Abstract

When considering the popularity of the term “business model” to popular press outlets and business consultants, the term itself has remained a difficult and at times perplexing concept to management researchers. Yet recent interest has lately occurred in defining the characteristics and role of the business model, to include theorizing potential implications of studying business models within new venture firms (George & Bock, 2010).

We contend that “demand side” influences (identified as customer product/service signals to the firm subsequent to new venture launch) are key drivers in shaping how the initial opportunity and resulting business model is subsequently adapted and implemented (Priem, Li, & Carr, 2011; Ye, Priem, & Alshwar, in press). Thus we suggest that business model innovation is the result of “opportunity shaping”, which we define as those signals external to the new venture that shape how the entrepreneurial firm adapts their initial opportunity subsequent to new venture launch. Additionally, we theorize and test whether existing organizational structural dimensions, namely the degree of formalization and centralization, help or hinder the ability for the entrepreneurial team to successfully engage in business model innovation, subsequent to those opportunity shaping signals they receive from their customers.

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