Legitimacy without Imitation: How to Achieve Robust Business Model Innovation

Abstract

Business model innovation requires legitimacy, but increased legitimacy raises the possibility of imitation. We examine how firms can balance legitimacy-imitation tension through two relevant theoretical lenses, institutional theory (legitimacy), and the resource-based view (imitation). We argue that firms can strategically design the content, structure, and governance of their new business models to selectively increase legitimacy with customers and business partners while at the same time limiting the likelihood of imitation by competitors. We call the outcome of such a design robust BMI and theorize that it enables innovators of business models to enjoy sustainable performance advantages relative to other innovation types (i.e., product, process, and management innovation).

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