Toward a Process Framework of Business Model Innovation in the Global Context: Strategic Entrepreneurship and Dynamic Capability of Medium-Sized MNE

Primarily due to the large gaps in economic and institutional contexts between the developed and emerging economies, effective business models in the two distinctive contexts tend to differ. In particular, the business model innovation (BMI) at the subsidiary level plays an important role in the success of multinational enterprises (MNE) from the developed economies operating in the emerging economies as top-down ventures. While some studies claim that direct involvement of headquarters (HQ) in the operations of subsidiaries is critical, surprisingly little is known about how HQ specifically enable BMI at the subsidiary level, especially for medium-sized MNE. Adopting the method of comparative and longitudinal case study, we tracked the BMI processes of six Danish medium-sized MNE operating in China. The emergent framework indicates that entrepreneurial aspiration and flexibility at the HQ level are two primary enablers of BMI (in terms of new value creation and new value capture) at the subsidiary level via dynamic capability (in terms of sensing and seizing new opportunities) as the underlying mechanism. Further, we also found that BMI can contribute to the initial enablers in a feedback loop. Hence, we contribute to the literatures of BMI and dynamic capability by enriching both research streams, especially the critical link between BMI and dynamic capability in the context of international strategic entrepreneurship.