
leader (but not yet in Sweden, where iOS is still the leading platform).
Smartphones and their larger cousin, tablets, changed the power bal-
ance in the industry, taking the control and revenue of services out
of the hands of operators while leaving them with the responsibility
for network connectivity, which was rapidly becoming commoditized
and giving diminishing returns.
TeliaSonera had negotiated exclusive rights for iPhone 3G in
Sweden (R16) and was selling the iPhone at prices ranging between
SEK8,000 and 21,500 depending on the model, lockin time, and sub-
scription (Lindkvist, 2014). The director of corporate strategy
commented: We were quick to sign for exclusivity, because we could
see what the users wanted. It was mostly for tactical reasons; in addition
to sales, we sought to strengthen the brand and lower the churn.How-
ever, the combination of a lack of their own highvalue services and
the increasing demand for capitalexpenditurehungry bandwidth
extensions caused operators to face a widening revenue gap
(Markendahl, Mäkitalo, Werding, & Mölleryd, 2009). For instance,
the profit of TeliaSonera's broadband division decreased by an aver-
age of 1 billion SEK per year after 2010. The combined economic
pressure on TeliaSonera's Nordic businesses led to major costcutting
initiatives in 2007, 2009, and 2014 (R15). And in 2008, the access
network was finally implemented in a separate infrastructure
company, Scanova, because the regulator demanded access
equality (R17).
While the former CEO of TeliaSonera, Anders Igel, was rather
reluctant to expand the company at the expense of profitability, his
successor Lars Nyberg had a stronger growth mandate from the board.
Anticipating the major transformation toward digital business and a
merger in the use of fixed and mobile Internet, TeliaSonera initiated
negotiations and the development of a combined technology and busi-
ness development training program with KTH Professional Education
in 2006. As of 2007, the program has brought key internal people from
FIGURE 4 Portfolio of strategic responses to the technological
convergence (1st phase)
all over the world to Stockholm for intense training. This has supported
a muchneeded competence and culture shift toward stronger busi-
ness and customer orientation and away from the old institutional
thinking of the monopoly days.
The long stretch of costsaving efforts and rationalizations contin-
ued. In 2009, twothirds of the company's original headcount had been
eliminated. Unions criticized top management for trying to polish
financial indicators with the hope of attracting a buyer, rather than
developing promising midto longterm business development pro-
grams and strategies (Göteborgs Posten, 2008).
Another driver of capacity demand was the emerging streaming
services, most notably Spotify (in 2006) and Netflix (in Sweden in
2012). Instead of locally downloading and storing data, streaming
now involves customers downloading content for single consumption.
When Netflix launched in Sweden, TeliaSonera's fixed network traffic
almost doubled overnight. This surge also spilled over onto the mobile
side, where many customers started to stream video on their handheld
terminals, using this second screenas a first screen.
When Lars Nyberg replaced Anders Igel as TeliaSonera's CEO,
there was the hope of rekindling growth in Scandinavia. However,
the constant cost cutting continued and was joined by corporate
focus areas such as quality of serviceand worldclass networks.
These are typical defensive differentiators at the end of a technol-
ogy cycle. The resulting sentiment was unfavorable for innovation
and the taking of risks. Some improvement came gradually and
were further supported by Johan Dennelind's leadership, which
began in 2013.
TeliaSonera changed its business development strategy in the
streaming context by partnering with leading actors rather than build-
ing proprietary solutions from scratch. In 2010, it launched a partner-
ship with Spotify (R19) and with HBO Nordic in 2012 (R21). These
music and video services were bundled with broadband subscriptions
to differentiate them from lowprice competitors while also giving
partners access to a larger customer base. TeliaSonera deepened its
commitment to Spotify in 2015 by buying a 1.4% share of the com-
pany. The chief technology officer (CTO) in Europe explained: We
were early to form these partnerships in Sweden. It was a proactive way
to get a foot in the media consumption trend. We also saw that the mobile
was becoming the epicentre for the individual.
An innovation initiative called Purple pluswas launched in
2015 to further support innovation and growth, and even more inno-
vation training initiatives were offered to managers (R23). Additional
efforts were made at the end of 2015 and 2016 to stimulate innova-
tion. The companywide initiative New Generation Telco was an
attempt to foster a positive sense of the future while supporting a
constructive culture with a focus on growth following cost cutting
and reorganization (R24). In 2016, a separate unit, X division,was
formed in which entrepreneurial initiatives could be hosted and could
benefit from a supportive environment and startupappropriate
management practices (R26). Recent new services include Sense, a
subscription and hardware package that enables cars built after
2001 to connect to the Internet. In addition to giving the car a WiFi
network, it also equips it with a number of useful control and support
functions (R25). Again, the initiative is built upon partnerships with
other companies, rather than doing everything inhouse. Figure 5
illustrates the categorization of these responses and they can also
be found in the Appendix.
This study aimed to contribute to the BMI literature along three axes:
(1) to uncover patterns in the interplay between BMI and TI over time;
(2) to identify antecedents and outcomes of BMI (with or without TI);
and (3) to investigate the relationship between antecedents, organiza-
tional response (TI/BMI), and performance outcomes.
It should first be noted that a longitudinal case study cannot con-
clusively prove relationships. The aim, therefore, was to identify pat-
terns and to compare these with the claims of existing theory and
thus contribute to the development of new theory. The first notewor-
thy finding was that our focal firm was able to produce a high number
(n= 26) of organizational responses, which contrasts with the inertia
predicted by theory (March, 1991; Tushman & O'Reilly, 1996). In addi-
tion, the majority of them were combinations of TI and BMI, which
supports propositions that it is particularly important to study the
interplay between the two and may also be particularly interesting
for practiceas highlighted in the two most recent literature analyses
on business model research (Foss & Saebi, 2017; Wirtz et al., 2016).
Another interesting finding is revealed in Figure 6. By coloring the
areas in which the majority of organizational responses occurred, the
appetite for risk taking, approximated by the degree of radicalness in
exploration, appears to follow a Ushape over time. In phase 1 (liberal-
ization), the responses are close to home,i.e., mostly exploitative or,
to a low degree, incrementally explorative. Phase 2 (technological dis-
ruption) demonstrates an almost opposite trend to phase 1, and
TeliaSonera aggressively ventures into the most challenging double
ambidexterity quadrant, where both the business model and the core
technology are radically new. The results were mixed. For example,
the early app store was ahead of its time, as it was a pioneer of the
smartphone in all dimensions. But the lack of openness toward third
party developers, the high price, and the lack of a userfriendly inter-
face led to commercial failure. Other responses were temporary
successes, such as the IPTV business. For a short period, TeliaSonera
was Sweden's largest video rental agency, but it eventually lost out
FIGURE 5 Portfolio of strategic responses to upward profit migration
to Netflix and HBO. In phase 3 (upward profit migration), the adventur-
ism seems to decline, and the responses are either purely BMIs or
responses that build on partnering.
We attribute this Ushape tentatively to a learning pattern.
Respondents confirmed that, in particular, the technological disruption
in the second phase, combined with the appearance of strong new
entrants, led to a feeling of radical challenges requiring radical
responses. These organizational responses had mixed success, which
may be partly why the third phase organizational responses exhibit a
more measured strategic behavior. This indication of learning gives rise
to the hope that organizational adaptation, when challenged by exter-
nal disruptions, can be learned (March, 1991; Miles, Snow, Meyer, &
Coleman, 1978; Teece, 2010).
In addition, in this third phase, the case firm became increasingly
willing to open up its innovation activities, with partnering being the
preferred openinnovation instrument. During the first phase,
TeliaSonera typically designed and developed everything inhouse,
often in close collaboration with equipment manufacturers such as
Ericsson and Nokia. The loss of the 3G licence auction and the harsh
terms dictated by Apple when the iPhone was introduced could in ret-
rospect be considered as more or less forced partnerships. However,
both of these partnerships turned out to be successful, and they
thereby challenged the existing tradition of inhouse value creation.
Consequently, the third phase includes a number of partnerships, with
Spotify and HBO being the most notable ones. This pattern suggests
that the BMI practices shifted the focus of competitive strategy from
singlesource supplyside competitive advantage to combined
demandand supplyside competitive advantage, as suggested by
Massa et al. (2016).
This relates to the second research aim, where evidence suggests
that BMI is dependent on external pressure from market and/or tech-
nology disruptions. In addition, the nature of BMI practices seems to
be informed by learnings from earlier experiences. Here it is also note-
worthy that aTelco would see itself as a marketdriven company, oper-
ating technology developed by vendors such as Ericsson and Nokia.
This is interesting because, in the mature stage, our focal firm has
stopped its exploratory technology responses, preferring exploration
through BMI. For technologydriven companies, this might be
the opposite.
In the analysis, the outcome dimension is dominated by survival
and can be compared to other European Telcos' good financial
health. We were not able to draw conclusions about causality in
relation to TI/BMI and performance outcomes. However, the portfo-
lio of organizational responses is collectively comprehensive and
powerful in terms of securing a strong position in the industry. Some
individual responses, such as investing in fibretothehome and
partnering with streaming service providers (Spotify, HBO) has been
judged both internally and externally to be strong drivers of firm
Regarding the third research aim, evidence shows that organiza-
tional responses often relied on combinations of BMI/TI. Surviving dis-
continuous developments with the maintenance of firm performance
therefore appears to require mastering of both TI and BMI. This paired
ability can be conceptualized and studied with the double ambidexter-
ity matrix.This matrix can potentially support practitioners by intro-
ducing nuances into the planning, executing, and ultimately profit
making of TI and BMI.
The learning effects, which in TeliaSonera led to the Ushaped
level of radicalness of organizational response over time, may also
result in increased proficiency of double ambidexterity. In this case,
the focal firm would be able to exercise double ambidexterity in a more
mature way in the future, which could allow it to employ even more
radical and sophisticated responses, thereby further strengthening its
competitiveness (Achtenhagen et al., 2013; Foss & Saebi, 2017).
The case also has some implications for BMI research. First, a com-
mon (popular) understanding is that BMI is a phenomenon with very
short temporal distribution. In our case, we argue that BMI, like all
innovation processes, is a diffusion process that takes time to imple-
ment. In some cases, such as the launch of the iPhone, it is almost
instantaneous; however, in other cases, it is stretched out over several
years. Accordingly, to investigate BMI, we need to apply longitudinal
approaches and include the contextual setting.
As a third key finding, the study corroborates the important role of
trialanderror learning and the maintenance of portfolios of business
models (Foss & Saebi, 2017; Rohrbeck, Konnertz, & Knab, 2013). This
confirms the point made by Sabatier, Mangematin, and Rousselle
(2010) that firms may need to operate several different business
models in parallel. Even though some of TeliaSonera's BMIs and TIs
FIGURE 6 Nature of responses in the three phases [Colour figure can be viewed at]
failed, the portfolio of double ambidexterity responses collectively
ensured survival and new sources of revenue.
Despite interesting findings, the use of a single context and
umbrella case limits the case's ability to provide normative guidelines.
However, the refined perspective on double ambidexterity can hope-
fully contribute to further research that provides an even better under-
standing of how firms may systematically adapt to environmental
For further research, two research questions appear to be particu-
larly essential: (1) How can double ambidexterity be learned? and (2)
How can firms match disruptions and discontinuous changes of differ-
ent types with effective response patterns?
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Matti Kaulio is Associate Professor at the Department of Industrial
Economics and Management at KTH Royal Institute of Technology
in Stockholm, Sweden. His research focuses on Leadership and
Innovation Management.
Kent Thorén holds a PhD from, and is affiliated to the Department
of Industrial Economics and Management at KTH Royal Institute of
Technology in Stockholm, Sweden. He has an extensive experi-
ence from professional education and consulting in industry.
René Rohrbeck is Professor of Strategy at the Aarhus School of
Business and Social Sciences, Aarhus University, Denmark. His
research focuses two main areas: business model change and stra-
tegic foresight.
How to cite this article: Kaulio M, Thorén K, Rohrbeck R.
Double ambidexterity: How a Telco incumbent used business
model and technology innovations to successfully respond to
three major disruptions. Creat Innov Manag. 2017;26:339352.
Discontinuities Response
No. Name Business model change
Technology change
Liberalization 1 GSM premium Exploitation Exploitation
Liberalization 2 International
Exploitation Exploitation
Liberalization 3 ADSL Exploitation Exploration
Infrastructure upgrade and new
hardware, such as modems,
4 Early App Store Exploration
VP: Customize handset
VCr: Secure compatibility,
providing download
platform, back office
VCa: Subscription, pay
per use
Apps and app store enable
customization of handheld
Liberalization 5 HomeRun Exploration
VP: Remote access
VCr: WLAN and partnerships
VCa: Pay per use, weekly
WiFi in new context. Backbone
connection. Security
Liberalization 6 Halebop Exploration
VP: Lowprice mobile
VCa: Prepaid
Liberalization 7 Ebolaget Exploitation Exploitation
8 Speedy Tomato Exploration
VP: Online mobile portal,
access wide range of
VCr: Integration of services,
UX design, capabilities
VCa: Advertising
WABbased portal with
services through IP
9 Mobile broadband (3G) Exploration
VCr: Partnering for new
network, incl. base
stations and backbone
New base stations, phones,
and standards
10 International Carrier Exploration
VP: Global wholesale of IP
VCr: Separate organization
with global network
VCa: Selling IT capacity in
bulk B2B
Liberalization 11 TeliaSonera merger Exploitation Exploitation
12 Surf Port Exploration
VP: Online mobile portal Exploration
Integration of WAP and WWW
13 IPTV Exploration
VP: Streaming movies on
VCr: Media rights, storage,
VCa: Rental revenue model
New technology is needed at
Telia and for the customer
14 Triple play Exploration
VP: Simplification (bundling,
package price, one invoice)
VCr: Integrate systems
15 Cost cutting Exploitation Exploitation
Upward profit
16 iPhone exclusivity Exploration
VP: First smartphone
VCr: Partnering for
Upward profit
17 Scanova Exploitation Exploitation
18 4G pioneering Exploitation VCr: New base stations and
New base stations, phones,
and standards
Upward profit
19 Spotify partnership Exploration
VP: Music streaming
VCr: Partnering instead of
building own solution
VCa: Drug dealerbusiness
Discontinuities Response
No. Name Business model change
Technology change
20 Fibretohome Exploration
VCa: Customer pays
installation cost
Changes in the distribution
net work, new modems
Upward profit
21 HBO partnership Exploration
VP: Video streaming
VCr: Partnering instead of
building own solution
VCa: Drug dealerbusiness
Upward profit
22 Charging for data Exploration
VP: Free calls/SMS, pay for
data use
VCa: New pricing model
Upward profit
23 Purple+ Exploitation Exploitation
Upward profit
24 New generation
Exploitation Exploitation
Upward profit
25 Telia Sense Exploration
CP: Connect the car
CRr: IoTbased service
VCa: Installation price plus
Integration in car systems
Upward profit
26 X division Exploitation Exploitation
Change in Business Model: VP = value proposition, VCr = value creation VCa = value capture
... Ambidexterityan overview of solutions to explore and exploit Organizational ambidexterity, which refers to an organization's ability to simultaneously explore new possibilities for the future and exploit the current model, is a well-researched topic Duncan, 1976;March, 1991;Kaulio et al., 2017;O'Reilly and Tushman, 2013;Tushman and O'Reilly, 1996;Sok et al., 2022). The problem is framed by March (1991, p. 105): "The basic problem confronting an organization is to engage in sufficient exploitation to ensure its current viability and, at the same time devote enough energy to exploration to ensure future viability." ...
... Rather, structural and cultural elements seemed to work as motivators for their exploration of new digital technologies (Ramilo and Embi, 2014;Susskind and Susskind, 2015). This shows that established law firms are experiencing challenges in solving the ambidexterity problem (Kaulio et al., 2017) that digitalization has accelerated (Reis et al., 2018). We argue that there are distinct factors (relating to both structure and culture) that can explain their lack of exploration and the difference in digital transformation between established law firms and established architectural firms. ...
... Contextual solutions are particularly difficult, given the professional culture, promotion and billing practices, and structural solutions are not aligned with the industrial context and its regulations. Hence, it seems that it is hard for established law firms to achieve ambidexterity as a way to respond to disruption, as suggested by previous research (Kaulio et al., 2017). It is our hope that this will encourage further research on practical prerequisites for other industries to successfully move towards ambidextrous solutions. ...
Purpose This paper aims to understand what prevents established law firms from embracing digitalization and discusses barriers to solving the emerging ambidexterity problem. Law firms have been organized in the same way for decades. However, digital opportunities are emerging and new competitors are challenging established firms. This presents established law firms with an ambidexterity problem: How can law firms simultaneously uphold their successful way of working while entering a new world of digitalization, artificial intelligence (AI) and machine learning? Design/methodology/approach Previous research suggests that law firms are slow in digital transformation, compared to other Professional Service Firms (PSFs). In this paper, the authors explore why this happens. Interview data from representatives in law firms are complemented with data from architects as well as legal industry data and field notes. The data have been analyzed to spot patterns and emerging themes. Findings The authors find that established law firms face structural and cultural barriers to applying ambidextrous solutions. When comparing law firms with architecture firms, the authors see that while established architecture firms have combined digital exploration with ongoing exploitation, established law firms have focused on exploitation, leaving digital exploration to new legal tech firms. This difference can be attributed to industry context and professional culture. Originality/value This paper shows that both structural and contextual ambidexterity is a challenge for established law firms. This paper contributes to the understanding of barriers to embrace digital technology, and supports practitioners in efforts to remove these barriers.
... In this passage, therefore, our research emphasizes, in line with Kraus et al. (2020), the role of crises as events stimulating innovation not only in the short term but also in the long period. Specifically, the proposed model reveals how the digital BMI enables two forms of innovation in longterm business visions, which aims at totally creating new BMs (Kaulio et al., 2017) rather than acting on existing ones. These two forms of innovation are radical changes in businesses conduction and explorations of new opportunities. ...
... Furthermore, BMI as a response to crisis can be used to consolidate and exploit current businesses with the aim of exploring future opportunities (Schmitt et al., 2010;Kraus et al., 2020). Specifically, our findings unify and extend to crisis times the study perspectives of Verhoeven and Johnson (2017), Kaulio et al. (2017), and Fasnacht (2020) on the long-term strategic potential of BMI. In fact, during the crisis it is possible to consider and strengthen diversified businesses with respect to the principal business, whose value mechanisms can be integrated thanks to a digital ecosystem, giving birth to new business opportunities. ...
... On the other hand, digital BMI enables the consolidation and expansion of diversified businesses during the crisis, especially augmenting the positive role of explorative strategies in markets, products, and services domains to cope with the crisis (Archibugi et al., 2013;Osiyevskyy and Dewald, 2018). In particular, we discover that the value mechanisms of diversified businesses, started and/or reinforced during the crisis, can be interconnected thanks to digital technologies with the aim of seizing new business opportunities (Verhoeven and Johnson, 2017;Kaulio et al., 2017;Fasnacht, 2020;Li, 2020). ...
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This paper investigates the phenomenon of business models innovation (BMI) empowered by digital technologies and activated as a response to Covid-19 crisis. In fact, during the crisis numerous digital redesigns of businesses occurred to pursue both continuity and competitive advantage. Among these, the food retail sector has undergone under the pressure of the crisis intense digital changes, which, however, have not yet been investigated under the theoretical lens of BMI. To fill this gap, the paper analyzes the digital actions taken during the pandemic crisis by two large food retailers, namely Walmart and Carrefour. Covering a wide temporal interval of the pandemic evolution and reviewing multiple geographical markets, the authors interpreted the grocer's digital responses to the crisis in terms of innovation in value creation and capture mechanisms. As a result, three phases of digital BMI have been reconstructed, each characterized by specific mechanisms of value creation and capture experienced by the two grocers during the pandemic. Leveraging these findings, the paper proposes a model capable of defining how digital BMI takes place in response to crises. Results broaden theoretical knowledge and practical suggestions on digital BMI in terms of enabling factors, actionable value mechanisms, and future business opportunities.
... Chesbrough and Rosenbloom's [12] study of Xerox's spin-offs provided evidence that incumbents' dominant logic operates against exploratory behavior, though structural separation helps to avoid such pitfalls. This study had its roots in the interaction between radical technological innovation and BMI (e.g., Tongur and Engwall [13]; Kaulio et al. [14]), showing that technological incompatibilities favor structural separation. Similarly, Kuhlmann et al. [15] found that separation is fruitful with paradigmatic changes, such as moving towards circular BMs. ...
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The digital era and mounting sustainability pressures have reinforced incumbents’ need to respond to radical innovation through business model innovation. Despite advancements in the literature on incumbent business model innovation, there are still open debates regarding strategies for achieving systematic innovation and poor integration between the literature on managing multiple business models and the strategic management of business model innovation. To address these gaps, we investigated three Brazilian incumbents that developed systematic business model innovation processes and analyzed their evolution. We followed a multiple case study methodology, deploying system dynamics as an analytical lens. Our findings showed that the evolution of innovation departments from business model renewal to exploration is based on a systemic tension between solving the core problems of the business and creating openness to innovation, innovation capabilities, and resources. By assigning the innovation departments a vital role in the renewed business model and exploring synergies to manage multiple business models, the companies create a “buffer” to sustain exploratory business model innovation. We suggest that the strategy for conducting business model renewal matters, especially when the renewal is transformative, aiming to shape the future. We contribute to incumbent business model innovation theory by showing the system dynamics behind the evolution from business model renewal to exploration and by connecting the management of parallel business models to the strategic management of business model innovation.
... A longitudinal study finds that during the transition phase of a business model, the firm involved both incremental evolution and radical transformation of products (Spieth et al., 2014). Innovation ambidexterity is particularly associated with medium-and high-tech industries where incremental improvements are important and the firms compete in new technologies where radical innovations are also needed at the same time (Kaulio et al., 2017). ...
Purpose-Despite the importance of SMEs in Malaysia's economy, the likelihood of their failure is relatively high. From a strategic standpoint, a lack of appropriate competitive advantage is the primary cause of this scenario. In this direction, the purpose of this research is to configure a sustainable growth model of SMEs, in which strategic innovation plays a role in bridging the gap between desired growth and managerial-level competencies. Design/Methodology/Approach-Following a pragmatic research paradigm, the study has employed a sequential mixed method design. The quantitative data have been collected from 52 Malaysian SCORE-enlisted manufacturing SMEs, while the qualitative data were collected through semi-structured interviews conducted with seven SME decision-makers. The required analysis performed via SmartPLS3.0 and NVivo10. Alongside, an effective triangulation strategy has implemented in the context of explaining causation among selected variables. Findings-The statistical outcomes reveal that crowdfunding and opportunity recognition are positively related to sustainable growth of SMEs while exploitative and explorative innovation also mediate the associations between those competencies and desired growth. The qualitative results supports the obtained model and demonstrates varying effects on expected business growth with regard to several concerns. Research limitations/Implications-There is a need for more discussion about both the process and outcomes of this pilot study. Conducting a pilot study does not guarantee success in the main study, but it does increase the likelihood. Practical implications-The study's findings can improve businesses' competitiveness and differentiation in an uncertain business environment. In reality, the study provides owners or managers of SMEs with insight on how to grow their business in a sustainable fashion based on various managerial competencies and innovation initiatives. Social implications-These findings may have a positive social change impact by encouraging more innovation strategies in SMEs, which can enhance sustainability-oriented business performance and support a healthier economic system. The idea could also serve as the cornerstone for SMEs to accomplish Sustainable Development Goals (SDGs). Originality/Value-Little research has been undertaken on sustainable growth of Malaysian SMEs. This study addresses this knowledge gap. It provides a holistic growth theory that explains the sustainability-oriented competitive advantage of a firm. Keywords-Crowdfunding, Exploitative innovation, Explorative innovation, Sustainable growth
... A major stream of literature has elaborated on the concept of structural ambidexterity (Gupta et al. 2006;Tushman 2008, 2013;Kaulio et al. 2017;Jin and Shin 2020;Carraresi and Bröring 2021). The concept structurally aligns traditional (i.e., exploitative) and disruptive (i.e., explorative) business models with separate business units but integrates them into the existing management hierarchy (see Fig. 2a). ...
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Today companies are facing challenges to survive due to substantial transformations induced by digital technologies, ever-changing consumer demands, and environmental uncertainties. Thus, companies need to be innovative to sustain competitive advantages. Scholars and practitioners have recognized the potential of disruptive innovations as a key factor for a company’s competitiveness. Yet, such innovations often challenge established companies due to the tensions between their traditional business model and the newly emerging business model required for disruptive change. The theory of ambidextrous organizations has offered a variety of solutions to tackle these barriers referring to the alignment of exploration and exploitation within an organization’s structure. Current literature, however, faces inconsistencies regarding how this can be achieved. With this study, we therefore aim to provide a comprehensive understanding of how ambidextrous structures enable incumbent companies to reduce the barriers to disruptive business models. On the basis of a systematic literature review, we analyze and compare potential structures and their characteristics proposed in the ambidexterity literature. Drawing on our review, we conceptualize a framework linking the different organizational structures to the barriers associated with disruptive business models. Our framework identifies a range of seven structures which can resolve the barriers and thus support managers in their structural decisions on how to align exploration and exploitation to pave the way for disruptive business models.
... Scholars research biomedicine and find that sustainable business model innovation has a driving and incentivizing effect on technology innovation [45]. In addition, scholars focus on the mutual evolution mechanism of both innovations [46][47][48]. ...
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The transformation of old and new technologies, the normalized crisis situation, and global economic integration blur industrial boundaries and cause the business pattern to fluctuate and become unsustainable, especially when considering the impact of the COVID-19 pandemic. This study focuses on crisis situations and combines the types of technology innovation (introduction, socialization, and differentiation) and sustainable business model innovation (efficiency, novelty, and co-benefit innovations) to theoretically analyze the dynamic impact of technology innovation on different types of sustainable business model innovations. Using a multi-case comparative analysis method, typical enterprises are selected as the sample cases. This study discusses the influences of different technology innovation schemes on sustainable business model innovation in different crisis situations. Enterprises should consider introducing technology for rapid value updates to maintain an efficient business model in an urgent production factor crisis, search for valuable and scarce technical components or introduce other entities to facilitate technical cooperation and form a novel business model in a market environment crisis, and use big data, artificial intelligence, and other technologies to create co-benefit business model innovation in a business ethics crisis. The conclusion guides enterprises and provides a framework for the optimal technical scheme under the corresponding crisis.
Leaders in organizations and society must balance conflicting priorities, such as whether to protect the population from Covid or keep the economy humming. Ambidexterity in actions may be facilitated by a paradoxical mindset that can effectively consider opposite viewpoints without losing balance. This research further tested if meditation was effective in facilitating the experience of oneness which in turn developed a paradoxical mindset and individual ambidexterity. Based on a convenience sample survey of 143 individuals, the data supported (p < 0.01) the proposition that meditation helped develop a sense of oneness, which in turn supported a paradoxical mindset and individual ambidexterity. East vs. West culture of the respondent also had a strong direct effect on ambidexterity (p < 0.01). Western culture was associated with higher ambidexterity. This research has strong implications for developing individual ambidexterity in leaders through practices of oneness such as meditation.KeywordsIndividual ambidexterityParadoxical mindsetOnenessMeditationConsciousness development
Product platform development has become a norm in practice for manufacturing companies, enabling firms to develop and produce products more efficiently, shortening the time needed to develop new derivatives, and reducing unit procurement costs. However, the required organizational activities for product platform development with different architectural knowledge need further exploration. We conduct a case study of an automotive manufacturer in China to explore how firms engage in organizational learning processes when implementing product platforms with different architectural knowledge. This study illustrates four organizational learning approaches rooted in exploration and exploitation, yields four configurations between architectural knowledge and the required organizational learning approaches and reveals that each of these architecture knowledge‐organizational learning configurations produces different organizational performance.
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Over the last 15 years, business model innovation (BMI) has gained an increasing amount of attention in management research and among practitioners. The emerging BMI literature addresses an important phenomenon but lacks theoretical underpinning, and empirical inquiry is not cumulative. Thus, a concerted research effort seems warranted. Accordingly, we take stock of the extant literature on BMI. We identify and analyze 150 peer-reviewed scholarly articles on BMI published between 2000 and 2015. We provide the first comprehensive systematic review of the BMI literature, include a critical assessment of these research efforts, and offer suggestions for future research. We argue that the literature faces problems with respect to construct clarity and has gaps with respect to the identification of antecedent conditions, contingencies, and outcomes. We identify important avenues for future research and show how the complexity theory, innovation, and other streams of literature can help overcome many of the gaps in the BMI literature.
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This article examines five common misunderstandings about case-study research: (1) Theoretical knowledge is more valuable than practical knowledge; (2) One cannot generalize from a single case, therefore the single case study cannot contribute to scientific development; (3) The case study is most useful for generating hypotheses, while other methods are more suitable for hypotheses testing and theory building; (4) The case study contains a bias toward verification; and (5) It is often difficult to summarize specific case studies. The article explains and corrects these misunderstandings one by one and concludes with the Kuhnian insight that a scientific discipline without a large number of thoroughly executed case studies is a discipline without systematic production of exemplars, and that a discipline without exemplars is an ineffective one. Social science may be strengthened by the execution of more good case studies.
Ever since the Internet boom of the mid-1990s, firms have been experimenting with new ways of doing business and achieving their goals, which has led to a branching of the scholarly literature on business models. Three interpretations of the meaning and function of “business models” have emerged from the management literature: (1) business models as attributes of real firms, (2) business models as cognitive/linguistic schemas, and (3) business models as formal conceptual representations of how a business functions. Relatedly, a provocative debate about the relationship between business models and strategy has fascinated many scholars. We offer a critical review of this now vast business model literature with the goal of organizing the literature and achieving greater understanding of the larger picture in this increasingly important research area. In addition to complementing and extending prior reviews, we also aim at a second and more important contribution: We aim at identifying the reasons behind the apparent lack of agreement in the interpretation of business models, and the relationship between business models and strategy. Whether strategy scholars consider business model research a new field may be due to the fact that the business model perspective may be challenging the assumptions of traditional theories of value creation and capture by focusing on value creation on the demand side and supply side, rather than focusing on value creation on the supply side only as these theories have done. We conclude by discussing how the business model perspective can contribute to research in different fields, offering future research directions.
- This paper describes the process of inducting theory using case studies from specifying the research questions to reaching closure. Some features of the process, such as problem definition and construct validation, are similar to hypothesis-testing research. Others, such as within-case analysis and replication logic, are unique to the inductive, case-oriented process. Overall, the process described here is highly iterative and tightly linked to data. This research approach is especially appropriate in new topic areas. The resultant theory is often novel, testable, and empirically valid. Finally, framebreaking insights, the tests of good theory (e.g., parsimony, logical coherence), and convincing grounding in the evidence are the key criteria for evaluating this type of research.
Research Methods for Operations Management, second edition, is a toolkit of research approaches primarily for advanced students and beginner researchers, but also a reference book for any researcher in OM. Many students begin their career in research limited by the one or few approaches taken by their department. The concise, accessible overviews found here equip them with an understanding of a variety of methods and how to use them, enabling students to tailor their research project to their own strengths and goals. The more seasoned researcher will find comprehensive descriptions and analyses on a wide variety of research approaches. This updated and enhanced edition responds to the latest developments in OM, including the growing prominence of services and production of intangible products, and the increasing use of secondary data and of mixed approaches. Alternative research approaches are included and explored to help with the early planning of research. This edition also includes expanded literature review and analysis to guide students towards the next steps in their reading, and more detailed step-by-step advice to tie theory with the researcher’s own practice. Including contributions from an impressive range of the field’s leading thinkers in OM research, this is a guide that no-one embarking on an OM research project should be without. Christer Karlsson is Professor of Innovation and Operations Management and Academic Director for the Competitiveness platform at Copenhagen Business School, Denmark. He is also Professor at the European Institute for Advanced Studies in Management (EIASM) in Brussels, Belgium.
Selecting the appropriate method for a given research question is an essential skill for organizational researchers. High-quality research involves a good fit between the methods used and the nature of the contribution to the literature. This article describes a contingency framework that relates the state of prior theory and research to the design of a current research project, paying particular attention to when to mix qualitative and quantitative data. Whereas contributions to mature literatures are best made with quantitative methods, and contribute to nascent literature’s call for qualitative data, intermediate research is best served by a mix of both approaches.