Although business model innovation (BMI) can create a firm's competitive advantage and enhance its performance, many small and medium-sized enterprises (SMEs) fail to obtain the expected outcomes when innovating their business model. BMI leads to irreversible fundamental changes in key components of a company's business model, which means it entails a high level of risk, ambiguity and uncertainty. BMI can be seen as a double-edged sword, in that it can have very positive and negative consequences, and firms can experience substantial growth or go bankrupt, depending on whether or not the BMI is implemented correctly. Hence, knowing how and when to innovate a BM is a serious challenge for firm managers/owners. This study developed a model for implementing Business Model Innovation in SMEs focusing on “human and organisational” factors to improve performance. The model shed light upon our understanding of the managerial side of BM implementation by highlighting the role of managers and employees within organization as a key driver for any change in a BM. These findings provide guidelines to help company owners/managers implement informed decisions about the implementation of BMI based on their firm's strategies.

Research has shown that business model innovation (BMI) can create competitive advantages and enhance firm performance. However, many small and medium-sized enterprises (SMEs) fail to supreme their performance. BMI can create unexpected consequences for businesses and their ecosystem. Therefore, knowing how and under what circumstances BMI affects a firm’s performance is a primary concern for managers/owners of SMEs. Using data from 460 European SMEs, this paper aims to examine three paths through which ICT-driven BMI can impact firm’s performance. Introducing organisational capabilities as a mediator, this study has extended prior literature on BMI by showing that organisational capabilities are as strong as other existing mediators of revenue and efficiency growth regarding improving the firm’s performance. The findings provide guidelines for practitioners to execute informed-decisions about the implementation of BMI based on their firm’s strategies and the available capabilities while considering contingent factors of firm size and age.

Although research has shown that business model innovation (BMI) can create a firm's competitive advantage and enhance its performance, many small and medium-sized enterprises (SMEs) fail to obtain the expected outcomes when innovating their business model. Business Model Innovation (BMI) leads to irreversible fundamental changes in key components of a company's business model, which means it carries with it a high level of risk, ambiguity and uncertainty. Drawing on the data from a cross-industry sample of 563 European SMEs, we apply structural equation modelling to examine how a firm's performance is affected by innovating its business model. A conceptual model is developed to examine how organisational capabilities and implementation of a profit- or growth-oriented strategy, as materialised in BMI, affect a firm's overall performance. The results indicate that, while the direct link between BMI and firm performance is not significant, this path is fully mediated through efficiency growth, organisational capabilities and revenue growth. Furthermore, there are significant direct effects from efficiency growth, organisational capabilities and revenue growth on firm performance. These findings confirm the validity of the model and contribute to existing literature on BMI efforts in SMEs and provide guidelines to help company owners/managers implement informed decisions about the implementation of BMI based on their firm's strategies.