The sustainable performance of the digital start-up company based on customer participation, innovation, and business model
Abstract
The digital-based start-up industry in Indonesia has developed, but with a high failure rate. This research aims at elaborating the relationship between business model, entrepreneurial orientation, innovation, and sustainable performance on the digital start-up companies in Indonesia. The data were collected using offline and online surveys to 206 leaders or founders of digital start-up companies spread throughout Indonesia. Then, the data were then analysed using the structural equation model. The research results revealed that a business model had a significant role in achieving sustainable performance. A business model needs to be supported by customer participation and innovation. Innovation was more influential compared to customer participation in achieving companies’ sustainable performance. The indirect effect of customer participation and innovation on sustainable performance through the business model was greater than the direct effect not through the business model. The novelty of this research is the examination and analysis of the relationship between innovation, customer participation, business model, and sustainable performance in one model, and the use of digital start-up companies in Indonesia as the research analysis unit.
Keyword : business model, customer participation, digital startup, innovation, structural equation model, sustainable performance
How to Cite
Danarahmanto, P. A., Primiana, I., Azis, Y., & Kaltum, U. (2020). The sustainable performance of the digital start-up company based on customer participation, innovation, and business model. Business: Theory and Practice, 21(1), 115-124. https://doi.org/10.3846/btp.2020.11053
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2014). A primer on partial least squares structural equation modelling (PLS-SEM). Sage publications.
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Joo, J., & Shin, M. (2017). Building sustainable business ecosystems through customer participation: A lesson from South Korean cases. Asia Pacific Management Review, 23(1), 1–11. https://doi.org/10.1016/j.apmrv.2017.01.001
Joshi, A., & Sharma, S. (2004). Customer knowledge development: antecedents and impact on new product performance. Journal of Marketing, 68(10), 47–59. https://doi.org/10.1509/jmkg.68.4.47.42722
Klein, J. (1999). The relationship between level of academic education and reversible and irreversible processes of probability decision-making. Higher Education, 37(4), 323–339. https://doi.org/10.1023/A:1003608412240
Lagrosen, S. (2005). Customer involvement in new product development: a relationship marketing perspective. European Journal of Innovation Management, 8(4), 424–436. https://doi.org/10.1108/14601060510627803
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Magretta, J. (2002). Why business models matter. Massachusetts: Harvard Business Review.
Merlo, O., Eisingerich, A., & Auh, S. (2014). Why customer participation matters. MIT Sloan Management Review, 55(2), 81. Massachusetts: MIT Sloan Management Review.
Merx-Chermin, M., & Nijhof, W. (2005). Factors influencing knowledge creation and innovation in an organisation. Journal of European Industrial Training, 29(2), 135–147. https://doi.org/10.1108/03090590510585091
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Mustak, M., Jaakkola, E., & Halinen, A. (2013). Customer participation and value creation: a systematic review and research implications. Managing Service Quality: An International Journal, 23(4), 341–359. https://doi.org/10.1108/MSQ-03-2013-0046
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Santos, J., & Brito, L. (2012). Toward a subjective measurement model for firm performance. BAR-Brazilian Administration Review, 9(SPE), 95–117. https://doi.org/10.1590/S1807-76922012000500007
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Teece, D. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640
Teece, D. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2), 172–194. https://doi.org/10.1016/j.lrp.2009.07.003
Teeratansirikool, L., Siengthai, S., Badir, Y., & Charoenngam, C. (2012). Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), 168–184. https://doi.org/10.1108/17410401311295722
Timmers, P. (1998). Business models for electronic markets. Journal of Electronic Markets, 8, 3–8. https://doi.org/10.1080/10196789800000016
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Zott, C., & Amit, R. (2001). Value creation in e-business. Strategic Management Journal, 22(6–7), 493–520. https://doi.org/10.1002/smj.187
Zott, C., & Amit, R. (2007). Business model design and the performance of entrepreneurial firms. Organization Science, 18(2), 181–199. https://doi.org/10.1287/orsc.1060.0232
Afuah, A., & Tucci, C. (2001). Internet business models and strategies: text and cases. New York: McGraw-Hill Irwin.
Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long Range Planning, 46(6), 419–426. https://doi.org/10.1016/j.lrp.2013.08.023
Barrett, P. (2007). Structural equation modelling: Adjudging model fit. Personality and Individual Differences, 42(5), 815–824. https://doi.org/10.1016/j.paid.2006.09.018
Blank, S. (2010). What’s a startup? First principles. https://steveblank.com/2010/01/25/whats-a-startup-first-principles/
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, 9–19. https://doi.org/10.1016/j.jclepro.2012.07.007
Bouncken, R. B., Lehmann, C., & Fellnhofer, K. (2016). The role of entrepreneurial orientation and modularity for business model innovation in service companies. International Journal of Entrepreneurial Venturing, 8(3), 237–260. https://doi.org/10.1504/IJEV.2016.078973
Rahayu, E. (2018). Data Tenant BTP [Microsoft Excel spreadsheet]. Bandung: Bandung Techno Park.CB Insight. (2019). The Top 20 reasons startups fail [Research Brief]. https://www.cbinsights.com/research/startup-failure-reasons-top/
Chang, S., & Lee, M. (2008). The linkage between knowledge accumulation capability and organizational innovation. Journal of Knowledge Management, 12(1), 3–20. https://doi.org/10.1108/13673270810852359
Chang, W., & Taylor, S. (2016). The effectiveness of customer participation in new product development: a meta-analysis. Journal of Marketing, 80(1), 47–64. https://doi.org/10.1509/jm.14.0057
Chervonnaya, O. (2003). Customer role and skill trajectories in services. International Journal of Service Industry Management, 14(3), 347–363. https://doi.org/10.1108/09564230310478864
Chesbrough, H., & Rosenbloom, R. (2002). The role of the business model in capturing value from innovation: evidence from Xerox Corporation’s technology spin-off companies. Industrial and Corporate Change, 11(3), 529–555. https://doi.org/10.1093/icc/11.3.529
Chomeya, R. (2010). Quality of psychology test between Likert scale 5 and 6 points. Journal of Social Sciences, 6(3), 399–403. https://doi.org/10.3844/jssp.2010.399.403
Cummins, R., & Gullone, E. (2000, 8–10 March). Why we should not use 5-point Likert scales: The case for subjective quality of life measurement. In Proceeding of the 2nd international conference on quality of life in cities (pp. 74–93). Singapore.
Dabholkar, P. (2015). How to improve perceived service quality by increasing customer participation. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 483–487). New Orleans, Louisiana. Springer. https://doi.org/10.1007/978-3-319-13254-9_97
Damanpour, F. (1996). Organizational complexity and innovation: developing and testing multiple contingency models. Management Science, 42(5), 693–716. https://doi.org/10.1287/mnsc.42.5.693
Djelassi, S., & Decoopman, I. (2013). Customers’ participation in product development through crowdsourcing: Issues and implications. Industrial Marketing Management, 42(5), 683–692. https://doi.org/10.1177/2051570716650160
Drucker, P. (1985). Innovation and entrepreneurship. UK: Pan Business Management.
Elkington, J. (1998). Cannibals with forks: 1he triple bottom line 21 century business. Gabriela Island, British Columbia: New Society Publishers. https://doi.org/10.1002/tqem.3310080106
Fang, E. (2008). Customer participation and the trade-off between new product innovativeness and speed to market. Journal of Marketing, 72(4), 90–104. https://doi.org/10.1016/j.ijpe.2011.05.014
Ghozali, I. (2006). Aplikasi Analisis Multivarite dengan SPSS. Semarang: Badan Penerbit Universitas Diponegoro.
Gouthier, M., & Schmid, S. (2003). Customers and customer relationships in service firms: The perspective of the resource-based view. Marketing Theory, 3(1), 119–143. https://doi.org/10.1177/1470593103003001007
Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662–676. https://doi.org/10.1016/j.ijpe.2011.05.014
Hair, J., Black, W., Babin, B., Anderson, R., & Tatham, R. (2010). Multivariate data analysis. New Jersey: Prentice Hall.
Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2014). A primer on partial least squares structural equation modelling (PLS-SEM). Sage publications.
Hall, J., Daneke, G., & Lenox, M. (2010). Sustainable development and entrepreneurship: Past contributions and future directions. Journal of Business Venturing, 25(5), 439–448. https://doi.org/10.1016/j.jbusvent.2010.01.002
Joo, J., & Shin, M. (2017). Building sustainable business ecosystems through customer participation: A lesson from South Korean cases. Asia Pacific Management Review, 23(1), 1–11. https://doi.org/10.1016/j.apmrv.2017.01.001
Joshi, A., & Sharma, S. (2004). Customer knowledge development: antecedents and impact on new product performance. Journal of Marketing, 68(10), 47–59. https://doi.org/10.1509/jmkg.68.4.47.42722
Klein, J. (1999). The relationship between level of academic education and reversible and irreversible processes of probability decision-making. Higher Education, 37(4), 323–339. https://doi.org/10.1023/A:1003608412240
Lagrosen, S. (2005). Customer involvement in new product development: a relationship marketing perspective. European Journal of Innovation Management, 8(4), 424–436. https://doi.org/10.1108/14601060510627803
Lee, S., Olson, D., & Trimi, S. (2012). Co-innovation: convergenomics, collaboration, and co-creation for organizational values. Management Decision, 50(5), 817–831. https://doi.org/10.1108/00251741211227528
Lendel, V., & Varmus, M. (2013). Use of innovation in marketing management of Slovak business enterprises. Business: Theory and Practice, 14, 35. https://doi.org/10.3846/btp.2013.04
Lüdeke-Freund, F. (2013). Business model for sustainability innovation: conceptual foundation and the case of solar energy (PhD’s Thesis). Lüneburg: Leuphana Universität Lüneburg.
Magretta, J. (2002). Why business models matter. Massachusetts: Harvard Business Review.
Merlo, O., Eisingerich, A., & Auh, S. (2014). Why customer participation matters. MIT Sloan Management Review, 55(2), 81. Massachusetts: MIT Sloan Management Review.
Merx-Chermin, M., & Nijhof, W. (2005). Factors influencing knowledge creation and innovation in an organisation. Journal of European Industrial Training, 29(2), 135–147. https://doi.org/10.1108/03090590510585091
Ministry of Commerce and Industry of the Republic of India. (2017). Notification G.S.R. 501 (E). http://www.egazette.nic.in/WriteReadData/2017/176201.pdf
Muhamad, M., Ebrahim, Z., & Hami, N. (2014, 7–9 January). The Influence of innovation performance towards manufacturing sustainability performance. In Proceeding of 2014 International Conference on Industrial Engineering and Operations Management. Bali.
Mustak, M., Jaakkola, E., & Halinen, A. (2013). Customer participation and value creation: a systematic review and research implications. Managing Service Quality: An International Journal, 23(4), 341–359. https://doi.org/10.1108/MSQ-03-2013-0046
Osterwalder, A. (2004). The business model ontology a proposition in a design science approach (Doctoral dissertation). Université de Lausanne, Faculté des hautes études commerciales.
Plé, L., Lecocq, X., & Angot, J. (2010). Customer-integrated business models: a theoretical framework. M@n@gement, 13(4), 226–265. https://doi.org/10.3917/mana.134.0226
Prahalad, C., & Ramaswamy, V. (2004). Co-creating unique value with customers. Strategy & Leadership, 32(3), 4–9. https://doi.org/10.1108/10878570410699249
Rademakers, M. (2005). Corporate universities: driving force of knowledge innovation. Journal of workplace Learning, 17(1/2), 130–136. https://doi.org/10.1108/13665620510574513
Rahman, S. A., Taghizadeh, S. K., Ahmad, N., & Ramayah, T. (2016). Psychological factors of innovativeness among nomadic micro-entrepreneurs for achieving business growth. Business: Theory and Practice, 17, 191. https://doi.org/10.3846/btp.2016.618
Redis, J. (2009). The impact of business model characteristics on IT firms’ performance. International Journal of Business, 14(4), 291.
Santos, J., & Brito, L. (2012). Toward a subjective measurement model for firm performance. BAR-Brazilian Administration Review, 9(SPE), 95–117. https://doi.org/10.1590/S1807-76922012000500007
Schaltegger, S., & Wagner, M. (2011). Sustainable entrepreneurship and sustainability innovation: categories and interactions. Business Strategy and the Environment, 20(4), 222–237. https://doi.org/10.1002/bse.682
Schaltegger, S., Lüdeke-Freund, F., & Hansen, E. (2012). Business cases for sustainability: the role of business model innovation for corporate sustainability. International Journal of Innovation and Sustainable Development, 6(2), 95–119. https://doi.org/10.1504/IJISD.2012.046944
Shah, R., & Goldstein, S. (2006). Use of structural equation modeling in operations management research: Looking back and forward. Journal of Operations Management, 24(2), 148–169. https://doi.org/10.1016/j.jom.2005.05.001
Sinfield, J., Calder, E., McConnell, B., & Colson, S. (2012). How to identify new business models. MIT Sloan Management Review, 53(2), 85. Massachusetts: MIT Sloan Management Review.
Teece, D. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640
Teece, D. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2), 172–194. https://doi.org/10.1016/j.lrp.2009.07.003
Teeratansirikool, L., Siengthai, S., Badir, Y., & Charoenngam, C. (2012). Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), 168–184. https://doi.org/10.1108/17410401311295722
Timmers, P. (1998). Business models for electronic markets. Journal of Electronic Markets, 8, 3–8. https://doi.org/10.1080/10196789800000016
United Nations. (1987). Our common future: report of the world commission on environment and development (Report No. A/42/427). https://sswm.info/sites/default/files/reference_attachments/UN%20WCED%201987%20Brundt-land%20Report.pdf
Wijnker, M., Van Kasteren, H., & Romijn, H. (2015). Fostering sustainable energy entrepreneurship among students: The business oriented technological system analysis (BOTSA) program at Eindhoven university of technology. Sustainability, 7(7), 8205–8222. https://doi.org/10.3390/su7078205
Zott, C., & Amit, R. (2001). Value creation in e-business. Strategic Management Journal, 22(6–7), 493–520. https://doi.org/10.1002/smj.187
Zott, C., & Amit, R. (2007). Business model design and the performance of entrepreneurial firms. Organization Science, 18(2), 181–199. https://doi.org/10.1287/orsc.1060.0232