A Different Magnitude of SME Business Model Innovation: A Lesson From The Pandemic

Abstract

The COVID-19 pandemic has significantly affected SME businesses and forced them to respond to the situation. Business model innovation (BMI) is considered as a suitable choice of innovation mode for the sustainability of SMEs. The change in the business model (BM) in SMEs varies among organizations. Therefore, this study attempts to further explain the changes in BM for SMEs during the pandemic. Through this research, the understanding of BMI is expected to increase substantially, especially in the context of SMEs. The study performed a qualitative approach through multiple case studies to analyse the information and obtain factual findings to understand this phenomenon. Eight cases with different backgrounds were submitted and interviewed through semi-structured online interviews to obtain information about the BMI in SMEs. The findings show that although SMEs intervene through BM changes, the changes adjust to SMEs’ internal and external situations. In other cases, BM changes only focus on several sub-value systems (value capture, value creation, or value proposition). In certain other cases, SMEs were forced to radically change their value systems due to the extreme impact of the pandemic on their businesses and environment. This study conceptualizes BM changes in SMEs, as classified into type 1, type 2, type 3, and type 4, arranged based on the level of complexity (x-axis) and novelty of change (y-axis). The model can be justified through eight cases in this study. This study contributes to the scientific development of BM/BMI and justifies changes in BM empirically. For practitioners, this study clearly defines the direction of changing BMs in extreme situation.

Keywords: BMI, multiple case studies, different magnitude, pandemic, SMEs