The business model captures the fundamental linkages in a venture on economic, strategic, and process levels. Recent research suggests that firms’ differentiation, competitiveness, and innovation oftentimes resides in their business models. Current business model research is hindered by multiple definitions and frameworks which lack a solid theoretical grounding. We use evolutionary theory and organizational routines to ground the concept. Specifically, this research deals with the relationship between business model innovation and performance.

To attribute performance differences to business model innovation, we focus on one industry, NY wineries. This industry is ideal because one, wine is a differentiated product with significant a price range. Second, product and process innovation has a minimal impact. Differentiation is achieved by innovation in the business models. However, there are pressures to conform to norms and a desire for legitimacy. Too innovative approaches can have negative performance implications. We therefore propose that model innovation relates to performance in non-linear ways.