Business model replication and renewal

The purpose of this paper is to investigate how environmental dynamism influences the two basic types of business model innovation, namely business model replication and business model renewal, and the role that centralization and formalization play in this relationship. Using a data sample of 477 firms from a large-scale cross-industry survey, this study uses a hierarchical regression analysis to empirically examine how centralization and formalization partially mediate the relationship between environmental dynamism and the two types of business model innovation. The findings demonstrate that environmental dynamism significantly increases a firm’s level of business model renewal, but not the level of business model replication. Moreover, the relationship between environmental dynamism and renewal is mediated by both centralization and formalization independently. This study theoretically and empirically contributes to the literature by advancing understanding of how organizational design may influence a firm’s propensity to engage in business model innovation and by providing evidence that the relevance and relative importance of antecedents varies between business model replication and renewal.