The role of differentiation, integration, and governance in developing innovative business models

How can established firms that seek to innovate their business models organize best to achieve high degrees of novelty in the resulting business model designs? Rooted in corporate entrepreneurship literature we develop and test a model that explains why the degree of novelty of business model designs depends on the extent of alignment between differentiation, integration and governance mechanisms. Results from a unique hand-collected sample of 141 business model innovation initiatives in large established companies support the theoretical hypotheses. We discuss the implications of our findings for research on corporate entrepreneurship and business model innovation.