The dark side of business model innovation

Abstract

Existing literature has tended to focus on the positive benefits and outcomes of business model innovation (BMI), despite emerging evidence that BMI can also have a dark side, with negative consequences. We systematically review the existing BMI literature, articulating it around three clusters of negative consequences: those affecting the firm as an entity; those affecting the firm's stakeholders; and those that are specific or context-dependent. In a similar fashion, we identify the driving factors and circumstances leading to these negative consequences and group them into four clusters: (1) managerial choices and processes, and three underpinning circumstances that influence such choices or processes; (2) trade-offs between the new and current business models; (3) managers’ ability to manage BMI; and (4) context within which BMI is situated. The paper provides the first attempt to gather prior research on the phenomenon and thereby develop a conceptual understanding of the dark side of BMI. Furthermore, by proposing a model that explains how the dark side of BMI may occur, we inform ongoing debates on the theorization of the consequences that may derive from BMI and how these can be managed to support firms’ innovative growth, arguing how the disruptive innovation literature can only partially explain the phenomenon. Second, our model provides important foundations to further distil the complex link between BMI and performance. Finally, we suggest a number of future research avenues, accounting for different dimensions of the phenomenon.