During the nascent stages of venture creation and development, founders must identify, implement, and frequently modify a repeatable system for creating, delivering, and capturing value for and from stakeholders. In other words, entrepreneurs must build a viable business model. Extant research shows business models often progress through a series of adaptations before a solution emerges where the venture’s strategic direction, resources, and capabilities are able to reliably satisfy customer needs, respond to external pressures, generate sufficient revenue to cover operating expenses, and produce profit for shareholders. For example, studies have revealed that business model designs and evolutionary processes may be context-specific, e.g., among electric vehicle manufacturers (Bohnsack, Pinkse, & Kolk, 2014) or in advanced materials university spinouts (Lubik & Garnsey, 2016), and implicate cognitive processes such as sensemaking, anticipatory and reactive planning, and learning-by-doing as mechanisms by which business model changes are enacted (Nailer & Buttriss, 2020; Velu, 2017; Demil & Lecocq, 2010). Yet, despite increased research attention to business model evolution in recent years, relatively little is known about what information or signals entrepreneurs attend to when deciding to modify a proposed or existing business model. Further, less is known about how cultural differences influence how information is filtered and weighted in business model decisions.
The proposed qualitative research project aims to bridge this gap. To investigate the research question – what triggers an entrepreneur to modify a venture’s business model – data will be collected from and about entrepreneurs and their ventures via semi-structured interviews and archival sources. The impact of cultural differences will be explored by engaging with entrepreneurs in the United States, Spain, and Portugal. Using a convenience sampling method, the research team will leverage entrepreneurship fostering organizations (EFOs; incubators, accelerators, and venture development programs) prevalent in Portuguese (e.g., 28 Successful Accelerators and Incubators in Portugal (failory.com)), Spanish (e.g., Top Startup Accelerators, Incubators and VCs in Spain (incubatorlist.com)), and Los Angeles (e.g., Updated: The Most Comprehensive Guide to the Los Angeles Startup Ecosystem Ever Created (400+ Resources) (fi.co)) ecosystems as well as relationships with LMU’s Spanish sister institution (Emprendimiento. Universidad Loyola (uloyola.es)) to recruit participants. The study’s findings can advance our understanding of the relationship between entrepreneurs’ cognitive processes and business model implementation, thereby elucidating the microfoundations of firm-level strategy execution (Foss & Pederson, 2016; Ployhart & Hale, 2014).
Relevance to MBA Students
MBA students stand to benefit considerably by studying entrepreneurs’ decisions to modify business models. First, students will gain exposure to how firms differentially respond to environmental pressures (e.g., pandemic protocols, economic conditions, labor markets) and how these pressures vary across national borders and within countries. Second, students gain familiarity with business model designs – patterns of value creation, delivery, capture – as they learn to document how and what changes a model has undergone. Knowledge of these patterns (e.g., Gassman, Frankenberger, & Csik, 2014) empowers students to design, create, or innovate business models within existing firms and new ventures. Last, business models function as gestalts and therefore encourage students to think holistically about the enterprise in addition to interdependencies among its components, thereby achieving a primary learning goal of strategic management education.
Relevance to Learning Outcomes
The proposed project addresses the following learning outcomes:
• Integrate concepts and skills from multiple business areas when analyzing business situations.
- Business models vary in their complexity from a simple financial model to an integrated strategic model (Morris et al., 2013; Morris et al., 2005). Analysis requires use of skills obtained from disciplines including entrepreneurship, marketing, operations, and finance.
• Utilize critical thinking skills in analyzing business situations.
- Tracking business model evolution requires analysis (breaking down a whole into components) and synthesis (creating wholes from components).
• Determine the effect of different cultures in business situations.
- Collecting data across Spain and Portugal can illustrate how culture operates as a cognitive lens that can bias what and how entrepreneurs process information.
• Evaluate how economic and trade issues impact business situations.
- Understand which and how macroenvironmental forces influence business decisions.
• Express knowledge and ideas through written communication.
- Reporting and presenting findings in professional settings.
Relevance to LMU and CBA Missions and Strategic Plans
Directly contributes to LMU’s 2021-26 Strategic Plan “Integrative and Interdisciplinary Thinking” spotlight initiative in applying social science research methods to study business topics. Also helps to advance two priorities under Goal 8 of the United Nations’ Sustainable Development Goals (SDGs) – achieving higher levels of productivity through innovation and promoting policies encouraging the growth and development of micro- and small-and-medium enterprises (SMEs).