A firm’s business model has been acknowledged as a source of competitive advantage and its main locus of value creation (Amit and Zott, 2001; Casadesus-Masanell and Ricart, 2010), making it an important object of scrutiny in the entrepreneurship and strategic management literature (George and Bock, 2011). Amit and Zott (2001) propose the firm and industry boundary-spanning business model construct as the appropriate unit of analysis for research on value creation and describe four interconnected business model design themes – novelty, lock-in, complementarities and efficiency – as the main value drivers for entrepreneurial firms. Empirical investigations within the business model framework of Amit and Zott (2001) so far are limited to static research approaches, calling for novel research on this pressing issue (Morris et al., 2005; Zott et al. 2011).

In response, this paper examines business models dynamically, thus covering the full extent of business models’ time-varying effects. We investigate performance implications of short- and long-term effects of novelty-centered, and efficiency-centered business model designs. This paper therefore aims at developing a fuller theoretical picture of how entrepreneurial firms can use their business model to foster firm performance.