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Top1. Introduction
A business model articulates the logic, the data and other evidence that support a value proposition for the customer, and a viable structure of revenues and costs for the enterprise delivering that value (Teece, 2010, p. 179). Prior research in the business model (BM) literature primarily focuses on business model innovation (e.g., Amit & Zott, 2012; Foss & Saebi, 2018; Spieth, Schneckenberg, & Ricart, 2014); however, the understanding of business model adaptation (BMA) remains equivocal (Saebi, Lien, & Foss, 2017; Sarta, Durand, & Vergne, 2020). For example, there is an on-going debate about how firms adapt their business model in response to discontinuities and disruptions of external environments. Scholars have called for further research on business model adaptation (e.g. Foss & Saebi, 2018; Massa, Tucci, & Afuah, 2017; Spieth, Schneckenberg, & Matzler, 2016; To, Au, & Kan, 2019).
In this study, the authors address the knowledge gap by focusing on small and medium-sized information technology (IT) firms in high-velocity business environments. First, the rapid evolution of information, computer and telecommunication technologies often challenges the existing business models and forces firms to adapt (Loon & Chik, 2019; To et al., 2019). Second, high-velocity business environments are characterised as markets with blurred boundaries, unclear business models, and ambiguous and shifting market players i.e. buyers, suppliers, competitors, complementors (Wirtz, Mathieu, & Schilke, 2007). In a high-velocity business environment whereby competition, technologies, government policies, and consumers’ attitudes are highly uncertain, few competitive advantages can last (Liu, Ndubisi, Liu, & Barrane, 2020; Wirtz et al., 2007), which intensifies the need and difficulty for firms to adapt their business models.
Small and medium-sized IT firms are particularly vulnerable to high-velocity environments given their limited financial and human resources with which to respond (Vargo & Seville, 2011). It is, therefore, critical for them to develop their capabilities to innovate and adapt their business models to achieve better synchronicity with their business environments in the face of threats and opportunities. This study is concerned with this prominent issue and seeks to answer this question: how do small and medium-sized IT firms in high-velocity business environments manage their BMA? Specifically, the authors draw on dynamic capability as the underpinning theoretical perspective (Teece, 2010) to address the question. Through examining the process of the BMA of small and medium-sized IT firms, the authors aim to extend the understanding of business model literature by identifying the key dynamic capabilities that shape and determine the process of BMA, and provide business practitioners with insights into enacting, managing and implementing their BMA.