An analysis of business models: Firm characteristics, innovation and performance

This article empirically examines the business models of small, entrepreneurial firms. We use configuration analysis to classify common business models and to identify innovative business models. Data for 124 firms is used in our analysis with a 55.4% response rate. Several implications are apparent from the research.First,weidentify firm characteristics, such as the understanding a firm develops of their customers and firm's willing to experiment, associated with business model innovation. Second, the methodology employed in this research provides a means to objectively identify standard industry business models and innovation. Third, we highlight the importance of evaluating an appropriate level of activities/routines to assess business models. Fourth, the work is theoretically based using evolutionary theory as a guide. Finally, the research shows that business model innovation is important for improving performance in a small business environment.