How do business model and health technology design influence each other? Insights from a longitudinal case study of three academic spin-offs

• Published in: Research policy Vol. 43; no. 6; pp. 1025 - 1038
• Main Authors: Lehoux, P., Daudelin, G., Williams-Jones, B., Denis, J.-L., Longo, C.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.07.2014; Elsevier Sequoia S.A
• Subjects: Academic spin-offs; Business model; Business models; Canada; Case studies; Entrepreneurs; Innovation management; Innovations; Longitudinal studies; Medical devices; Medical technology; Planning methods; Product design; R&D; Research policy; Spinoffs; Studies; Uncertainty; Canada; Innovation management; R&D; Academic spin-offs; Business model; Medical devices
• ISSN: 0048-7333; 1873-7625
• DOI: 10.1016/j.respol.2014.02.001

•Business models redefine or reframe technology-based value propositions.•Design efforts are redirected, prioritizing capital investors’ value expectations.•Industry-level dynamics are likely to constrain business model innovation.•Health technology spin-offs need well-thought out alternative business models. Academic spin-offs often lack business expertise, face uncertainties regarding their innovation and their markets, and do not have a clear idea of how their product will create value. In spite of this vagueness, academic entrepreneurs must articulate a business model and rapidly establish trustworthy relationships with potential users, purchasers and capital investors. One may thus wonder how their technology development process is influenced by the long-term expectations of their putative customers as well as the short-term requirements of capital investors? This longitudinal case study examines how the business models of three Canadian health technology spin-offs sought to address the value expectations of clinical users and capital investors, how tensions were resolved, and the impact this had on technology design. We describe the synergistic readjustments, drastic reconfiguration and mismatch between business model and technology design we observed. Our discussion highlights the mediating mechanisms by which business models and technology design influence each other, clarifying why the initial value proposition of the spin-offs was either refined or reframed. Beyond confirming the importance of differentiating business models in the health technology industry, our study suggests that it is not only who makes decision that matters, but also how stakeholders’ value expectations get embedded in a spin-off's value proposition.