Journal of Business Research 130 (2021) 683–697

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Knowledge management capabilities and organizational risk-taking for

business model innovation in SMEs
Marianne Hock-Doepgen a, *, Thomas Clauss b, Sascha Kraus c, Cheng-Feng Cheng d
a
Philipps-University of Marburg, School of Business and Economics, Research Group of Management and Innovative Value Creation Concepts, Universitätsstrasse 25a,
35037 Marburg, Germany
b
University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
c
Durham University, Durham University Business School, Mill Hill Lane, Durham DH1 3LB, United Kingdom
d
Asia University, 500 Lioufeng Road, Wufeng, Taichung 41354, Taiwan

A R T I C L E I N F O A B S T R A C T

Keywords: In today’s business environment with fast growing communication and information technologies, knowledge
Business model innovation management (KM) capabilities are a valuable source for innovation. However, little is known about the
Knowledge management capabilities particular KM capabilities that lead to business model innovation (BMI) and whether their effect is dependent
SMEs
upon the firm’s orientation towards risk-taking. We examine the impact internal and external KM capabilities
Risk-taking tolerance
have on BMI and how these effects are moderated by its risk-taking tolerance. We empirically analyze a sample of
PLS path modeling
197 small and medium-sized enterprises (SMEs) applying structural equation modeling (SEM) and fuzzy-set
qualitative comparative analysis (fsQCA). The results from the SEM indicate that particularly external KM ca­
pabilities stimulate BMI. This relationship is strengthened for firms with a high risk-taking tolerance. Internal
knowledge is only effective for firms with a low risk-taking tolerance. The fsQCA results substantiate these
findings and refine the SEM by providing particular antecedent conditions for high levels of BMI.

1. Introduction firms to react to environmental changes and to facilitate BMI proactively

(e.g., Clauss, Abebe, Tangpong, & Hock, 2019a; Groskovs & Ulhøi, 2019;
The fast rise of digital technologies has changed the business envi­ Ricciardi, Zardini, & Rossignoli, 2016). The process of BMI however
ronment and has led to new ways in which firms can do business (Amit & might require firms to cannibalize existing revenue streams against
Han, 2017; Massa, Tucci, & Afuah, 2017). New competitors are not uncertain streams of future revenues (Clauss et al., 2019a; Tellis,
necessarily established market players but can even be start-ups that Prabhu, & Chandy, 2009). Thus, decisions to innovate the business
compete against incumbents with different business models (Dushnitsky model are often characterized by uncertainty concerning their costs,
& Lenox, 2005; Zott & Amit, 2007). Some new business models have duration, and outcome (Teece & Leih, 2016). Large firms usually have
significantly changed the rules of the game in certain industries (e.g., the necessary resources to experiment with new business models (Sosna,
Uber and the taxi industry, Netflix and the movie industry, and Airbnb in Trevinyo-Rodriguez, & Velamuri, 2010). They can potentially create
the accommodation industry) (Teece, 2018). In consequence, incumbent additional prototype business models as spin-offs without risking the
firms are forced to regularly change and innovate their business model survival of the firm (Karimi & Walter, 2016). This is not the case for
(Amit & Zott, 2015). Business model innovation (BMI) is defined as small and medium-sized enterprises (SMEs), which have fewer resources
“designed, nontrivial changes to the key elements of a firm’s business available for business model experimentation. If a new business model
model and/or the architecture linking these elements” (Foss & Saebi, fails, the challenge and risks associated with BMI are particularly high
2017, p. 201). BMI allows firms to create novel activities that go beyond for SMEs (Laudien & Daxböck, 2016).
product and process innovation (Osiyevskyy & Dewald, 2015) and was To minimize uncertainties and to improve the ability to make well-
identified as a source of sustainable competitive advantages (Tallman, informed decisions, SMEs have to permanently identify innovative op­
Luo, & Buckley, 2018). portunities and threats arising from within and outside the boundaries of
Recently, studies started to investigate the antecedences that enable the firm (Sanchez & Ricart, 2010) and to sense and leverage the

* Corresponding author.
E-mail addresses: [email protected] (M. Hock-Doepgen), [email protected] (T. Clauss), [email protected] (S. Kraus), [email protected] (C.-F. Cheng).

https://doi.org/10.1016/j.jbusres.2019.12.001
Received 16 March 2019; Received in revised form 1 December 2019; Accepted 2 December 2019
Available online 15 January 2020
0148-2963/© 2019 Elsevier Inc. All rights reserved.
M. Hock-Doepgen et al. Journal of Business Research 130 (2021) 683–697

knowledge about these threats (Smith, Collins, & Clark, 2005). the scope of product and process innovation as key elements (e.g., rev­
Following the theoretical arguments of dynamic capability theory enue models) of a firms business model are being changed (Foss & Saebi,
(Teece, 2007; Teece, 2018; Teece, Pisano, & Shuen, 1997) firms (e.g., 2017). While product innovation refers to introducing new products and
SMEs in particular) require special knowledge management (KM) ca­ services and process innovation is defined as the implementation of new
pabilities, which allow them to identify and process existing and new operations or manufacturing methods (Snihur & Wiklund, 2019), BMI is
knowledge into innovative business opportunities (Swap, Leonard, & said to be a new and different type of innovation, which complements
Mimi Shields, 2001; Teece, 2010). KM capabilities are those underlying product and process innovation through a holistic perspective on inno­
organizational activities which facilitate the infrastructure and the vation potentials in the elements of the organization (Massa et al.,
processes for exploiting internal knowledge and acquiring, converting, 2017). When analyzing the question of why some firms are superior and
and applying external knowledge sources (Gold, Segars, & Malhotra, dominate markets (e.g., Apple), while others lose market share or fail
2001). For example, these KM capabilities could comprise the utilization entirely (e.g., Kodak), studies provide evidence that the successful firms
of technologies to screen customer data, the distribution of new reconfigured their business by innovating either specific components of
knowledge among the employees, or the organizational processes the business model or the entire business model (Clauss et al., 2019b).
acquiring, storing, and using knowledge. The ability to gather internal The scope of BMI does not necessarily require radical changes in one or
and external knowledge and to apply it at the right time, is assumed to all business model elements but can also be the result of more incre­
be essential for BMI (Teece & Leih, 2016). Thus, SMEs must develop an mental reconfigurations of these (Velu & Jacob, 2016).
understanding of which KM capabilities to possess to be able to innovate Despite the increased interest in BMI among practitioners and in
the business model. academia, previous research has been rather static and descriptive in
Although scholars propose that KM in general is an enabler of BMI nature. The main focus was set on defining a “blueprint for the coher­
(Malhotra, 2000; Martins, Rindova, & Greenbaum, 2015; Teece, 2018), ence between the business model components” (Demil & Lecocq, 2010,
studies have not yet empirically investigated how different types of KM p. 227), explaining case-based examples of BMI retrospectively (e.g.,
capabilities influence BMI in SMEs. Drawing on previous research, Amit & Zott, 2015; Sosna et al., 2010), or demonstrating the perfor­
which shows that different innovation types require different knowledge mance implications of BMI (e.g., Heij, Volberda, & Van den Bosch, 2014;
sources (Cohen & Levinthal, 1990; Snihur & Wiklund, 2019), we assume Karimi & Walter, 2016). Only recently, researchers started to analyze
that the nature of KM capabilities required for BMI may differ from those internal capabilities that enable managers to proactively change their
required for product and process innovation and that particular KM existing business model. Particularly the dynamic capability framework
capabilities (e.g., external and internal KM capabilities) are needed to has provided a theoretical angle for analyzing this proactive BMI process
effectively manage BMI in SMEs. Furthermore, we assume that the role (Foss & Saebi, 2017; Teece, 2018). Unlike ordinary capabilities which
of certain KM capabilities depends on the general strategic orientation of mainly sustain a firm’s present operations, dynamic capabilities are
the firm. In particular the organizational risk-taking tolerance (i.e., the responsible for sensing innovative opportunities, seizing new opportu­
firḿ s willingness to intentionally accept risk while exploiting innovative nities and transforming a firm’s business model (Teece, 2018; Teece
opportunities) will affect how knowledge is processed and utilized in the et al., 1997). In the search for internal enablers for BMI some scholars
firm (Choo, 2013). Therefore, we further investigate the conditional have directed their attention to exploring the particular micro­
effects of KM capabilities on BMI for varying degrees of organizational foundations of dynamic capabilities. Achtenhagen, Melin, and Naldi
risk-taking tolerance in the SME context. (2013) for example, highlight the need for a balanced use of resources,
Our study provides three main contributions to research. First, we the ability to experiment, and a balanced coherence of leadership ca­
contribute to the emerging literature on the internal enablers of BMI (e. pabilities, organizational culture, and employee commitment. Doz and
g., Clauss et al., 2019a; Groskovs & Ulhøi, 2019; Ricciardi et al., 2016) Kosonen (2010) as well as Clauss et al. (2019a) identify micro capabil­
by providing a better understanding how particular KM capabilities ities of strategic sensitivity, leadership unity, and resource fluidity as
affect BMI in SMEs. Theoretically, this also helps to specify the role of enablers for BMI. Others have focused on the strategic decision making
dynamic capabilities for BMI (e.g., Leih, Linden, & Teece, 2015; Teece, processes and the underlying cognitive behaviors that enable BMI
2018). Second, we enrich the literature linking KM and innovation (e.g., (Martins et al., 2015; Osiyevskyy & Dewald, 2015).
Clauss & Kesting, 2016; Cohen & Levinthal, 1990; Trantopoulos, von This previous research has greatly advanced our understanding
Krogh, Wallin, & Woerter, 2017). So far, KM and KM capabilities have about the enabling factors that help firms to proactively carry out BMI.
primarily been linked to product and process innovation. Thus, our However, so far, studies have not analyzed the capabilities for identi­
findings provide new insights on how the nature of KM may vary ac­ fying and utilizing knowledge as an enabler of BMI. We consider this an
cording to the type of innovation and whether the innovation is pursued important omission, as KM can be considered to be a key micro­
at a more holistic level. Third, we contribute to the literature on the foundation of sensing capabilities (Teece, 2007) and as new knowledge
particularities of BMI management for SMEs (e.g., Anwar, 2018; Clauss, is traditionally considered to be a driver of the innovation process
Bouncken, Laudien, & Kraus, 2019b; Laudien & Daxböck, 2016). (Cohen & Levinthal, 1990; Smith et al., 2005). Although, Teece and Leih
(2016) assume based on dynamic capability theory that the ability to
2. Literature review gather new knowledge and to apply it at the right time is relevant for
BMI, empirical analyses analyzing which KM capabilities firms should
2.1. Business model innovation develop must still be done.

Business models are conceptualized as an architecture of the three 2.2. Knowledge management
interrelated key elements: value proposition, value creation, and value
capture (Clauss, 2017; Clauss et al., 2019a). These elements are In today’s knowledge-based business environment, firms refer to
configured as a mutually enforcing system that defines the organiza­ themselves as organizations that continuously learn and leverage
tional business logic (Martins et al., 2015; Teece, 2010). Throughout the knowledge (Smith et al., 2005). The right knowledge and the ability to
last two decades, new technological developments have led to in­ convert that knowledge for new value creation is said to lead to
novations in all elements of the business model. These include new competitive advantage (Ozer & Vogel, 2015). Therefore, much attention
market places where value can be offered (e.g., e-commerce), new ways has been placed on how to develop and maintain organizational
of how value can be created (e.g., selling services instead of products) knowledge (Mehta & Bharadwaj, 2015).
and new opportunities of how revenues can be captured (e.g., paying per In general, two research streams on KM have been differentiated by
use) (Massa et al., 2017). These developments show that BMI extends literature: the static and dynamic KM (Hargadon & Fanelli, 2002). The

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static dimension refers to a firm’s internal KM capabilities, which pro­ from sources outside of the firm (Valentim, Lisboa, & Franco, 2015).
vide an inter-organizational basis for social interaction, knowledge Thus, firms are in need of continuously updating their knowledge base,
storage, and knowledge availability. The focus lies on maintaining, making sense of environmental changes and creating new knowledge
replicating, and exploiting existing knowledge (Smith et al., 2005). The out of external knowledge sources. External KM capabilities differ
dynamic dimension captures a firm’s external KM capabilities, empha­ significantly from the internal ones (Hansen, 1999). A firm’s capabilities
sizing a firm’s ability to acquire, convert, and apply knowledge arising to acquire new external knowledge, assimilate, and apply it for novel
from sources outside the boundaries of the firm (Smith et al., 2005). The opportunities of value creation, are being called “absorptive capacity”
focus lies on grasping external knowledge in order to analyze competi­ (Cohen & Levinthal, 1990). Following Gold et al. (2001), a firm’s KM
tors and customers and to identify overall market developments and capabilities are built up in three processes:
trends (Roberts, 2015). Both internal and external KM capabilities are The acquisition-oriented processes mainly focuses on obtaining
interdependent and responsible for the firm’s knowledge assets (Mehta knowledge from various sources (Roberts, 2015), e.g., through social
& Bharadwaj, 2015). These knowledge assets comprehend know-how capital that is embedded in the relationships on an individual level and/
which is unique and difficult to imitate for competitors as they are or the organizational level between organizations and through network
mainly tacit and not accessible in public (He & Wang, 2009). Thus, KM collaborations (Gold et al., 2001), or alternatively through the purchase
capabilities provide the toolset for leveraging internal and external of knowledge assets (Yew Wong & Aspinwall, 2004), or by simply
knowledge sources as such, that they can be captured and converted into scanning the environment (Velu, 2015). Referring to the latter, there
productive outcomes (He & Wang, 2009). have been several studies suggesting that companies require KM capa­
bilities that scan the business environment and identify signals and clues
2.3. Internal knowledge management capabilities concerning changes in customer demand, technological trends, and
competitive actions (Day & Schoemaker, 2004; Teece et al., 1997).
Internal KM capabilities are based on the socio-technological theory To actually exploit external knowledge in order to seize innovative
(Bostrom & Heinen, 1977), describing the social and technological business model opportunities, firms have to further convert and apply
perspective that form a firm’s KM capabilities for maintaining and the knowledge that has been acquired (Cohen & Levinthal, 1990). These
exploiting internal knowledge (Gold et al., 2001). The social perspective operations incorporate the integration and filtration of new external
refers to the knowledge transfer relationships among the employees. knowledge and the replacement of outdated knowledge (Gold et al.,
They are embedded in a firm’s organizational culture and structure and 2001). The efficiency of these conversion-oriented processes are depen­
responsible for the transfer of informal and tacit knowledge (Swap et al., dent on a firm’s internal KM capabilities and the ability of the firm to
2001). The technological perspective on the other hand, refers to the actually value new external knowledge (Lane & Lubatkin, 1998). Con­
firm’s information system used to maintain, store, and analyze knowl­ verting new external knowledge into the firm’s organizational knowl­
edge (Lee & Choi, 2003). A firm’s KM culture, structure, and technology edge language and knowledge stock makes the external knowledge
constitute a firm’s internal KM capabilities (Gold et al., 2001). ready for use (Lane & Lubatkin, 1998). Finally, in the application-oriented
A firm’s KM culture is considered to be a critical component (Black­ processes, the newly generated knowledge needs to be effectively applied
ler, 1995; Janz & Prasarnphanich, 2003), as it defines how and what in the operative and the strategic activities of the firm (Gold et al.,
knowledge is valued, shared, and stored inside the organization for 2001).
potential innovative advantage (Alavi, Kayworth, & Leidner, 2005).
Studies have shown that a firm’s knowledge culture influences organi­ 3. Hypothesis development
zational effectiveness (Choo, 2013; Quinn & Rohrbaugh, 1983) and the
firm’s overall innovativeness (Nonaka & Takeuchi, 1995). 3.1. Internal knowledge management capabilities and BMI
Closely linked to the organization’s knowledge culture is its KM
structure. It provides dictates on how and with whom knowledge is BMI arising from internal knowledge has lately been particularly
transferred and communicated throughout the firm. Centralized firm dominant in the engineering industry, where companies try to recon­
structures, characterized by hierarchical power in company decision figure the way value is delivered to and captured form customers. Ever
making, mostly coincide with centralized KM structures (Anand, 2011). since Rolls Royce transformed their business logic from selling aero-
These hierarchical KM structures are said to inhibit communication and engines to offering them on a service-based model called “power by
collaboration with colleagues from other business units and thus, pro­ the hour”, many engineering firms are trying to restructure their busi­
mote the hoarding of information, causing asymmetric knowledge flows ness logic from within the firm by switching from a product-based to a
across the organization (Gold et al., 2001). Non-hierarchical and flexible service-based business, or a hybrid of both (Smith, 2013). Thereby, these
knowledge structures on the other hand, have shown to improve the firms refer to their core competencies and existing knowledge for
transfer of knowledge (Chen & Huang, 2007). innovating the value proposition by switching from a product to a
Explicit knowledge is mainly stored in the organization’s informa­ service-oriented logic (Clauß, Laudien, & Daxböck, 2014). Similar ex­
tion systems. Its KM technology provides data based systems in which amples can be found in the automobile industry, in which car manu­
organizational data and knowledge is stored and organizational pro­ facturers such as Daimler and BMW are not just selling cars, but provide
cesses mapped (Pan & Scarbrough, 1998). These technological systems convenient mobility by offering car sharing services such as ShareNow
comprehend intranets, internal search engines, knowledge tools, but from Daimler and BMW, a joint venture of the previous Car2Go and
also hard facts concerning warehouse and logistic data (Alavi & Leidner, DriveNow services built in 2019. Thus, BMI can arise from leveraging
1999). Technological systems support KM by providing a pool of internal knowledge assets. Alavi et al. (2005) found that organizations
accessible knowledge and an analytic platform for analyzing and that effectively manage their internal knowledge benefit from a pool of
communicating data (Alavi & Leidner, 2001). innovative knowledge assets which allow firm’s to be aware of inno­
vative opportunities. These innovative opportunities may arise from the
2.4. External knowledge management capabilities R&D department in terms of new products and services, through inno­
vative teams, or through other units that deal with value creation and
Considering that organizations face environmental changes and value capture innovation. They can range from simple cost reduction
competitive rivalry, firms need to be constantly aware of their dynamic opportunities to improving a firm’s internal agility and its overall
environment and of new opportunities arising from new combinations of innovativeness (Alavi et al., 2005). Thus, strong internal KM capabilities
knowledge (Schumpeter, 1934). Studies have shown that a firm’s may help firms to increase the awareness of potential business model
innovativeness increases with the ability to exploit knowledge coming opportunities arising from within the firm. Moreover, a profound

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understanding of the firm’s underlying activities also enhances the transform the external knowledge into firm language and to make it
awareness of the firm’s internal strength and constraints that are rele­ ready for experimentation (Gold et al., 2001). Finally, the application
vant for strategic business model decision making. These decisions processes implements and adjusts operative and strategic activities of
include, for example, the selection of the firm’s business logic and the the current business model in order to solve problems and develop new
decision of which activities to perform internally and which to outsource technologies, products, revenue models, etc. (Valentim et al., 2015).
(Quinn, 1999). Thus, strong external KM capabilities allow firms to acquire and
Once an innovative opportunity has been sensed and the strategic recognize new external knowledge, convert it to firm knowledge, and
designing of the new business model has occurred, operational changes apply it for commercializing novel BMI opportunities. Referring to the
are necessary. Processes, resources, and core competencies must be arguments above, we hypothesize:
transformed and reconfigured for new means of value creation (Zott & H2: External KM capabilities positively influence the firm’s ability to
Amit, 2010). Considering that these changes are interdependent and innovate the business model.
cross-functional, BMI requires great collaboration and the transfer of
knowledge throughout all levels and business units of the firm (Heij 3.3. Organizational risk-taking tolerance, knowledge management
et al., 2014). The ability to transfer core capabilities and resources is capabilities and BMI
underpinned by transferring knowledge captured in processes and rou­
tines that are tied to specific employees and are in most cases tacit The organizational risk-taking tolerance reflects the firm’s willing­
(Nonaka & Takeuchi, 1995). Hence, BMI calls for a social setting with ness to exploit uncertain business initiatives. It represents the extent to
strong knowledge-sharing relations, which are embedded in the firm’s which organizations support risk-taking vs. control behaviors (Smith
organizational KM culture and structure (Swap et al., 2001) and sup­ et al., 2005). These behaviors are embedded in the firm’s climate
ported through technological systems of knowledge storage (Gold et al., (Ekvall, 1996) and have been found to affect many aspects of how or­
2001). The firm’s KM culture determines which knowledge is valued and ganizations acquire, share, and leverage knowledge (Cameron & Quinn,
through which means and frequency knowledge is shared (Chen & 2011; Choo et al., 2006). Firms with a high risk-taking tolerance are said
Huang, 2007). Studies have shown that a strong KM culture coupled to foster KM behaviors that encourage an external focus on the envi­
with flexible and non-hierarchical KM structures positively influences ronment and an internal focus on proactive knowledge-sharing (Choo,
knowledge-sharing across departments and business units, resulting in 2013). Thus, firms with a high risk-taking tolerance build external KM
an optimized use of organizational knowledge (Cameron & Quinn, 2011; capabilities that enable them to identify new trends and technological
Chen & Huang, 2007; Choo, 2013). Moreover, a firm’s KM technologies developments, to evaluate opportunities, and to encourage entrepre­
provide a pool of data storage and a database for accessing, analyzing, neurial behaviors (Cameron & Quinn, 2011). Furthermore, they develop
and sharing firm knowledge (Teece, 1998). When used appropriately, internal KM capabilities for leveraging internal opportunity recognition,
KM technologies have an enormous potential for leveraging internal creativity, and agility (Choo, 2013). Firms with a high risk-taking
knowledge, as they comprehend cross-functional data (Alavi & Leidner, tolerance are said to emphasize KM behaviors that foster organiza­
2001). Prior studies found that internal KM capabilities promote inno­ tional experimentation and learning (Smith et al., 2005). They
vative ideas and foster a firm’s overall innovativeness (Lee, Leong, Hew, encourage trial and error and foster a climate that stresses internal
& Ooi, 2013; Nesta & Saviotti, 2005). Following the reasoning above, we knowledge testing and knowledge-sharing (Nahapiet & Ghoshal, 1998).
hypothesize that a firm’s internal KM capabilities, consisting of a strong Furthermore, they encourage employees to leverage knowledge sources
KM culture, a flexible and non-hierarchic KM structure, and KM tech­ and to seek ideas for new markets, trends, and products from both in­
nologies, enables BMI: ternal and external knowledge sources in order to promote creativity
H1: Internal KM capabilities positively influence the firm’s ability to and innovation (Choo, 2013). Thereby, they move the organization to­
innovate the business model. wards disorder, leading to the discovery of new ideas (Smith et al.,
2005). These characteristics support the “discovery-driven” approach to
3.2. External knowledge management capabilities and BMI BMI, in which the innovation of a firm’s business model is achieved
through constant experimentation and learning (McGrath, 2010).
While external changes in the business environment may create new Following the argumentation above, we expect varying preferences of
opportunities, they can also cause a threat to the current business model organizational risk-taking to influence the way in which organizations
(Teece, 2007). Especially with digitalization and the “Internet of manage and value knowledge. As firms with a high risk-taking tolerance
Things”, ecosystems surrounding a firm’s business model are constantly foster KM behaviors that encourage organizational creativity and
changing and influencing the way customers consume and businesses innovation, we hypothesize that the extent to which internal and
compete (Teece & Linden, 2017). Firms that are unable to grasp these external KM capabilities lead to BMI is strengthened when firms have a
changes may suffer from large losses and negative consequences. There high risk-taking tolerance. The complete hypothesis model is visualized
are many case-in-point examples where firms focused too much on in Fig. 1.
leveraging their current business model rather than focusing on changes Hypothesis 3: The effect of internal KM capabilities on BMI will be
occurring in their ecosystems (e.g., Blockbuster Video, Blackberry, strengthened (weakened) when the firm’s risk-taking tolerance is high
Kodak, etc.). (low).
Strong KM acquisition processes allow firms to constantly be aware Hypothesis 4: The effect of external KM capabilities on BMI will be
of changes occurring in the business environment. They increase the strengthened (weakened) when the firm’s risk-taking tolerance is high
overall alertness of potential threats and allow firms to continuously re- (low).
evaluate the competitive state of their business model. This ongoing
evaluation process is critical for identifying innovative opportunities 4. Methodology
and for guiding the strategic positioning of the firm. Moreover, external
knowledge acquisition can also be used for finding new partners, sup­ 4.1. Overview of the empirical design
pliers, distribution channels, and new customer relationships (Zott &
Amit, 2010). Hence, the acquisition of external knowledge is critical for We combined two different methods for testing and further exploring
making strategic business model decisions. From an operational point, the relationships in our model based on a unique survey-based dataset of
firms require conversion processes in order to integrate the acquired SMEs. First, we applied partial least squares (PLS) structural equation
external knowledge into organizational knowledge and for developing modeling (SEM) to test our model (Chin, 1998). It has been demon­
new knowledge assets. Conversion processes enable firms to internally strated that PLS is a robust method that has been continuously used in

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Fig. 1. Conceptual framework.

business research studies (Cepeda Carrión, Henseler, Ringle, & Roldán, 4.2. Data collection and sample
2016) and strategic management (Hair Jr., Sarstedt, Hopkins, & Kup­
pelwieser, 2014). In addition, PLS has some particularities that make the The sample data used for this study consists of survey data of 197
methodology suitable for our analysis in this study: First, it is the method SMEs (≤500 employees) in the technology sector that are represented in
of choice whenever models are based on either first order formative various industries (9.1% Automotive, 21.8% Biotechnology, 12.2%
measures or higher order measures that use formative indicators at any Engineering, 22.3% Electronics, and 34.5% others). These industries are
level (Becker, Klein, & Wetzels, 2012; Lowry & Gaskin, 2014). Second, it subject to continuous technological developments and are thus, highly
is provides more accurate estimates than regression analyses if the innovative. We collected the data at two international trade fairs that
moderation effect of latent variables should be tested (Chou & Yang, were held in Germany. The questionnaire was collected personally with
2011; Titah & Barki, 2009). According to Chou and Yang (2011), the a team of students who were knowledgeable of the topic. Exhibitors at
approach used to measure the latent variable in PLS allows for a sub­ the fair were personally addressed and asked for their knowledge about
sequent assessment of the moderator’s measurement error, which is not KM and BMI. The survey was then only handed out if a knowledgeable
computed for regressions with moderators that comprehend latent key respondent was available. The use of a key informant to obtain firm-
variables with multi-item scales. level data is considered valid and reliable, particularly in the context of
Second, we further run a fuzzy-set qualitative comparative analysis small to medium-sized firms, due to greater information transparency
(fsQCA) for exploring how certain configurations of KM capabilities are and limited organizational complexity (Homburg, Klarmann, Reimann,
linked to BMI in SMEs. Several problems of social science can be & Schilke, 2012). Hence, the formal positions of our respondents vary:
formulated in terms of sets and set relations, and then asymmetry can 28.1% are top managers (e.g., CEO, COO etc.), 37.8% department or
seem to be an important aspect of set-theoretic connections (Ragin et al., team leaders, and 34.1% are in other functional management areas.
2008). Traditional symmetric thinking in data analysis often suffer from The questionnaire was handed out in German and English. To ensure
disconnections between theory and empirical testing (Woodside, 2013). consistency of the translated German version to the original items, the
In general, if the relationships among variables are asymmetric, scholars back-translation method using two bilingual translators was applied
have called for using a set-based approach to supplement a traditional (Brislin, 1970). Considering the importance of trade fairs in the tech­
symmetric approach such as regression analysis or SEM (Kraus, Ribeiro- nology sector, our sample can be considered as a good representation of
Soriano, & Schüssler, 2018; Woodside, 2013). According to asymmetry the typical market in these industries (Rolf Seringhaus & Rosson, 1998).
thinking in data analysis, qualitative comparative analysis (QCA) is a The use of trade fairs as the sampling frame also provided us the op­
technique that combines quantitative and qualitative methods that of­ portunity to assess the issue of nonresponse bias and sampling bias. We
fers a middle path between quantitative and qualitative measurement compared the available information about company size and product
(Ragin et al., 2008), and fsQCA is a set-theoretic approach for exploring type between those firms who participated, those who decided not to
sufficient conditions for a particular outcome based on Boolean logic participate, and those that were not selected. The results indicated no
(Ragin, 2009). Since a high degree of complexity can be captured by significant differences between them, suggesting that neither nonre­
focusing on fsQCA rather than single effects of individual variables, sponse bias nor sampling bias were serious concerns here. Table 1
fsQCA has recently received more attention in business studies (e.g., summarizes the characteristics of our sample.
Kraus et al., 2018; Palmer, Niemand, Stöckmann, Kraus, & Kailer, 2019).
Therefore, in addition to the test of the linear effects, this study com­
4.3. Measures
bines five relevant antecedents (e.g., culture, structure, technology,
acquisition process, conversion process, and application process of KM)
For measuring our model constructs, we used existing multi-item
to explore the configurations for achieving high BMI based on using
scales from published studies whenever available (Table 2). All items
fsQCA v. 2.5.
were quantified on a five-point Likert-type scale.
BMI: We have developed items that capture the various elements of
BMI: value proposition innovation, value creation innovation, and value

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Table 1 composite reliability of all our constructs is very high and ranges from
Sample descriptions. 0.870 to 0.944. Convergent validity was tested by computing the
Descriptive characteristics % average variance explained per factor. All these values are above 0.5 and
the squared average variance extracted values exceed the highest inter-
Country
Germany 40.6 construct correlations (Fornell & Larcker, 1981). Thus, discriminant
China 5.1 validity according to the Fornell-Larcker criterion is given (Table 3).
UK 5.1 Moreover, the heterotrait-monotrait ratio of correlations (HTMT) was
Swiss 5.1 below the threshold of 0.85, which further substantiates discriminant
USA 3.1
Netherlands 3.6
validity (Henseler, Ringle, & Sarstedt, 2015).
France 3.1 For measuring the hierarchical second order constructs, a type II
Taiwan 2.0 reflective-formative approach was applied, using the repeated indicator
Korea 2.0 approach (Becker et al., 2012). The path weights of the first-order
Others 30.5
reflective constructs to the second order formative constructs were all
Industries
Automotive 9.1 significant (Diamantopoulos & Winklhofer, 2001). Furthermore, we
Biotechnology 21.8 tested for multicollinearity among the first-order constructs using the
Engineering 12.2 variance inflation factors. All variance inflation factors were below the
Electronics 22.3 threshold of 5 (Hair et al., 2011), indicating that multicollinearity is not
Others 34.5
Firm size
an issue for the formative constructs (Table 4).
<50 42.1
50–100 24.4 4.5. Analysis 1: Partial least squares
101–250 22.7
251–500 14.2
We calculate our model using the path weighting scheme. To obtain
the standard errors for our structural model testing, we used nonpara­
capture innovation. In total we measure nine reflective items that mirror metric bootstrapping with 5,000 replications and mean replacement of
innovation in all dimensions of the business model canvas (Osterwalder missing values. The higher order constructs were specified using the
& Pigneur, 2010) and match the second order constructs that were repeated indicator method (Ringle, Sarstedt, & Straub, 2012). In order
proposed by Clauss (2017). to calculate the latent interaction effects, we relied on the two-stage
Internal and External KM Capabilities: In order to measure internal and approach.
external knowledge capabilities, we used the two-stage hierarchical Attention was paid to the issue of common method bias (CMB), as the
measurement model of Gold et al. (2001). The three first order con­ dependent and the independent variables were collected by the same
structs that measure internal KM capabilities are: KM technology, KM respondent. Therefore, the issue was addressed ex-ante and ex-post to
structure, and KM culture. External KM capabilities are measured by the the data collection phase. To minimize CMB ex-ante, the development of
three first order constructs: KM acquisition process, KM conversion process, the survey followed the guidelines by Podsakoff, MacKenzie, Lee, and
and KM application process. Podsakoff (2003). We assured respondent anonymity, used established
For measuring Organizational Risk-taking Tolerance, we adapted four measurement scales and made sure that the structure of the questions
items from Herzog and Leker (2010) and Tellis et al. (2009). was set in a counterbalancing order. Furthermore, our model includes
In addition to our focal constructs, we control for external and in­ significant latent interaction effects which can hardly be the result of
ternal factors that might influence BMI. Considering that external CMB (Siemsen, Roth, & Oliveira, 2010). In addition, we conducted
changes are regarded as drivers of BMI (Amit & Zott, 2015; Heij et al., several ex post tests for CMB based on our dataset. First, we computed
2014), we include competitive intensity and environmental dynamism as the Harman’s one factor test by including all indicators of the dependent
external control variables. Both measures are based on the multi-item and independent variables into an exploratory factor analysis. The single
scales developed by Jaworski and Kohli (1993). The internal control factor only explains 24.71% of the variance, indicating that it does not
factors are firm size and firm hierarchy. According to Schumpeter (1934), account for a large percentage of the total variance (Podsakoff et al.,
firm size matters for innovation, as only large firms have the resources 2003). Second, a correlational marker variable test was applied (Lindell
required to invest in innovative projects. However, Hannan and & Whitney, 2001). We included self-perception as a marker variable as it
Freeman (1984) argue that larger firms are more prone to organizational is theoretically unrelated to our model constructs. We therefore asked
inertia, thereby hindering change processes. To account for these the respondents to assess their firms’ relative competitive advantage
possible effects, we control for firm size by taking the logarithm of the from 1 (no advantage) to 5 (very high advantage) related to the
number of firm employees. According to Damanpour (1991), firms with following dimensions: (1) cost/price, (2) quality, (3) technical perfor­
strong hierarchical structures and centralized decision making inhibit mance, (4) reputation, (5) delays/responsiveness, (6) services, and (7)
organizational innovativeness. Thus, we control for firm hierarchy by proximity. After controlling for this marker in a partial correlation
using five self-developed items. Finally, we control for the industry analysis of our model constructs, no substantial changes of our zero-
specific effects by including dummy variables for the four major in­ order correlations could be observed. Finally, as advised by Kock
dustries in our study (automotive, biotechnology, engineering, and (2015), we examined whether multicollinearity indicates common
electronic). method bias. However, as all variance inflation factors between the first
order constructs are below 5, this potential issue could be ruled out as
well. Thus, we found no indication that common method bias is a serious
4.4. Measurement model assessment issue in our study.

All psychometric properties of our reflective measured constructs 4.6. Results of the PLS analysis and hypothesis test
were assessed according to common criteria in the literature (Hair,
Ringle, & Sarstedt, 2011) (Table 2). In order to ensure an adequate in­ We calculated and compared three models (I-III) (Table 5). Model I
dicator reliability, we kept only those items in our measurement model only includes the control variables with only two significant effects and
that showed standardized factor loadings above 0.6, which led to the a rather low R2 of 0.132. Model II shows the main effects without
exclusion of two items from the BMI scale. The standardized factor interaction effects. As compared to Model 1, the R2 of this model is
loadings of the remaining items ranged from 0.672 to 0.887. The substantially higher with 0.248. Finally, Model III estimates our full

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Table 2
Quality criteria of reflective first-order-constructs.
Construct measurement item Item AVE CR
loadings

Business Model Innovation What were you able to accomplish in the last 1–5 years? – 0.521 0.884
Self-developed Overall, dramatic cost advantages.*
Dramatic improvements of operative processes’ effectiveness (e.g., R&D/production/ 0.684
marketing).
Completely new sources of revenue. 0.736
A dramatic expansion of the product or services range. 0.737
Capture new consumer segments.* –
Significant new sales and distribution channels. 0.772
Significantly improved satisfaction of customer desires and requirements. 0.799
Greatly improved efficiency in resources (HR, finance, technologies, etc.). 0.825
New forms of value or supply chains. 0.852

Knowledge management technology My organization uses technology that allows… 0.706 0.878
Gold et al. (2001) It to search for new knowledge. 0.790
It to retrieve and use knowledge about its products and processes. 0.887
It to retrieve and use knowledge about its markets and competition. 0.842

Knowledge management structure My organization(’s) … 0.633 0.873

Gold et al. (2001) Structure facilitates the discovery of new knowledge. 0.798
Structure facilitates the creation of new knowledge. 0.775
Designs processes to facilitate knowledge exchange across functional boundaries. 0.847
Structure facilitates the transfer of new knowledge across structural boundaries. 0.758

Knowledge management culture In my organization … 0.649 0.880

Gold et al. (2001) Employees are valued for their individual expertise. 0.672
Employees are encouraged to ask others for assistance when needed. 0.831
Employees are encouraged to interact with other groups. 0.864
Employees are encouraged to discuss their work with people in other workgroups. 0.840

My organization …
Knowledge management acquisition Has processes for benchmarking performance. 0.751 0.617 0.889
process Has teams devoted to identifying best practices. 0.828
Gold et al. (2001) Has processes for exchanging knowledge with our business partners. 0.816
Has processes for acquiring knowledge about new products/services within our industry. 0.776
Has processes for acquiring knowledge about competitors within our industry. 0.752

My organization …
Knowledge management conversion Has processes for filtering knowledge. 0.781 0.649 0.944
process Has processes for absorbing knowledge from individuals into the organization. 0.777
Gold et al. (2001) Has processes for absorbing knowledge from business partners into the organization. 0.866
Has processes for integrating different sources and types of knowledge. 0.841
Has processes for replacing outdated knowledge. 0.836

My organization …
Knowledge management application Has processes for using knowledge to solve new problems. 0.729 0.660 0.921
process Matches sources of knowledge to problems and challenges. 0.811
Gold et al. (2001) Uses knowledge to improve efficiency. 0.796
Is able to locate and apply knowledge to changing competitive conditions. 0.852
Quickly applies knowledge to critical competitive needs. 0.820
Quickly links sources of knowledge in solving problems. 0.860

Organizational risk-taking tolerance Our company places high value on taking risks, even if there are occasional mistakes. 0.856 0.754 0.902
Tellis et al. (2009), Herzog and Leker (2010) In our company, risky activities are commonplace. 0.866
Relative to other companies, we tend to favor higher-risk, higher return decisions. 0.884
Managers in our company rarely make risky decisions.* –

Environmental dynamism Technological changes in our industry were rapid and unpredictable. 0.847 0.626 0.870
Jaworski and Kohli (1993) The market competitive conditions were highly unpredictable. 0.808
Customers’ product preferences changed quite rapidly. 0.719
Changes in customers’ needs were quite unpredictable. 0.786

Competitive intensity Competition in our industry is cutthroat. 0.792 0.695 0.872

Jaworski and Kohli (1993) There are many competitive rivalries in our industry. 0.832
Intensive competitor-related activities are a hallmark in our industry. 0.875

Firm hierarchy** In our organization the employees can directly communicate with the CEO. 0.783 0.604 0.884
Self-developed In our organization it is easy to distribute new ideas to people responsible for decision 0.824
making.
Our organizational reporting channels are unbureaucratic. 0.812
Our organization has lean organizational structures. 0.761
Our organization has a very flat hierarchical structure. 0.701

Note:
*
These items were excluded due to low factor loadings.
**
As the items for firm hierarchy capture flat hierarchies, we reversed the answers.

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Table 4

0.722
Evaluation of the inner formative measurement model.
12 Construct/item Path t- VIF
weight value

− 0.071
1.000
Internal knowledge management
11

capabilities
Knowledge management culture 0.498*** 14.073 1.535

− 0.184
Knowledge management structure 0.464*** 15.252 1.502

0.777
0.239
Knowledge management technology 0.296*** 8.488 1.165
10

External knowledge management

− 0.004
capabilities

0.834

0.140

0.160
Knowledge management acquisition processes 0.324*** 20.760 2.263
0.373***
9

Knowledge management conversion processes 23.110 3.130

Knowledge management application processes 0.425*** 25.162 2.175

0.791
0.439
0.106
0.227

0.234
Note:
8

*p < 0.100.
**
p < 0.050.
− 0.148
− 0.002
0.869

0.291
0.257

0.311
***
p < 0.010.
7

hypothesized model including the interaction effects. This is used for the
− 0.329
− 0.085
0.812

0.205

0.102
0.114

0.353
hypothesis test. This model explains a good share of 28.9% of the vari­
6

ance of BMI. Furthermore, this model shows a good overall model fit
according to the standardized root mean square residual (SRMR) since
− 0.259
0.821

0.731

0.202

0.207
0.314

0.002

0.343

the value of 0.078 is less than 0.080 (Hu & Bentler, 1999). The positive
Q2 value of 0.123 for BMI indicates good predictive relevance of this
5

model.
− 0.222
0.785

0.743

0.596

0.225

0.162
0.231

0.002

0.390

The empirical findings support the hypothesized positive effect of

external KM capabilities on BMI (β = 0.382, p < 0.01) (Hypothesis 2).
4

However, internal KM capabilities show no significant effect on BMI (β

− 0.171

− 0.074

= 0.045, p > 0.1), thus rejecting Hypothesis 1. We further postulated

0.840

0.395

0.402

0.390

0.041

0.040
0.018

0.031

that the organizational risk-taking tolerance strengthens the extent to

3

which internal and external KM capabilities enable BMI. Whereas our

− 0.250
− 0.030

data support the effect of external KM capabilities on BMI (β = 0.203, p

0.795
0.317

0.418

0.445

0.541

0.123

0.087
0.029

0.188

< 0.01) (Hypothesis 4), the moderation is negative and significant for
2

the effect of internal KM capabilities on BMI (β = − 0.202, p < 0.01).

− 0.032
− 0.340
− 0.064

Therefore, Hypothesis 3 has to be rejected.

0.805
0.563
0.346

0.359

0.369

0.464

0.052

0.009

0.234

To better understand the moderating effects, we further plotted these

1

in two different ways. We visualized the simple slopes and the marginal
effects (Brambor, Clark, & Golder, 2006). Fig. 2 depicts the interaction
0.738
0.795
0.914

0.814

0.818

0.792

0.912

0.803
0.840
0.797
1.130

0.677
Dev.
Std.

between external KM capabilities and the organizational risk-taking

tolerance. The regression lines show that high organizational risk-
taking tolerance (+1 SD) strengthens the effect of external KM capa­
Mean

3.855
3.422
3.600

3.238

3.212

3.510

2.782

2.834
3.309
1.844
4.144

3.300

bilities on BMI. However, for organizations with a low risk-taking

tolerance (− 1 SD), high levels of external KM capabilities seem to
Knowledge management conversion

Organizational risk-taking tolerance

reduce BMI. Fig. 2 shows the marginal effects external KM capabilities

Knowledge management structure
Knowledge management culture

have on BMI for different degrees of organizational risk-taking toler­

Note: Numbers on the main diagonal show the square-root of the AVE.

ance. It can be seen that this effect increases with an increase of orga­
Environmental dynamism
Knowledge management

Knowledge management

Knowledge management

nizational risk-taking tolerance and for low degrees of organizational

Firm size (employees)
Competitive intensity

risk-taking tolerance, this effect is insignificant (i.e., when the lower

application process
acquisition process

bound of the 95% confidence interval crosses the zero-effect line) (see
Firm hierarchy

Fig. 3).
technology

Figure 4 visualizes the interaction between internal KM capabilities

process

and organizational risk-taking tolerance. Here the effects are opposite to

BMI

the ones found for internal KM capabilities. Under conditions in which

firms have a high organizational risk-taking tolerance (+1 SD), there is
Descriptives and construct correlations.

10
11

12
1
2
3

8
9

no obvious difference between organizations with low or high internal

KM capabilities. However, when firms have a low risk-taking tolerance
(-1 SD), high internal KM capabilities lead to higher outcomes of BMI.
External knowledge management
Internal knowledge management

Internal KM capabilities seem to gain importance for firms that are risk
averse. This is further substantiated by looking at the marginal effects of
internal KM capabilities in Fig. 5. We see that internal KM capabilities
have a significant positive effect on BMI when the organizational risk-
Control variables

taking tolerance is low. This effect even shifts to a negative significant

capabilities

capabilities

effect when the organizational risk-taking tolerance reaches a high

Moderator
Construct

degree.
Table 3

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Table 5 membership with values ranging from 0 to 1. It is necessary to specify

Hypothesis test and model fit. the values of an interval-scale variable that correspond to the threshold
Model I II III for full membership (e.g., fuzzy score equal to 0.95), the cross-over point
Dependent variable: Business model (e.g., fuzzy score equal to 0.5), and the threshold for full non-
innovation membership (e.g., fuzzy score equal to 0.05) (Ragin, 2009). In line
Independent variables: with previous studies (e.g., Kallmuenzer, Kraus, Peters, Steiner, &
Internal knowledge management capabilities 0.052 0.045 Cheng, 2019; Palmer et al., 2019), we set the original values of 5.0, 3.0,
(0.091) (0.082) and 1.0 of relevant antecedents and BMI from five-point Likert scales to
External knowledge management capabilities 0.276** 0.282**
(0.093) (0.093)
correspond to full membership (95%), cross-over anchors (50%), and
Organizational risk-taking tolerance 0.192* 0.187** full non-membership (5%). In the next step of the fsQCA, this study
(0.081) (0.073) separates configurations that are fostering BMI from those that are not
Interaction terms:
by specifying the consistent cutoff value as 0.85 and the number-of-cases
Organizational risk-taking tolerance * internal − 0.202** threshold as 2 (Ragin, 2009) and uses the truth table algorithm to
knowledge management capabilities generate the different combinations of causal conditions that are suffi­
(0.075) cient for achieving high BMI. Following the recommendation of Ragin
Organizational risk-taking tolerance * external 0.203**
(2009), we then use standard analysis of fsQCA to generate the solu­
knowledge management capabilities
(0.067) tions. Finally, complex solution (no logical remainders used), interme­
diate solution (partial logical remainders are selected), and
Control variables:
Environmental dynamism 0.246** 0.156 0.141
parsimonious solution (all logical remainders may be used) are three
(0.087) (0.092) (0.088) solutions produced for each fsQCA analysis. Because the intermediate
Competitive intensity 0.055 − 0.019 − 0.004 solutions are generally superior to both the complex and parsimonious
(0.093) (0.086) (0.086) solutions (Ragin, 2009), this study relies on the intermediate solutions to
Firm hierarchy − 0.192* − 0.044 − 0.049
combine relevant antecedents (e.g., KM culture, structure, technology,
(0.075) (0.084) (0.079)
Firm size − 0.060 − 0.063 − 0.097 acquisition process, conversion process, and application process) into
(0.079) (0.073) (0.067) various causal recipes to explore how these contribute to BMI in two
Industry = Automotive − 0.057 − 0.069 − 0.069 separate groups for low and high organizational risk-taking tolerance.
(0.086) (0.085) (0.083)
Industry = Biotechnology 0.044 − 0.015 − 0.024
(0.093) (0086) (0.086) 4.8. Results of the fsQCA
Industry = Engineering − 0.086 − 0.091 − 0.081
(0.085) (0.080) (0.079) The fsQCA provides a more nuanced understanding of the configu­
Industry = Electronics − 0.108 − 0.081 − 0.094
rations of internal and external KM capabilities that are beneficial for
(0.102) (0.099) (0.098)
R2 0.132 0.248 0.289
SMEs in changing their business model. In fsQCA, two indices are used to
Adjusted R2 0.095 0.203 0.239 assess the quality and relevance of a solution (Ragin, 2009). The
SRMR 0.063 0.078 0.078 coverage index provides information on the relevance of conditions for
Q2 0.054 0.104 0.123 the outcome, whereas a low degree of coverage indicates several paths
Notes: *p < 0.050, **
p < 0.010, ***
p < 0.001, Values in parentheses show the (combinations of conditions) to the same outcome. The consistency
standard error. index is analogous to a correlation that indicates how closely the sub-
sets of conditions and the outcome are related to each other.
4.7. Analysis 2: Fuzzy set qualitative comparative analysis Table 6 shows intermediate solutions for achieving high BMI of two
groups based on low (e.g., group 1) and high (e.g., group 2) organiza­
We follow standard procedures for running the fsQCA. First, data tional risk-taking tolerance with minimum solution coverage of 0.80 and
calibration focuses on transforming ordinary data into fuzzy-set solution consistency of 0.89. These configurations explain a large pro­
portion of the outcome and show that a subset relation exists. This study

Fig. 2. Interaction between external knowledge management capabilities and organizational risk-taking tolerance. Note: n.s. not significant, *p < 0.100, **p < 0.050,
***
p < 0.010.

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0.9 Area with significant

positive effect
0.7

Marginal effectof external knowledge

on business model innovation

0.5

management capabilities 0.3

0.1
Organizational Risk
Taking Tolerance

0.9

1.2

1.5

2.4
0.3

0.6

1.8

2.1
-2.1

-1.8

-1.5

-0.6

-0.3
-1.2

-0.9
-0.1

-0.3 marginal effect

95% upper bound
-0.5
95% lower bound

Fig. 3. Marginal effect of external knowledge management capabilities on BMI.

Fig. 4. Interaction between internal knowledge management capabilities and organizational risk-taking tolerance. Note: n.s. not significant, *p < 0.100, **p < 0.050,
***
p < 0.010.

0.9 Area with significant

positive effect marginal effect
Marginal effect of internal knowledge

0.7
95% upper bound
on business model innovation
management capabilities

0.5 95% lower bound

0.3

0.1 Organizational risk

taking tolerance
0

0.9

1.2

1.5

2.4
0.3

0.6

1.8

2.1
-2.1

-1.8

-1.5

-0.6

-0.3
-1.2

-0.9

-0.1

-0.3

-0.5
Area with significant
negative effect

Fig. 5. Marginal effect of internal knowledge management capabilities on BMI.

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further uses simple notations for causal configurations in which black Furthermore, our findings showed the positive relationship external KM
circles “●” indicate the presence of causal conditions, white circles “○” capabilities have on BMI is strengthened when firms have a high risk-
indicate the absence or negation of causal conditions, and the blank cells taking tolerance. However, this is not the case for firms with a low
represent “doesn’t matter” conditions. Fig. 6 provides a more detailed tolerance for risk-taking. Our findings depict that for firms with low
illustration of the configurations for high BMI. organizational risk-taking tolerance, BMI is strengthened through in­
The results of the fsQCA analysis of the antecedent conditions for ternal KM capabilities. Thus, internal KM capabilities seem to gain
high levels of BMI reveal four pathway solutions. For all cases, KM importance for risk averse firms. These findings suggest that risk averse
culture presents a core condition for achieving BMI. Solution 1–3 pro­ firms execute BMI opportunities that mainly arise from their internal
vide pathways leading to high BMI independent of KM conversion knowledge assets (e.g., R&D department). A possible explanation may
processes as is the case in solution 1, independent of KM structure, as be that risk averse firms pursue less radical BMI or more efficiency
shown in solution 2, and independent of KM technology as provided by oriented BMI (Clauss et al., 2019b). Risk averse firms are rather inter­
solution 3. These solutions indicate that high BMI can be achieved in­ nally oriented and set on improving internal efficiency rather than
dependent of KM conversion processes, KM structure, or KM technology, engaging in risky projects (Cameron & Quinn, 2011). Organizations
if all other KM capabilities are strongly developed. Finally, solution 4 with a low risk-taking tolerance may focus on leveraging core compe­
indicates that even under the absence of external KM capabilities (KM tencies (Leonard-Barton, 1992) or replicating the business model
acquisition, conversion, and application processes) and KM technology, without fundamentally changing its underlying logic (Heij et al., 2014).
BMI can be attained through high KM culture and structure. The more nuanced findings of the fsQCA confirm that external KM
capabilities represent core conditions in achieving high BMI. However,
5. Discussion and conclusion the results also demonstrate a conditional relationship between internal
KM culture, structure and technology, and BMI in the presence of
While scholars acknowledge the necessity of KM capabilities for external KM capabilities. We reveal four pathways in which different
product and process innovation (Helfat et al., 2007; Velu, 2015), little is combinations of internal and external KM capabilities provide condi­
known about which particular KM capabilities SMEs rely on to innovate tions for high BMI. Whereas two configurations show that high external
the business model. To address this research gap, this study was KM capabilities can be combined with most internal KM capabilities.
designed to advance our understanding of how particular KM capabil­ Two pathways however suggest that internal KM capabilities can create
ities affect the ability to innovate the business model in SMEs and to high BMI in the absence of external knowledge acquisition. This speaks
identify whether these effects are further moderated by a firm’s risk- for a situation in which internal KM capabilities can only achieve their
taking tolerance using two different methods of analysis, SEM and full potential if no new knowledge is acquired. For all pathways, KM
fsQCA, for increasing robustness and providing depth to the study. culture presented a core condition for achieving BMI. These latter
The findings suggest that external KM capabilities of acquiring new findings are in line with prior studies on product and process innovation
external knowledge, converting it to be ready for use, and finally which propose that successful innovation in incumbent firms is depen­
applying it for commercialization, are essential KM capabilities that dent on developing both internal and external KM skills (Helfat et al.,
enable SMEs to innovate their business model. Internal KM capabilities, 2007; Teece, 2007; Velu, 2015). However, while product innovation is
emphasizing internal knowledge exploitation and replication, showed mainly based on knowledge about customer preferences and specialized
no significant effect on BMI. This finding might be related to the holistic knowledge related to R&D, and process innovation is usually based on
and often disruptive nature of BMI that requires knowledge that is not internal tacit knowledge of improving manufacturing efficiency paired
available insight to the firm or might even be hindered by relying on with an external search of the latest technological improvements (Snihur
traditional organizational knowledge. Snihur and Wiklund (2019) & Wiklund, 2019), our findings indicate that BMI might be achieved
recently found that for BMI, firms mainly rely on various external through balanced mixtures of external and internal knowledge that
knowledge sources, which include broad knowledge searches in distant captures knowledge related to all dimensions of the business model.
industries and settings. Furthermore, our findings are in line with studies
that have proposed that external knowledge sources may foster and
generate ideas for BMI (Doz & Kosonen, 2010; Martins et al., 2015; 5.1. Contribution to research
Teece, 2018), and that BMI is triggered through changes occurring in the
firm’s extant ecosystem (Amit & Zott, 2015; Heij et al., 2014). Our re­ Our study contributes to research in several ways. First, we
sults demonstrate that innovating a firm’s business model in today’s contribute to the emerging literature on the internal enablers that drive
business environment requires firms to have an absorptive capacity – the BMI. Previous studies have highlighted leadership capabilities for
ability to develop external KM capabilities. This then enables firms to identifying and experimenting with new business opportunities (Ach­
become aware of large market trends and new opportunities arising tenhagen et al., 2013; Doz & Kosonen, 2010), resource capabilities for
from shifts in the firm’s ecosystem (e.g., new technologies, changing flexible use and re-use of resources (Clauss et al., 2019a; Doz & Kosonen,
customer demands, regulations, etc.) (Cohen & Levinthal, 1990). 2010; Teece, 2007), and cultural values and commitment to change
(Hock, Clauss, & Schulz, 2016). We extend the knowledge in this

Table 6
Intermediate solutions of high BMI.
Path Antecedent Coverage Consistency Solution

KMCU KMST KMTE KMAC KMCO KMAP Raw Unique Coverage Consistency

1A ● ● ● ○ ● 0.47 0.03 0.93 0.80 0.89

2A ● ● ● ● ● 0.70 0.03 0.93
3A ● ● ● ● ● 0.70 0.03 0.93
4A ● ● ○ ○ ○ ○ 0.30 0.02 0.94

Notes:
1. KMCU = knowledge management culture, KMST = knowledge management structure, KMTE = knowledge management technology, KMAC = knowledge man­
agement acquisition process, KMCO = knowledge management conversion process, and KMAP = knowledge management application process.
2. Black circles indicate the presence of causal conditions (i.e., antecedents). White circles indicate the absence or negation of causal conditions. The blank cells
represent “doesn’t matter” conditions.

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KMCU KMCU

KMAP KMST KMAP

1A 2A
KMTE KMCO KMTE
KMCU KMCU
KMAC KMAC
KMAP KMST KMAP KMST

3A 4A
KMCO KMCO KMTE

KMAC KMAC

Note: An ellipse with a black-line border represents the presence of the condition, whereas an ellipse with a dotted-line
border represents the absence of the condition. If a condition is irrelevant to the configuration, no ellipse is displayed.

Fig. 6. Causal configurations for high BMI. Note: An ellipse with a black-line border represents the presence of the condition, whereas an ellipse with a dotted-line
border represents the absence of the condition. If a condition is irrelevant to the configuration, no ellipse is displayed.

discourse by shedding light on how organizational KM capabilities affect knowledge sources outside of the firm. BMI however is conceptually
BMI for SMEs. So far, extant studies have mainly been conceptual different from product and process innovation (Snihur & Wiklund, 2019;
without directly testing the proposed effect internal enablers have on Wang, Voss, Zhao, & Wang, 2015). As such, this study provides a first
BMI (Foss & Saebi, 2017). Our empirical findings substantiate prior starting point for better understanding how particular KM capabilities
conceptual and case study based studies by directly linking KM capa­ lead to BMI. This is in keeping with Snihur and Wiklund (2019) who
bilities to BMI. In doing so, we follow the call for empirical research and believe that the more radical and holistic nature of BMI particularly
causal-relationship testing and to advance theory building for BMI requires a more distant knowledge search from outside of the firm. This
literature (Foss & Saebi, 2017). We specifically advance the literature is also in line with the argument that BMI ideas can be generated by
that applies dynamic capability theory to BMI (Mezger, 2014; Teece, adopting business model analogies from companies in other industries
2018). Our study substantiates the general assumption that dynamic (Gassmann, Frankenberger, & Csik, 2014). The findings of our fsQCA,
capabilities facilitate a proactive BMI (Clauss et al., 2019a). As an that configurations of external and internal KM capabilities might be
important addition, we look into the microfoundations of organizational complementary further supports initial findings from Trantopoulos et al.
sensing and show that firms should develop the ability to acquire, (2017) who show that additional external knowledge might even reduce
convert, and apply knowledge for successful BMI. By including organi­ process innovation if the firm lacks internal KM technology. Despite our
zational risk-taking tolerance as a moderator, we take into account that initial findings, this clearly shows an avenue for future research on the
enablers in general and required capabilities more specifically for BMI dynamics of various KM capabilities in relation to different types of
may vary according to individual firm-level variables (Foss & Saebi, innovation and particularly BMI.
2017). Organizational risk-taking tolerance is a general orientation of Third, although SMEs play an important role regarding economic
the firm (Kreiser, Marino, Kuratko, & Weaver, 2013) and thus defines growth in most economies, studies analyzing BMI processes in SMEs are
the overarching context in which KM capabilities operate. It determines relatively scarce (e.g., Anwar, 2018; Clauss et al., 2019b; Laudien &
the willingness of the organization to utilize new business opportunities Daxböck, 2016). While BMI literature is mainly dominated by studies on
in a situation of uncertainty and will therefore determine (Choo, 2013), large companies (Guo, Tang, Su, & Katz, 2017), this study contributes to
how and to what extend new knowledge is been used. The analysis of the the BMI literature by analyzing how internal enablers for BMI fit in the
moderating role of an organization’s risk-taking tolerance highlights SME context. Our study paves the way for better understanding enablers
that mirco-level dynamic capabilities are not necessarily universally that drive BMI in SMEs. This is particularly relevant as SMEs, because of
beneficial for BMI. Dynamic capabilities that might be successful for BMI their limited size and resources, are less able to experiment with new
in one firm are not necessarily successful in another firm. As such, this business models under high uncertainty but need to ensure that internal
empirical study represents a first step towards better understanding the mechanisms for identifying and utilizing BMI exist. Our findings sub­
underlying dynamics of micro-level capabilities. stantiate previous findings that SMEs’ BMI benefits from a better
Second, we contribute to the literature that links knowledge man­ recognition of opportunities (Guo et al., 2017), and that knowledge
agement and innovation (Cohen & Levinthal, 1990; Snihur & Wiklund, management is an important capability that SMEs need to establish in
2019; Trantopoulos et al., 2017). Prior studies in this field have pri­ order to be successful on a long-term base (Bagnoli & Vedovato, 2014).
marily analyzed the role of different knowledge sources on product Particularly, as KM is underrepresented in SMEs (Hutchinson & Quintas,
(Caloghirou, Kastelli, & Tsakanikas, 2004; Cohen & Levinthal, 1990) or 2008), our findings provide an important approach for SMEs to facilitate
process innovation (Trantopoulos et al., 2017). We support their general BMI. Additionally, our findings might be different to those in large firms.
findings that knowledge is beneficial to innovation as it helps to identify It is reasonable that the missing or even negative effect of internal KM
new ideas such as customer demands, new technological opportunities, capabilities of BMI comes from the limited size and thus also limited
competitor moves, etc. More specifically, our findings show the impor­ knowledge base and knowledge diversity within these firms. In contrast,
tance of external KM capabilities that facilitate the identification of large enterprises have more different business units and might therefore

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M. Hock-Doepgen et al. Journal of Business Research 130 (2021) 683–697

benefit to a larger extent from internal KM capabilities. the items for BMI were formulated to capture this process, by asking the
firms about their changes within the last 1–5 years, we suggest future
5.2. Managerial implications studies to collect data at several points in time. This would allow an in-
depth analysis of processes and management behaviors that develop in
This study provides useful implications for managers in SMEs. First, the process of BMI. Furthermore, we rely on key informants in each
our findings depict that the effect specific KM capabilities have on BMI organization. Although we did our best to ensure that these respondents
are dependent on the organizational risk-taking tolerance. For firms that were knowledgeable and in an adequate organizational position, in
are risk tolerant and willing to innovate the business model in a way that order to capture facets of BMI, multiple informants in each organization
goes beyond the existing business model, managers are advised to might be preferable. Although this issue is lower for SMEs, we encourage
develop external oriented KM capabilities that enable them to under­ future studies to collect data with respondents at different levels in the
stand and interact with the ecosystem which surrounds the firm. These firm.
external KM capabilities should comprehend knowledge acquisition From a theoretical perspective, our study only focused on external
processes that particularly focus on increasing the sensitivity to changes and internal KM capabilities. However, firms often engage in network
in environmental trends. In order to develop these capabilities, man­ collaborations, providing them access to relevant knowledge coming
agers are advised to implement processes that capture knowledge on the from outside the firm. In network collaborations, firms actively coop­
latest product and service developments, that exchange knowledge with erate with key partners and customers to promote the exchange of
business partners, and try to devote teams for identifying best practices, knowledge (Dyer & Nobeoka, 2000). Thereby, they create “networks of
etc. Developing these processes sharpens the overall awareness of the learning” (Powell, Koput, & Smith-Doerr, 1996). Hence, network col­
firm and enables the organization to identify new business model op­ laborations provide an additional stream of knowledge which can be
portunities and potential threats (Teece, 2010). Furthermore, external used for identifying BMI opportunities. Therefore, we suggest future
KM capabilities should comprehend processes for converting external studies to analyze the knowledge stream arising from network collabo­
knowledge to company knowledge and application processes for rations and to study how they influence BMI.
implementing new business models. In order to convert external Another source used to capture knowledge coming from outside the
knowledge, managers are advised to apply processes that absorb firm is the acquisition of knowledge through mergers and acquisitions
knowledge from individuals and business partners into the firm. These (M&As) and joint ventures (JVs) (Dunlap, McDonough, Mudambi, &
processes should further integrate different sources of knowledge and Swift, 2015). M&As are a fast way of gaining entirely new knowledge
replace the firm’s outdated knowledge. To finally apply the external resources (Barney, 1991), while JVs are based on collaborative knowl­
knowledge for novel business model solutions, managers are advised to edge transfers with other firms. During joint projects, firms share
integrate processes that quickly link the newly converted knowledge for knowledge and thereby increase their knowledge stock and improve
solving current problems, for experimenting with innovative ideas, and core competencies (Rosenkopf & Almeida, 2003). Considering that M&A
for increasing organizational efficiency. External KM capabilities are and JV are popular methods used to increase a firm’s knowledge capa­
especially important if managers are not planning on innovating the BMI bilities and their overall innovativeness (Dunlap et al., 2015), we
on their own, but rather through alliances with new suppliers, partners, encourage future research to analyze how the acquisition of knowledge
etc. through M&As and the knowledge transfer in JVs influences a firm’s KM
However, if managers are in a firm with low risk-taking preferences, capabilities and the ability to innovate the business model.
then we advise managers to leverage their internal KM capabilities.
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User’s guide to fuzzy-set/qualitative comparative analysis (p. 87). University of Arizona. Range Planning, 43(2), 216–226.
Ricciardi, F., Zardini, A., & Rossignoli, C. (2016). Organizational dynamism and adaptive
business model innovation: The triple paradox configuration. Journal of Business
Dr. Marianne Hock-Doepgen received her doctoral degree at the Department of Business
Research, 69(11), 5487–5493.
& Economics at Philipps-University of Marburg at the research group in Management and
Ringle, C., Sarstedt, M., & Straub, D. (2012). A critical look at the use of PLS-SEM in MIS
Innovative Value Creation Concepts. Her research focuses on identifying critical micro­
Quarterly. MIS Quarterly (MISQ), 36(1).
foundations of dynamic capabilities that drive business model innovation. She was a
Roberts, N. (2015). Absorptive capacity, organizational antecedents, and environmental
visiting phd scholar at the Haas School of Business, UC Berkeley and at the Institute for
dynamism. Journal of Business Research, 68(11), 2426–2433.
Manufacturing, University of Cambridge. Marianne Hock-Doepgen is the COO of “Digi­
Rolf Seringhaus, F., & Rosson, P. J. (1998). Management and performance of
tales Gründerzentrum Alte Schlosserei”, a government-funded incubator in Germany.
international trade fair exhibitors: Government stands vs independent stands.
International Marketing Review, 15(5), 398–412.
Rosenkopf, L., & Almeida, P. (2003). Overcoming local search through alliances and Dr. Thomas Clauss is Associate Professor in the Section of Innovation and Design Engi­
mobility. Management Science, 49(6), 751–766. neering, Department of Technology and Innovation at University of Southern Denmark.
Sanchez, P., & Ricart, J. E. (2010). Business model innovation and sources of value Additionally, he is affiliated researcher with the Group for Innovative Value Creation and
creation in low-income markets. European Management Review, 7(3), 138–154. Entrepreneurship, School of Business and Economics at Philipps-University of Marburg,
Schumpeter, J. (1934). The theory of economic development. Cambridge, MA: Harvard Germany, where he held an Assistant Professor position prior to his current role. He
University Press. received his Ph.D. from the University of Hamburg, Germany. His research interests
Siemsen, E., Roth, A., & Oliveira, P. (2010). Common method bias in regression models include business model innovation, innovation generation in alliances and buyer–supplier
with linear, quadratic, and interaction effects. Organizational Research Methods, 13 relationships, as well as the implications of digitalization for these topics.His work has
(3), 456–476. appeared in leading international journals, such as Long Range Planning, Journal of
Smith, D. J. (2013). Power-by-the-hour: The role of technology in reshaping business Supply Chain Management, Industrial Marketing Management, IEEE Transactions on En­
strategy at Rolls-Royce. Technology Analysis & Strategic Management, 25(8), gineering Management, R&D Management, and Organization & Environment.
987–1007. https://doi.org/10.1080/09537325.2013.823147.
Smith, K. G., Collins, C. J., & Clark, K. D. (2005). Existing knowledge, knowledge
Dr. Sascha Kraus is Full Professor of Entrepreneurship at Durham University, United
creation capability, and the rate of new product introduction in high-technology
Kingdom. He holds a doctorate in Social and Economic Sciences from Klagenfurt Uni­
firms. Academy of Management Journal, 48(2), 346–357.
versity, Austria, a Ph.D. in Industrial Engineering and Management from Helsinki Uni­
Snihur, Y., & Wiklund, J. (2019). Searching for innovation: Product, process, and
versity of Technology and a Habilitation (Venia Docendi) from LUT University, both in
business model innovations and search behavior in established firms. Long Range
Finland. Before joining Durham University, he held Full Professor positions at Utrecht
Planning, 52(3), 305–325.
University, the Netherlands, the University of Liechtenstein and École Supérieure du
Sosna, M., Trevinyo-Rodriguez, R. N., & Velamuri, S. R. (2010). Business model
Commerce Extérieur, a Grande École in Paris, France. He also held Visiting Professor
innovation through trial-and-error learning the naturhouse case. Long Range
positions at Copenhagen Business School, Denmark and at the University of St. Gall,
Planning, 43(2–3), 383–407.
Switzerland.
Swap, W., Leonard, D., & Mimi Shields, L. A. (2001). Using mentoring and storytelling to
transfer knowledge in the workplace. Journal of Management Information Systems, 18
(1), 95–114. Cheng-Feng Cheng is Associate Professor of Marketing at the Department of Business
Tallman, S., Luo, Y., & Buckley, P. J. (2018). Business models in global competition. Administration of Asia University, Taiwan. He received his Ph.D. in Management from
Global Strategy Journal, 8(4), 517–535. National Cheng Kung University, Taiwan. His research interests are strategic management,
Teece, D. J. (1998). Capturing value from knowledge assets: The new economy, markets marketing management, and consumer behavior. He has participated in several interna­
for know-how, and intangible assets. California Management Review, 40(3), 55–79. tional conferences and published his research in journals like Tourism Management,
Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations Technovation, Journal of Business Research, Industrial Marketing Management, British
of (sustainable) enterprise performance. Strategic Management Journal, 28(13), Journal of Management, Personnel Review, Asia Pacific Business Review, Applied Eco­
1319–1350. nomics Letters, Journal of Computer Information Systems.

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