Managing high growth and innovationthe role of business models and dynamic capabilities

Abstract

In today’s business environment which is characterized by its high environmental dynamism driven by technological disruptions and the disruptive growth of innovative business models, firms face the important challenge of continuous adaptation to internal and external change. On the one hand, firms with innovative business models that achieve high growth face the challenge of adapting their organizational practices to the internal and external environments that are in constant flux. On the other hand, incumbent firms face the challenge of adjusting to the changing market conditions, caused by fast growing new entrants, in order to protect their competitive position. While this phenomenon has attracted significant research attention in recent years, there still remain important gaps in our understanding of how firms and top managers deal with the critical questions of high growth and innovation in the pursuit of successful adaptation. To address this omission, we conduct two single in-depth case studies and one multiple-case study. Throughout these empirical studies, we examine: (1) how the top management team of an incumbent firms combines the dynamic managerial capabilities of its top managers in order to adapt its firm’s business models to protect its competitive position; (2) how a scale-up company creates and enacts dynamic capabilities that enables it to sustain high growth over prolonged periods of time; and (3) how scale-ups design scalable business models that enable them to create and capture value over prolonged periods of high growth. We build our theorizing on three related research topics that have gained momentum in recent years: Business Models, Dynamic Capabilities, and High-Growth Firms, often referred to as Scale-ups. Our insights have important implications for our understanding of how firms and top managers deal with the important, yet complex challenges of sustaining high growth and the challenge of protecting their firm’s competitive position against its fast-growing competitors.