Business Model Innovation in a Crisis: A Longitudinal Qualitative Analysis

The Covid pandemic highlighted the speed and intensity with which an external shock can impact the ability of firms to continue to create and capture value using their existing business model. The business models of entrepreneurial firms are particularly malleable as founders test the market and adapt their offerings, networks, and activities. This makes studying how entrepreneurial firms engage in business model innovation (BMI) in the face of external crises critical, which helps to better understand how firms grow and innovate in a dynamic environment. This paper explores how entrepreneurial firms engage in BMI during crises through three research questions: (1) What drives firm to engage in BMI during a crisis, (2) what types of firms engage in BMI during a crisis, and (3) what activities did crisis-exposed firms undertake and what types of resources did they use to transform their business models? The paper draws on 238 interviews with 85 high-growth UK entrepreneurs conducted over the course of the pandemic. We develop a novel methodology for multiple readers to review each transcript to identify changes in firms’ business models. Through thematic coding we identify the underlying drivers that trigger BMI during the crisis and the organizational processes that are used to change firms’ business models.