Integrative capability, business model innovation and performance

Purpose - The purpose of this paper is to examine how business model innovation (BMI) mediates the relationship between integrative capability, business strategy and firm performance. Design/methodology/approach - A literature review provides the model and hypotheses. Using a sample of 165 Chinese firms, the authors conduct the examination using a theoretical model and hypotheses following standard analysis methods. Findings - The results show that BMI positively mediates the relationship between integrative capability and firm performance. Moreover, a differentiation strategy positively moderates the link between BMI and firm performance, while a cost leadership strategy presents a significantly negative moderating effect. Research limitations/implications - First, the authors test the hypotheses using data from China; thus data from other emerging economies should be tested. Second, the authors use cross-sectional data in this study making it impossible to verify the dynamic developed in the process of BMI; a longitudinal study could provide a more comprehensive understanding. Third, the authors consider one intermediate mechanism to test the relationship of integrative capability and firm performance; additional factors may link integrative capability and firm performance. Practical implications - The mediating effect of BMI suggests managers should pay more attention to BMI to improve firm performance, and they should understand that BMI’s role varies across different business strategies. Originality/value - The paper is original in its investigation of the effect of integrative capability and BMI on firm performance using data from China and demonstrates the mediating effect of BMI on the relationship between integrative capability and firm performance.