Disentangling the complex longitudinal relationships between business model innovation and firm performance

Despite the increasing interest in business model innovation (BMI), the literature lacks solid empirical evidence about its impact over time. We address this gap by taking an element-based perspective, differentiating three core dimensions: value creation, value proposition, and value capture. We collected cross-industry data based on more than 35,000 press releases, capturing over 2,300 events of BMI from 60 German publicly traded corporations , and regressing them against firm performance measures. Our findings show that BMI has a positive, albeit lagged effect on firm performance. We further find substitutive as well as complementary effects of the different business model dimensions. Moreover, concentrated BMI activities outperform BMI activities dispersed across different business model dimensions when it comes to subsequent firm performance. Our findings contribute to the literature by stimulating a deeper reflection on the role of resource allocation, highlighting the need to carefully plan BMI activities at the level of strategic management.