Entrepreneurial Aspiration and Flexibility of Small and Medium-Sized Firms: How Headquarters Facilitate Business Model Innovation at the Subsidiary Level

Primarily due to the large gaps in economic and institutional contexts between
the developed and emerging markets, business model innovation (BMI) at the
subsidiary level plays an important role for the success of small and medium
sized firms (SMEs) from the developed markets operating in the emerging
markets as top-down venture. While some studies claim that the direct
involvement of headquarters (HQ) of SMEs in the activities of their subsidiaries
is essential, surprisingly little is known about how HQ specifically facilitates BMI
at the subsidiary level, especially in the context of top-down venture. Adopting
the method of comparative and longitudinal case study, we tracked the BMI
process of six SMEs from Denmark operating in China. The emergent framework indicates that entrepreneurial aspiration and flexibility at the HQ level 2 are two primary facilitators of BMI at the subsidiary level via the mechanisms of
commitment and cooperation. We also found that BMI performance would
influence the two facilitators in a feedback loop. Hence, we can contribute to the
literatures on international entrepreneurship and strategic entrepreneurship by
integrating the two previously separated research streams via their shared
theme of accelerated learning. In particular, this study helps solve the puzzle
concerning fast and successful international venture.
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