The fit between technological innovation and business model design for firm growth: evidence from China

How does technological innovation fit with business model design to jointly impact firm growth? Given the increasingly salient role of business model, extant literature provides little answer to this question. This study builds a theoretical model based on technological innovation literature, business ecosystem theory, and business model literature to investigate this issue. This study finds that exploitative innovation and exploratory innovation fit with different business model designs to promote firm growth. Six hypotheses are proposed and examined by a database from 176 Chinese firms. This research finds that exploitative innovation has a negative whereas exploratory innovation has a positive effect on firm growth. More importantly, we find that efficiency-centered business model design enhances the negative effect of exploitative innovation and weakens the positive effect of exploratory innovation. We also find that novelty-centered business model design weakens the negative effect of exploitative innovation. This research contributes to both technological innovation and business model design literature.