Abstract
This article ties in directly with recently intensified interest in business models in international business (IB), using the energy transition as empirical context to explore their relevance in firm internationalization. The global energy transition presents a challenge for almost all industries, but some face specific difficulties particularly important from an IB perspective. We study a set of European firms that used to operate in a highly regulated context with (partial) state ownership, until government-directed market liberalization started to allow further competition and internationalization. Existing firms were prompted to adapt their business models to these changes, with new ventures entering the market to reap opportunities with novel energy-related technologies and business models. Linking insights from strategic management to the IB literature, we conceptualize business model-related specific advantages (BMSAs), and explore the role of BMSAs in the internationalization of the firms in our sample. We also uncover barriers to BMSA recombination in (potential) host countries, consider BMSA location-boundedness, and discuss implications for firms’ international expansion by presenting a new framework. Consequences for the energy transition and the actors already involved and (in)directly confronted with it are explicated, while outlining promising areas for further research, building on the insights and limitations of our study.
Resume
This article is directly related to a recently intensified interest in business models (BM) in international business (IB), using the energy transition as an empirical context to explore their relevance in the internationalization of companies. The global energy transition presents a challenge for almost all industries, but some face specific challenges that are particularly important from an IB perspective. We study a set of European companies that operated in a highly regulated environment with (partial) state participation, until government-led market liberalization begins to allow for more competition and internationalization. Existing companies have had to adapt their BMs to these changes, with new companies entering the market to seize opportunities with new technologies and energy-related BMs. By linking strategic management knowledge to IB literature, we conceptualize the specific advantages of BMs (ASBMs) and explore the role of ASBMs in the internationalization of the companies in our sample. We also uncover the barriers to recombination of ASBMs in (potential) host countries, consider the delineation of the location of ASBMs and discuss the implications for international business expansion by presenting a new framework. Based on the perspectives and limitations of our study, the consequences for the energy transition and the actors already involved and (in) directly confronted with it are explained, while highlighting promising areas for further research.
Resumen
This article is directly related to recently intensified interest in business models (BMs) in international business (IBs), using the energy transition as an empirical context to explore its relevance in the internationalization of companies. . The global energy transition presents a challenge for almost all industries, but some face specific difficulties that are particularly important from an international business perspective. We studied a set of European companies that used to operate in a highly regulated context with (partial) state ownership, until government-led market liberalization began to allow greater competition and internationalization. Existing companies were encouraged to adapt their business models to these challenges, with new companies entering the market to seize opportunities with novel energy-related technologies and business models. Linking the contributions of strategic management to the international business literature, we conceptualize the specific advantages related to business models, and we explore the role of specific advantages related to business models in the internationalization of companies in our sample. We also find barriers to the recombination of specific advantages related to business models in (potential) host countries, consider the location limits of specific advantages related to business models, and discuss the implications for international expansion of companies by present a new framework. The consequences for the energy transition and the actors already involved and (in) directly confronted with it are explained, while promising areas for future research are described, based on the contributions and limitations of our study.
INTRODUCTION
The global energy transition presents a challenge for almost all industries, but some face specific difficulties. Highly relevant from both an international business (IB) and an energy transition perspective are firms in the electricity sector. These firms operate in a context in which regulation and (partial) state ownership used to prevail until policy changes started to drive the opening of markets and increasing cross-border competition (Kolk, Lindeque, & Van den Buuse, 2014). At the same time, electricity firms have dealt with novel technologies that rely particularly on renewable energy sources, energy efficiency, and the more active involvement of a range of actors, including customers, which require novel business models (Hancher & Winters, 2017). In this vein, the 2018 World Energy Outlook of the International Energy Agency focused specifically on electricity, noted to be “at the forefront of the clean-energy transitions”, with the sector being described by its Executive Director as “witnessing its most dramatic transformation since its birth more than a century ago” (IEA, 2018). Seen from an IB perspective, the current stage of the energy transition is characterized by an uneven degree of internationalization among electricity firms, with ‘traditional’ business models co-existing with and being challenged by novel ones relying on new technologies, against the background of liberalization policies coupled with persisting national approaches (Geels et al., 2016).
The international expansion of firms in the electricity sector represents a promising phenomenon for advancing internationalization theory through a business model perspective. Indeed, it is characterized by established firms and new entrants with a variety of business models, which have to take their internationalization decisions in a context of increasingly, albeit heterogeneous, open markets, and rising, though fragmented, diffusion of novel technologies (Dahlmann, Kolk, & Lindeque, 2017). In line with the phenomenon-based research approach described by Doh (2015, p. 609), we conceptualized this “contemporary, real-world” phenomenon by “identif[ying] a theory or set of theories that can inform [this] reality” (cf. Buckley, Doh, & Benischke, 2017), and then proceeded with theorizing to advance IB research. We posit that the assessment of firm-specific advantages (FSAs) inherent to a firm’s business model, and their location-boundedness, are critical for internationalization decisions. The business model has been mentioned in previous IB literature as key for realizing a competitive advantage across borders (e.g., Rugman & Verbeke, 2004). In fact, Verbeke, Coeurderoy and Matt (2018) recently indicated that FSAs may also come in the form of business models. However, thus far, the role and potential of the business model concept in relation to FSAs and firm internationalization have not been studied in detail (cf. Tallman, Luo, & Buckley, 2018), let alone in the context of a grand challenge such as the energy transition.
A business model lens allows us to complement the existing resource-based interpretation of FSAs in IB (Narula, Asmussen, Chi, & Kundu, 2019; Rugman & Verbeke, 2003; Verbeke & Asmussen, 2016), given that business models represent configurations of “resources in use” (Demil, Lecocq, Ricart, & Zott, 2015, pp. 2–3). What we conceptualize in this paper as business model-related specific advantage (BMSA) is tied to the configuration of value creation and capture components from a boundary-spanning, systemic perspective proposed by strategic management research (Massa, Tucci, & Afuah, 2017; Zott & Amit, 2010). We posit that the degree to which the individual components of the business model are location-bound or non-location bound – i.e., linked to local idiosyncrasies, local knowledge, or local innovation activities – renders the entire BMSA configuration on a continuum either as (more) location-bound or as (more) non-location bound. In addition, we propose that firms need to ‘recombine’ (Grøgaard, Colman, & Stensaker, 2019) their home country BMSA in host countries in order to thrive internationally. The barriers to recombination faced by a firm (e.g., related to regulation, infrastructure, or the market) can also be on a continuum from higher to lower. We suggest that the combination of BMSA and recombination barriers influences the internationalization of firms. Thus, to improve our understanding of whether and how firms enter foreign markets, it is important to assess (1) whether a firm’s BMSA is non-location or location-bound, and (2) whether the recombination barriers in a (potential) host country are high or low.1
Relating IB to business model research, as explicated further in the next section, this article thus aims to shed light on the role that BMSAs play in the internationalization of firms. We subsequently explore this empirically in the context of the energy transition, with a specific focus on 14 firms covering all the core types of activities in the European electricity sector. These firms are analyzed through an explorative qualitative research design, relying on interviews to uncover BMSAs, their location-boundedness across the components of the firms’ business model configuration, barriers to BMSA recombination in (potential) host countries, and implications for their international expansion. In doing so, we make several contributions to IB research. First, by proposing the BMSA construct as a new kind of FSA, we are able to bring rich insights from strategic management research on business models, where this concept is more established, into the IB field to develop earlier concise yet highly relevant references to the business model as an FSA (e.g., Hennart, 2009; Verbeke et al., 2018). In this way, the article also responds to recent calls for more research on business models, expressed inter alia at the Academy of International Business 2020 virtual conference. In addition, our work uncovers the existence of barriers in the host country hindering BMSA recombination, thus also enriching that literature. We furthermore present the implications of BMSA location-boundedness and BMSA host-country recombination barriers for a firm’s international expansion through a new framework. Our final section discusses implications for IB scholars as well as for those involved in multinationals’ strategy and policymaking.
Theoretical Background
Location-Bound and Non-location-Bound FSAs
Stemming from a resource-based view of internalization theory, the “Rugman school” (Narula et al., 2019) posits that successful international expansion depends on firm-specific advantages, i.e., the “firm’s unique knowledge resource-bundles in which it had invested as the foundation of survival, value creation and growth” (Verbeke & Kano, 2016, p. 84). Rugman and Verbeke (2001, 2003, 2004) have distinguished non-location-bound FSAs and location-bound FSAs. Non-location-bound FSAs – such as final products, intermediate products or key routines – create value in multiple markets, and can thus be easily transferred and profitably exploited across countries (Rugman & Verbeke, 2001; Verbeke, 2009), enabling a rapid and efficient international expansion (Grøgaard et al., 2019). By being deployed in multiple markets, non-location-bound FSAs allow the firm to benefit from economies of scale and scope (Rugman & Verbeke, 2001). Location-bound FSAs – such as local knowledge, local reputation or local best-practices – “benefit the company only in a particular location” (Rugman & Verbeke, 2001, p. 241). The value of a firm’s FSAs may thus be limited to a country or region and cannot be capitalized in other markets (Grøgaard et al., 2019). Location-bound and non-location-bound FSAs are often developed from the inception of the firm, imprinted by founders, and are continuously shaped by external circumstances. The FSA portfolio of a multinational enterprise (MNE) can include both location- and non-location-bound FSAs. Not least, this diverse “geographic ‘reach’ or fungibility of FSAs” (Narula et al., 2019, p. 1233) reflects the pressures for global integration and local responsiveness that MNEs experience with different degrees of intensity (Grøgaard et al., 2019).
In keeping with the compound nature of a firm’s FSAs, the concept of “FSA recombination” has been brought forward by the new internalization theory (e.g., Grøgaard et al., 2019), reflecting growing attention among IB scholars. FSA recombination indicates the need for an MNE to enhance the value of its non-location-bound FSAs by combining and “melding” (Pitelis & Verbeke, 2007) them with location-specific assets in foreign markets (Coviello, Kano, & Liesch, 2017). The ability to bundle FSAs with location-specific assets in the host country requires entrepreneurial capabilities as well as slack resources. It has been defined as a highest-order FSA and the “raison d’être of an MNE” (Narula, 2014, p. 10). While an MNE can sometimes be internationally competitive by ‘simply’ transferring and exploiting its non-location-bound FSAs (Verbeke & Kano, 2016), they are important but not sufficient for a successful foreign expansion to a host country in many other cases, in which access to complementary local assets is paramount (Narula et al., 2019).
Hence, to be able to compete in a host country, a firm with non-location-bound FSAs may still need to acquire new location-bound strengths that fulfill local needs and requirements (Grøgaard et al., 2019; Rugman & Verbeke, 2001). Securing these local resources may be critical for a firm to gain access to the country-specific advantages (CSAs) of the foreign market and thus ensure competitiveness. For example, being connected to a local distribution network is key to reaching an attractive customer segment in the targeted host country (Rugman, Verbeke, & Nguyen, 2011). By effectively bundling non-location-bound FSAs with host country-specific assets, a firm can create new location-bound FSAs (Grøgaard et al., 2019; Narula & Verbeke, 2015; Rugman et al., 2011; Verbeke, 2009). FSA recombination may be realized by directly obtaining the assets needed or by acquiring or partnering with local actors that own or control such assets (Hennart, 2009; Narula et al., 2019; Rugman et al., 2011; Verbeke & Kano, 2016).
Having said that, it should be noted that the firms included in this body of work are typically large (MNEs), rather than existing smaller ones (SMEs) that are (about to start) internationalizing. While SMEs face specific challenges and additional liabilities in internationalization – largely due to limited resources and market knowledge (e.g., Hollender, Zapkau, & Schwens, 2017; Knight & Liesch, 2016; Lu & Beamish, 2001; Pisani, Caldart, & Hopma, 2017), compared to (large) MNEs – some of the conceptualizations and findings may also apply to smaller firms, especially in the empirical setting of this study. Earlier research has, inter alia, shown that SMEs, like MNEs, benefit from experiential knowledge, i.e., FSAs (Love, Roper, & Zhou, 2016), and they have also been found to benefit from CSAs (Ciravegna, Lopez, & Kundu, 2014; Lee & Marvel, 2009). Moreover, incremental, initially smaller-scale, expansion to neighboring countries that are relatively familiar in cultural and economic terms is easier to achieve for SMEs (e.g., Laufs & Schwens, 2014; Lee & Marvel, 2009); the activities undertaken in the electricity sector, within the EU policy framework, fit these criteria.
Linking FSAs to Business Models
In line with the resource-based view (RBV) of the firm, FSAs have traditionally been conceptualized as proprietary assets and resource characteristics that a firm needs to own in order to have a competitive advantage over other firms and thus “engage in foreign activities” (Narula et al., 2019, p. 1234). Interestingly, several prominent IB scholars have hinted at FSAs as also encompassing the whole business model of a firm. More specifically, Rugman and Verbeke (2004, p. 10) had, early on, already indicated that MNEs such as Nike and Walmart could “outperform[..] other competitors” precisely because of their specific business model. Verbeke et al. (2018) mentioned business models in their listing of non-location-bound FSAs, while also noting a scarcity of insight into these components in IB research. Furthermore, when arguing that “knowledge is the main FSA that MNEs seek to exploit in foreign markets”, Hennart (2009, p. 1437) demonstrated the use of a very broad definition of knowledge that includes “the business models”.
Despite these more generic references, attention to business models in the IB literature has been scarce. To the authors’ knowledge, only Tallman et al. (2018) have made a first conceptual attempt to connect the IB literature to (non-IB) business model research. Their reflections on the relationship between FSAs and business models are, however, limited and different from the authors mentioned earlier in this paragraph. Tallman et al. (2018, p. 529) seem to conceptualize FSAs and business models as two separate constructs, arguing that FSAs “should be coupled with a business model”. Furthermore, there are two initial empirical studies, both exploratory cases, on a business model in relation to international expansion: Cavallo, Ghezzi and Guzmán (2019) on a Columbian agritech company, and Dunford, Palmer and Benveniste (2010) on ING Direct. Both articles, however, take the perspective of an individual firm with a business model that needs to change/evolve during an internationalization process, without considering the variety in firms’ business models and related advantages. In addition, they display a limited integration of IB and business model literature, thus not fully exploiting its potential. Although still not reflected in publications, the business model concept has recently gained increasingly attention in IB scholars’ debates, epitomized by sessions on the business model as a missing link in internationalization theory, and on how the business model concept can contribute to international business, held at the Academy of International Business 2020 virtual conference.
In this paper, we build on the perspectives taken by Hennart, Rugman, and Verbeke et al. with the aim of shedding more light on the FSA–business model relationship, while also leveraging the strategic management literature, where the business model concept has been more extensively investigated. This body of work has most often defined the business model concept as “the rationale of how an organization creates, delivers and captures value” (Osterwalder & Pigneur, 2010, p. 14). It describes the business model as a firm’s underlying dominant logic and strategic choice, and hence an architecture framework to earn profit (Casadesus-Masanell & Ricart, 2010; Magretta, 2002; Morris, Schindehutte & Allen, 2005; Prahalad & Bettis, 1986; Teece, 2010). Scholars who have confronted the work on business models and the RBV (e.g., Demil et al., 2015; Teece, 2018), have pointed at their complementarity. According to Demil et al. (2015, p. 3), for example, the business model perspective is in line with a ‘traditional’ resource-based view of competitive advantage, because “the business model emphasizes configurations of resources in use (Penrose, 1959)” [emphasis in original].
In linking business models to FSAs, we follow existing frameworks (Chesbrough & Rosenbloom, 2002; Demil & Lecocq, 2010; Morris et al., 2005; Osterwalder & Pigneur, 2010) and distinguish three business model components: the value proposition, the value network, and the revenue–cost model (Bohnsack, Pinkse & Kolk, 2014). The value proposition is a core component of each business model and describes the value created for the customer; it connects the firms’ activities with the demand side. The value network describes the company’s approach to value creation and position with regard to its relationships with external actors, including, in particular, suppliers, distributors, customers, and competitors. The revenue–cost model involves the cost structure and monetization mode of the firm’s offerings (Baden-Fuller & Haefliger, 2013; Chesbrough & Rosenbloom, 2002). The smart configuration of the three components enables a firm to create more value and gain an advantage over competitors (Casadesus-Masanell & Ricart, 2010).
On Business Model-Related Specific Advantages (BMSAs)
When linked to FSAs, the business model concept adds two core features: the higher-order configurational character and the link to external actors. First, BMSAs seem particularly pertinent when examining firms aiming to internationalize during technology-intensive changes, of which the energy transition is an example, given that the shift from fossil-fuel-based electricity generation to renewables depends on new technologies for the production, distribution, and consumption of electricity. While extant IB literature has indicated technology as a core FSA (e.g., Grøgaard et al., 2019), Massa et al. (2017, p. 91) state that “innovative technologies and ideas, per se, have no economic value, but only latent value. It is the function of the business model to realize part of that value by connecting these technologies and ideas to the realization of economic output in markets”. An MNE thus needs to combine a new technology with a suitable business model, that is, to set up a configuration of activities that create and capture value and that allow the MNE to deploy and successfully exploit the technology across borders. Each activity of the configuration can be attributed to a component of the business model and, in doing so, allows us to identify which specific business model component(s) – within the whole rationale of how the firm creates, delivers, and captures value – are non-location bound and can be transferred internationally, and which one(s) are location-bound and might need modification in host countries in order for the firm to be competitive.
With regard to the latter, the value of a business model perspective to FSAs is also tied to the integration of actors external to the focal firm that critically contribute to its international competitiveness. Value co-creation with an array of external actors within and across countries has become increasingly important for internationalizing firms, also thanks to novel technologies (Coviello et al., 2017). This is acknowledged in recent internationalization literature which, according to Hennart (2009), has gradually shifted from being “MNE-centric” towards increasing attention to ecosystems and networks (e.g., Coviello et al., 2017; Narula & Verbeke, 2015; Vahlne & Johanson, 2017). Networked value creation and capture is also often at the basis of FSA recombination, which entails the collaboration with external partners that own or control key location-specific assets (Narula & Verbeke, 2015; Verbeke & Kano, 2016). The business model concept, with its “integrated, holistic and balanced consideration of value creation and capture” (Demil et al., 2015, p. 5), which encompasses the focal firm and its network of suppliers, customers, and partners (Zott & Amit, 2010), allows us to apprehend the increasingly central role played by external actors in a firm’s international expansion.
As the business model perspective enables an extension of the concept of FSAs to include the whole configuration of value creation and capture, as designed by the focal firm and its stakeholders across countries, we use the concept of a BMSA (as already mentioned in the “Introduction”) to indicate a configuration of location-bound and non-location-bound activities that, as a whole, lead to a firm-specific advantage. For some firms, the BMSA configuration may be transferred and leveraged internationally with no or just minor adaptations if all the three business model components are non-location-bound. The BMSA of other firms may instead result in competitiveness only in the home country, but not internationally. In that case, in order to then ensure value creation and capture in foreign markets, the business model requires adaptation, through recombination with location-specific assets. Figure 1 presents a framework that depicts the location-specificity of a BMSA by combining, on the vertical axis, the business model components (value proposition, value network, and the revenue–cost model) with, on the horizontal axis, the location-boundedness of the BMSA components. This framework thus allows for a reflection on the extent to which a firm’s BMSA is transferable. A BMSA is highly transferable if all elements of the business models are non-location-bound, but more difficult to transfer the more elements of the business model are location-bound. This framework helps to identify the overall configuration of the business model as well as the components that a firm needs to adapt or recreate in a host market to be able to still rely on the BMSA. We will use it as guidance for our empirical exploration in this paper.
Research Design
In order to shed light on the role of the BMSA in firms’ internationalization, we applied an exploratory qualitative approach based on a multiple-case study design (Eisenhardt, 1989; Yin, 1994). We considered this appropriate given the novelty of the topic under investigation, and the adoption of a phenomenon-based research approach. More details will be given below on the empirical context and sample as well as the data collection and analysis.
Empirical Context
The energy transition affects organizations and institutions across industries and regions. A case in point is the electricity industry in the European Union (EU) which has witnessed fundamental changes in the past decade, triggered by the increasing share of renewable energy sources (e.g., wind and solar energy), policymaking to liberalize energy markets, and, most recently, the digitalization wave. First, while traditionally electricity was “generated in large power plants operating in a central location” (Alanne & Saari, 2006, p. 541), and essentially included coal, gas, and nuclear power stations, the growth of electricity generation from renewables has led to a more variable and decentralized electricity system, with “households, community groups, new energy companies, as well as utilities with new business models all becoming producer–consumer” (Smith & Raven, 2012, p. 1033).
Second, the EU institutions have been promoting a European single market since 1996, reconfiguring the industry context in which firms operate by implementing pro-market reforms. In particular, the Third Energy Package – enacted in 2009, and consisting of three regulations and directives – was a milestone in EU energy market legislation, as it opened up business opportunities for new players in the industry, and paved the way for more cross-border business transactions. Before 2009, the energy markets in the EU member states were marked by isolated, monopolistic systems, in which dominant market players controlled vertically integrated value chains2 reliant on a few, specific energy sources. With the goal of providing secure, competitive, and sustainable energy supply, next to driving the European integration overall and the creation of a single electricity market, the Third Energy package liberalized the gas and electricity industry, by directing the ‘unbundling’, i.e., “the separation of energy supply and generation from the operation of transmission networks” (European Commission, 2019). As a result of these measures, “the [EU] electricity industry has been transformed” (Pollitt, 2019, p. 82), with an increase in competition, the rise in access to diverse sources of energy in each national market, and the intensification of electricity trade between EU countries, which increased by 25% between 2010 and 2018 (ENTSO-E, 2010, 2019).
Third, the emergence of new technologies has helped to match demand and supply in a system increasingly reliant on renewable energy installations, which are intermittent because electricity generation depends on time and weather conditions, such as in the case of wind and solar power (Alotto, Guarnieri & Moro, 2014; Müller & Möst, 2018). The development of technologies such as energy storage and demand response applications have been promising in tackling this issue by enabling control of the demand side by, for example, automatically turning on and off machines in production plants or appliances in private households to better match the constantly changing supply of electricity (Feuerriegel & Neumann, 2016). In particular, digital technologies in the form of mobile phone applications or smart sensors at home, such as Google’s smart home system, Nest, have enabled companies to engage directly with customers, for example, with respect to sharing data about electricity consumption and incentivizing electricity-saving behavior.
The major changes illustrated above have resulted in the burgeoning of different, usually smaller, firms along the electricity value chain that challenge the incumbents’ established positions through new business models. The current stage in the energy transition is thus characterized by the coexistence of traditional and novel business models. These transformations have also unlocked opportunities for internationalization; ideally, increasing internationalization would lead to faster dissemination of technologies and accelerate the energy transition. Yet, thus far, few companies in the electricity sector have been able to seize international opportunities, and difficulties seem to be present. This richness of business models and the different patterns of international expansion characterizing the electricity sector provide a particularly relevant context to shed light on the role of BMSA for firms’ internationalization.
Sample
In line with the key characteristics of the empirical setting outlined, we ventured to select firms for our study that covered the whole electricity sector. This entailed moving beyond the utilities that have been studied most often, and also including smaller firms engaging in core activities that characterize the sector as it has evolved due to liberalization and technological transformation. The types of activities we aimed to capture include: electricity production, transmission, distribution, supply, and technology provision. However, finding firms that were not only willing to be interviewed but also to disclose their business models, internationalization strategies, and experiences thus far, proved rather difficult. This stems from the difficulties they face in making time available to expose the complexities of their specific activities, coupled with competitive concerns in an industry in a state of transition.
We therefore decided to approach the firms that participated in a large-scale, four-year European Innovation project, i.e., the H2020 project inteGRIDy, which had as its aim to integrate novel technologies into smart electricity grids. This made it easier to gain access to firms open to being interviewed and sharing information, as there was already some familiarity with their foci and scopes.3 Each company partner was contacted through the respective project manager. In addition, where possible, further representatives who could give information on the internationalization processes were solicited via the project manager. Our convenience sampling approach allowed us to compile a list of firms that (1) covered all the core types of activities in the electricity sector, (2) included both incumbents and new entrants in the industry, (3) helped to understand mechanisms across actors, and (4) provided a suitable context to talk openly about strategic ambitions.
In the end, we were able to secure participation from 14 companies (see Table 1 for relevant details for each of them) exhibiting the variation inherent to the sector in this time and age. Since the goal of this study is to shed light on a relatively novel and ‘real-world’ phenomenon as it unfolds, a convenience sample is appropriate (cf. Knight, Holdsworth, & Mather, 2007; Phene & Almeida, 2008; Pornpitakpan, 1999).
Data Collection
Since the nature of the insights we aimed to gain from the companies required the collection of primary data, interviews were the core source of information. The interviews were conducted with the founders, and product and/or project managers (see the overview of interviewees in Table 1). Interviews were carried out in person, by telephone or through Skype, depending on the interviewee’s preference, and they lasted between 20 min and 1.5 h. A basic questionnaire was used to conduct semi-structured interviews focused on the details of the firms and their representatives (e.g., activities and roles), their business model (e.g., original business model and adaptation to new markets), the energy transition (e.g., how their activities and business model relate to it), the firms’ internationalization (e.g., stage, approach and ambitions), and barriers affecting it. Questions were subsequently refined according to recurring response patterns.
In total, we interviewed 21 representatives of 14 firms in two phases (in 2017 and 2018)4; in six firms, it turned out to be possible to interview more than one person. The interviews resulted in 170 pages of transcripts, all in English, and transcribed following a ‘denaturalism’ approach with a focus on the relevant themes indicated above (McLellan, MacQueen, & Neidig, 2003; Oliver, Serovich, & Mason, 2005). We also gathered documents available in the framework of the project and publicly available materials (i.e., company websites, news reports, and publicly available reports). These were, however, primarily used only to provide background information on the firms presented in Table 1 and to prepare for the interviews, as the nature of the information was not specific enough to explore our research question in sufficient detail. In order to tackle the risks of biased information and of subjective interpretation, we adopted the following measures. On the one hand, we inquired about the possibility of interviewing more informants with different roles in the same organization. This was possible in six cases. The confrontation of the answers provided in the two interviews enabled a solid reporting of facts. On the other hand, we restricted the interview questions to ‘factual accounts’ (e.g., concerning the firm’s business model), in order to minimize the risks of speculation (Martin & Eisenhardt, 2010).
Data Analysis
The data analysis encompassed four main stages. The first stage consisted of a deductive analysis of the interview data with a focus on the business model components and their location-boundedness. This first analysis was deductive because we employed as codes concepts derived from the literature (cf. Bohnsack et al., 2014; Rugman et al., 2011), in order to uncover the BMSA of each focal firm. Specifically, we assigned to the data the following codes: value proposition, value network, revenue-cost model, location-bound, and non-location-bound. The coded text was then extracted and examined to find recurring patterns and differences, across cases, about the firms’ BMSA location-boundedness, in keeping with Figure 1. In order to assess comparatively the degree of BMSA location-boundedness experienced by each firm, we assigned, for each business model component, 1 point when it emerged as location-bound, 0.5 points when the business model component was partially location-bound (e.g., if minor adaptations were necessary to be competitive in the foreign market), and 0 points when it was described as non-location-bound (see Table 2).
The second stage entailed an inductive analysis, driven by empirical insights emerging from the data (cf. Ciulli, Kolk, & Boe-Lillegraven, 2019; Corley & Gioia, 2004) about key (potential) host country-related challenges. In particular, we noted that the interviewees highlighted barriers to BMSA recombination faced by the firms in the (potential) host countries; these were described by the interviewees as factors inherent to the foreign markets, which made it highly difficult or impossible for the focal firms to recombine their BMSAs with needed local assets. We thus concentrated on uncovering inductively the factors emerging from the interview data which hindered the bundling of the firms’ BMSAs with location-specific assets in (potential) foreign markets. More specifically, in keeping with the inductive interpretive approach (Ciulli et al., 2019; Gioia, Corley & Hamilton, 2013; Gioia, Price, Hamilton & Thomas, 2010), we first recorded a set of terms and phrases which closely represented the raw data and coded them through open coding (Gioia et al., 2010). We then examined similarities and differences between these “first-order codes” (Gehman et al., 2017), and, through axial coding, we grouped them accordingly into second-order themes (Gioia et al., 2010). Finally, we classified the themes into aggregate dimensions until the analysis reached theme saturation (Bowen, 2008; Ciulli et al., 2019) and did not uncover any additional relationships. These concepts reflected the different types of barriers to BMSA recombination highlighted in the interviews. In keeping with the Gioia methodology (cf. Ciulli et al., 2019; Corley & Gioia, 2004; Nag & Gioia, 2012; Van Burg, Berends & Van Raaij, 2014), Figure 2 depicts the data structure that emerged from the inductive analysis of the barriers to BMSA recombination.
We then returned to the coded data, in order to assess which type(s) of barriers to BMSA recombination (regulatory, infrastructure, market barrier) were experienced by each firm, and compared the cases on the extent to which they experienced barriers to BMSA recombination. Similar to the approach adopted to assess the BMSA location-boundedness, we assigned, for each of the three barriers to BMSA recombination, 1 point when the focal firm faced a barrier, 0.5 points when the barrier to BMSA recombination was only experienced by the firm for a few, specific foreign markets, and 0 points when the firm did not face a barrier (see Table 2).
Third, we deductively analyzed the firms’ internationalization, by coding the data using the following codes: no internationalization, internationalization with adaptation, and internationalization with no/marginal adaptation. Fourth, to reflect the dimensions examined and analyze the cases comparatively along them, we developed a framework representing, on the horizontal axis, the degree of BMSA location-boundedness and, on the vertical axis, the level of barriers to BMSA recombination. We plotted the cases in the framework based on the assessment conducted in stages one and two. We then examined the position of each case in the framework in relation to its internationalization, captured in the third stage, in order to uncover patterns across cases.
Both the deductive and the inductive analyses were conducted using Atlas.ti software. We ensured the reliability of our analysis particularly through “investigator triangulation” (Denzin, 2017) which consisted of leveraging the three authors’ different degrees of engagement “with the data collection and analysis to balance empirical embeddedness with research independence (Gioia, Thomas, Clark & Chittipeddi,1994; Gioia et al., 2010)” (Ciulli et al., 2019, p. 11). Specifically, the first author, who had direct knowledge of the firms and their context, due to the common involvement in the H2020 project inteGRIDy, and had been in charge of the data collection, carried out the data analysis, by coding the data deductively, in terms of business model components and internationalization, as well as inductively, to uncover the barriers to BMSA recombination. The second author, who had knowledge of business model and IB literature, and the electricity context in general, but had not been involved in the data collection, also analyzed the data deductively and inductively, in parallel and independently from the first author. The outcome of the deductive and inductive coding conducted independently by the two authors presented relevant similarities, but also some distinct interpretations. In line with the qualitative method’s approach to intersubjective agreement (cf. Ciulli et al., 2019; Saldaña, 2013; Smaling, 1992), the discrepancies were addressed through discussion and by further analyzing the data until a consensus was attained between the two authors. The third author, with an extensive experience in IB and business model research, was involved in the analysis as a “sparring partner” (Ciulli et al., 2019), in charge of verifying the consistency of the findings and confronting them with the theory. In this way, the whole author team participated, but in different and complementary ways.
The role of business models in firm internationalization
Author(s): René Bohnsack, Francesca Ciulli & Ans Kolk
ARTICLE
Cite this article
Bohnsack, R., Ciulli, F. & Kolk, A. The role of business models in firm internationalization: An exploration of European electricity firms in the context of the energy transition. J Int Bus Stud 52, 824–852 (2021).
Keywords
- internationalization
- firm-specific advantages
- location-bound/non-location-bound
- business model
- energy
- internalization theory
