Business model innovation in demand response firms: Beyond the niche-regime dichotomy

• Published in: Environmental innovation and societal transitions Vol. 39; pp. 1 - 17
• Main Authors: Ruggiero, S., Kangas, H.-L., Annala, S., Lazarevic, D.
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.06.2021
• Subjects: Business model; Demand-side management; Multi-technology interaction; Sectoral reconfiguration; Sustainability transition; Business model; Sustainability transition; Sectoral reconfiguration; Demand-side management; Multi-technology interaction
• ISSN: 2210-4224; 2210-4232
• DOI: 10.1016/j.eist.2021.02.002

•We focus on business model innovation for demand response services in Finland.•We identify drivers and business model innovation behaviours of firms.•The identified behaviours do not neatly fall in the niche-regime dichotomy.•To overcome binary thinking we suggest adopting a morphological box.•Multi-sector interaction creates opportunities for business model innovation. Demand response (DR) is an innovation emerging at the intersection of the energy and information and communications technology sectors. This paper aims to investigate the drivers of—and differences in—business model innovation (BMI) behaviours of firms operating in these two interacting industries. Results from 22 semi-structured interviews with representatives of Finnish DR companies show that external drivers of BMI include regulation, competition, and the demise of the telecom industry following the fall of Nokia. Whereas technology start-ups and companies from adjacent industries are motivated by entrepreneurial opportunities, incumbent energy companies are driven by the threat of losing their existing customers and need to increase efficiency. The BMI behaviours observed do not fall neatly into the often-used dichotomous categories of niche/new entrant and regime/incumbent, as firms show behaviours from both extremes. To overcome this binary thinking, we propose a morphological box model that represents the extreme states of firm BMI while allowing for flexibility.