A research on the robustness measurement model of incumbent′s digital business model

Wang Xuedong, Kuang Haibo, Wang Qi

Science Research Management ›› 2021, Vol. 42 ›› Issue (1) : 189-199.

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Science Research Management ›› 2021, Vol. 42 ›› Issue (1) : 189-199.

A research on the robustness measurement model of incumbent′s digital business model

  • Wang Xuedong, Kuang Haibo, Wang Qi
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Abstract

In today′s digital age, many incumbent enterprises have built digital business models and are striving for digital transformation. The construction of digital business model by incumbent enterprises is a process of remodeling business model with great risk and high failure rate. "Business model robustness" is the key to whether incumbent enterprises can achieve digital transformation. However, the existing research and evaluation of business model pays less attention to the innovation and practice of incumbent enterprises in traditional industries, and does not provide a systematic method in general to evaluate the robustness of incumbent enterprises′ digital business model. Therefore, "how to evaluate and maintain the robustness of incumbent′s digital business model" still remain poorly understood in current studies. The purpose of this paper is to build a robustness measurement model of incumbent′s digital business model.
     In order to answer the above questions, considering multiple criteria, this study made a construction of a comprehensive evaluation measurement model covering quantitative and qualitative indicators, and decomposed complex multi-standard decision-making〖JP〗 problems into hierarchical structures by qualitativly grounded analysis,  R clustering and coefficient of variation, MA-OWA operator ,TOPSIS method and other algorithms. Beginning with qualitative inductive analysis and with the help of quantitative rational screening, a scientific, practical and operational robustness measurement model of incumbent enterprises′ digital business model was constructed.
    Our research shows that the robustness measurement model of incumbent′s digital business model mainly includes three levels: the target layer, the criterion layer and the indicator layer. The target layer with robustness as the core. And business model robustness refers to the feasibility and reliability of business model in dealing with external turbulent environment; The criteria layer represented by the compatibility of original customers, novelty of new customers, balance of internal operation, stability of external system and effectiveness of profit model, etc. The robustness of the digital business model of the incumbent enterprises mainly includes five secondary indicators: original customer compatibility, emerging customer novelty, internal operation balance, external system stability and profit model effectiveness. Among them, the original customer compatibility refers to the degree of compatibility of the incumbent enterprises′ digital business model with the original customers. Digital transformation is not to abandon the original customers, but to better serve the original customers and provide a more convenient digital interface for the original customers, so that the incumbent′s enterprises′ relative customers can retain the dominant power in a better way. The novelty of emerging customers refers to the novelty degree of the digital business model of the incumbent enterprises to emerging customers beyond the original customers. In digital business model innovation, incumbent enterprises need to meet more different dimensions of customers and provide them with more diverse and complementary value. The balance of internal operation refers to the incumbent enterprises, in the process of digital business model innovation, need to complete the digital coordination among organizational reconstruction, management evolution and internally original business; to open up the internal logistics, capital flow, information flow and business flow of the enterprises to realize business digitization. The external system stability refers to the stability of the ecosystem constructed by the incumbent enterprises in the process of digital business model innovation, which is reflected in the locking of system customers, the network effect, the synergistic effect brought by participants and the value network extension of operating external ecosystem. The effectiveness of profit model refers to the effective degree of the income and profit sources of the incumbent enterprises in the digital business model innovation process. Incumbent enterprises cannot achieve profitability like Internet start-ups, through traditional way of free and subsidize, but depend more on the way of non-neutral pricing and non-economic compensation to gain income and profits; And the indicator layer includes 18 dimensions.
    At the same time, this paper also uses the constructed robustness measurement model of incumbent enterprises′ digital business model to quantitatively evaluate the digital business model practice cases including Baowu Steel Group, CMST Development Co.,Ltd, Transfar Group, Tielong logistics, etc. Based on the 5-level likert scale scoring of 35 middle and senior managers of four enterprises, the collected data were evaluated according to TOPSIS method. The results showed that the project of Baowu Steel Group′s Ouyeel Group had outstanding compatibility of original customers, stability of external systems and balance of internal operation; at the same time, Transfar Group′s highway port project of Transfar group performs well in the effectiveness of profit model, the novelty of emerging customers and the balance of internal operation. Therefore, the evaluation results show that the project of Baowu Steel Group′s Ouyeel Group and Transfar Group′s highway port has good robustness. 
This paper opens up a new direction about the incumbent enterprises in the study of business model evaluation, and provides a theoretical enlightenment of measurement model for incumbent enterprises′ digital transformation practice, which will help more traditional industry incumbent enterprises to carry out digital transformation practices in an even better fashion.
    The theoretical contribution of this paper lies in two aspects. On the one hand, from the perspective of robustness, this study comprehensively uses a variety of qualitative and quantitative evaluation models to develop a set of robustness measurement model of digital business model for incumbent enterprises that can be measured and quantitatively analyzed, which enriches the current research status of business model evaluation based on performance evaluation and sustainability evaluation. On the other hand, this study focuses on the special scenarios of incumbent enterprises′ digital transformation, opening up new directions for incumbent enterprises′ business model evaluation research, and providing new measurement methods for digital transformation, which enriches academic research in the business model evaluation and the related fields of digital transformation.
    The practical value of this paper is that we provide inspiration of the robustness measurement for incumbent enterprises′ innovation of digital business models with high uncertainty and high risk. Although each enterprises faces different digital transformation challenges and digital business model innovation paths, many incumbent enterprises can reference qualitative and quantitative evaluation results of relevant indicators from the measurement model of this research and obtain valuable enlightenment of digital transformation to implement digital transformation more steadily.
   It should be pointed out that this paper only constructs the robustness measurement model of the digital business model for the incumbent enterprises. In the future, further in-depth analysis should be carried out around the anaphor, intermediary and other variables of the robustness of the digital business model.

Key words

digital business model / robustness / traditional industry / incumbent company / measurement model

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Wang Xuedong, Kuang Haibo, Wang Qi. A research on the robustness measurement model of incumbent′s digital business model[J]. Science Research Management. 2021, 42(1): 189-199

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