The nature of business model innovation in start-up companies

This study aims to conceptually clarify the nature of business model innovation (BMI) in start-ups and its difference to established companies. Based on the conducted literature review, we propose a taxonomy of BMI that differentiates between four clusters where innovation can take place: 1) transformation of an established business model; 2) parallel business model; 3) pivot in a start-up business model; and 4) greenfield business model. We show that the differences in the nature of BMI in entrepreneurial and established firms are largely attributed to the distinct barriers faced by the two types of firms throughout their BMI. To establish what constitutes a HMI in entrepreneurial companies we suggest a comprehensive scale of business model innovativeness for gauging the extent of start-up BMI across three dimensions (breadth, depth, and reach). Research propositions are derived to underpin the future theoretical and empirical work on the topic.