The article raises the question of developing innovation in developing and transforming economies. It is noted that such economies have become, as it were, experiments in the field of innovation and business.

The authors emphasize that the trend of the BRICS and Eastern European countries to transform their economies into an innovative economy has stimulated the desire for entrepreneurship and experimentation with new business models. At the same time, the authors write that, in a sense, the business model describes the structure of the value chain that is required to create and disseminate a value proposition, as well as the additional assets required for this process.

In their paper, the authors note that transition economies are at the forefront of business model innovation. For example, apps like Alipay, created by Alibaba in China, have revolutionized online retail and can be used for all types of transactions that are hampered by a lack of trust between the parties involved. In addition, business model innovation is helping companies compete successfully on the global stage, as evidenced, for example, by the emergence of Huawei as a global leader in telecommunications networks and the decline of incumbents such as Lucent and Ericsson.

The authors argue that while the conventional wisdom of academics is that local firms tend to use imitation, where the main goal is to fully replicate a product, strategy, trait, or behavior in order to imitate global industry leaders, they dispute this with their co-evolutionary point of view. With regard to an innovative business model in a transforming economy, firms in a transforming economy employ a combination of borrowing, adaptation, and creation.

Research points to several characteristics of the firm that are important in driving innovation in business models. One of them is research orientation. The authors show that Chinese researchers found in a sample of Chinese firms that this orientation increases the firm's ability to recognize opportunities and engage in entrepreneurial activities. An even more compelling finding from a study of Chinese platform enterprises is that entrepreneurial orientation is a prerequisite for innovation in business models. Likewise, the market orientation of firms is also important for business model innovation. The authors emphasize the importance that for Chinese firms, both flexible and proactive market orientation stimulate business model innovation, but their effect depends on how flexible firms are in coordinating their resources: flexibility enhances the effect of flexible market orientation, but weakens the effect proactive orientation.

Thus, to summarize, this article makes it possible to understand that at the present stage of economic development, companies in developing countries have unique business models that are most effective in comparison with world leaders from developed countries. Moreover, these companies are now beginning to focus on their own innovations. All of the above is especially relevant for the PRC, examples of Chinese companies are given throughout the article.

Source: Oli Mihalache and Henk Volberda «Business Model Innovation in Transforming Economies: A Co-evolutionary Perspective for a Global and Digital World» Management and Organization Review 17:2, May 2021 doi: 10.1017/mor.2021.14 pp. 202–225. https://www.cambridge.org/core