The paper, entitled Business Model Innovation, Multinational Enterprises, and Global Customers’ Heterogeneous Preferences, is written by PhD candidate Mohammad Taghi Ramezan Zadeh, Professor Henk Volberda, and RSM alumni Saeed Khanagha and Oli Mihalache. This research is conducted as a collaborative project with Ericsson Research, Kista, Sweden and the case under scrutiny was Ericsson's global Cloud business.
Multinational enterprises
The paper deals with the effects of the advent of cloud technology and industry convergence on globally scattered customers’ preferences about incumbent multinational enterprises (MNEs). In this context, the authors from RSM tried to answer the questions “How different are the demands of globally distributed customers?”, “What are the organisational antecedents of the discrepancy in customers demands?” and “How do multinational firms respond to the customers heterogeneous preferences?” To answer these questions, the authors applied a mixed method; they surveyed 116 of Ericsson’s globally scattered accounts, and studied Ericsson’s business model innovation as a case to answer their research questions.
Customer categories
“Our research findings confirm that the customers’ demands vary significantly based on their adaptive capabilities,” said Professor Henk Volberda. “The survey indicates divergent, yet intertwined, demands from customers so that the divergence prevents the MNEs to merely develop isolated business models for different categories of customers.” Volberda added that at the same time, the demands conflict in the sense that the needs of individual customers are substantially contradictory to each other and to the current business model of the firm.
Intertwined processes
Results of the research suggest that theories recommending separating innovative businesses from current businesses do not reflect what practically happens in the current industry settings. Instead, MNEs devise parallel processes of business model innovation that are interdependent. In other words, MNEs operate through experimenting multiple new value propositions in a very efficient and agile manner through simultaneous intertwined processes and vacillating among them to serve their customers’ heterogeneous demands. Finally, this study states that the MNEs leadership devotes high degrees of vigilance, integrates all those heterogeneous efforts at the firm level, and manages long run internal conflict imposed by parallel business model innovation routes.
