Cross-Pollinators in the Ecosystem: The Role of Suppliers in the Diffusion of a New Business Model

This paper extends the business model literature by studying how a new business model diffuses in an industry. We theorize that firms are more likely to adopt a new business model when their rivals have adopted that new business model, but this is more than a simple matter of serving the same role in an industry. We distinguish between (1) rivals with which the focal firm has a direct business relationship (direct rivals) and (2) rivals with which the focal firm has an indirect relationship through a mutual supplier (joint-supplier rivals). Furthermore, we theorize that firms will not adopt a new business model when they are exposed to direct and joint-supplier rivals that have not adopted the innovation, even if the innovation is generally spreading. We study these predictions in the global video game industry 2006-2013. We find that firms are more likely to adopt or not, depending on whether their joint-supplier rivals have adopted the innovation. However, direct rivals do not influence the focal organization in its decision to adopt the innovation. We discuss the neglected role of suppliers in the diffusion of a business model innovation, and implications for the business model and diffusion of innovations literatures.