Antecedents and Consequences of Business Model Simulation: An Empirical Study with Leadership Support as Moderator

Abstract

Business model simulation is a computer-based model for understanding business processes and firm dynamics. Simulating a business model in a laboratory helps one to understand the operational and strategic aspects of firms quickly, reliably and cost-effectively, enabling them to develop new financial and operational strategies. Not many studies have focused on antecedents of the business model simulation and their consequences. Therefore, the aim of this study is to determine the antecedents and consequences of business model simulation and to further analyse the moderating effects of leadership support. A theoretical model is proposed that takes inputs from the literature and resource-based view and dynamic capability theories. The partial least squares–structural equation modelling technique tested the model by analysing the quantified responses of 327 respondents. This study finds that business model simulation is significantly impacted by firms’ competitive intensity, innovative activities and technology strategy. The study also demonstrates that leadership support moderates the relationship between business model simulation and actual business practices. The study contributes that business model simulation, which is affected by salient predictors, can impact firm performance when mediated through actual business process and practices and with the moderating effects of leadership support.