How can Small and Medium Enterprise retail business in Thailand successfully compete through Business Model Innovation?

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Abstract

Small and Medium Enterprise (SME) retail businesses in many countries, including Thailand, are facing challenges of high competition, as modern retail formats have grown rapidly in many Asian countries such as Singapore, Taiwan, China and Thailand (Howard, 2009). Thus, SME retail Businesses are facing an “innovate or die” situation, as non-adapting retail firms have always been and will continue to be driven out of the business (Evans, 2011). A new critical capability of retail business is the ability to configure and reconfigure its processes into a coherent blueprint – known in other words as a Business Model (Sorescu et al., 2011). The research question becomes “How can SME retail Business in Thailand successfully compete through Business Model Innovation?” Business Model Innovation requires system wide changes, since modifying one component always has network effects on other components (Tikkanen et al., 2005). There is no fixed method or successful formula that all companies will adopt; therefore disciplined experimentation and adaptation is recommended (Berman, 2011; Chesbrough, 2010; McGrath, 2010; Mitchell et al., 2003; Teece, 2010). However, most past studies on innovation are about large companies (Tim, 2004) and not many articles cover empirical studies on Business Model Innovation. In particular, few studies address the dynamic view (Demil and Lecocq, 2010; Svejenova et al., 2010; Sosna et al., 2010).This research focuses on the implementation of Business Model Innovation within SME retail business. The research uses a methodology called Action Research, and was conducted within the researcher’s organization, which is a SME retail business in Thailand. This overcomes the practical challenges of studying SME business, which is related to limited opportunity to conduct empirical research. The study was conducted over the 4 year period from October 2010 to August 2014 by implementing Business Model Innovation in order to exploit opportunities in rural areas. Business Model concepts were employed as sources of innovation and units of analysis. Action Research consists of multiple cycles of changes and adaptation. It was found that Business Model concepts can be represented at different levels of abstraction from reality. At a high level of abstraction, the Business Model Canvas helps to understand the overview of the firm's business logic in a broad way, and provide ideas about what can be adapted. At the operational level, the Retailing Business Model provides a structural approach to the conceptualisation, planning and implementation of activities that support high level changes. In all, Business Model Innovation can be conceptualised as an ongoing learning process similar to the iterative cycles of Action research. These cycles consist of constructing actions, planning, taking actions and evaluating actions. The Business Model concepts at different levels of abstraction can be used for understanding and planning, as well as to capture learning experiences, both on the high level and on the operational level. Therefore, Business Model Innovation is a dynamic process where changes and learning happen continuously. Such a process enables SME retail businesses to improve their understanding of their Business Model and thus improve their chances of success.?

Keyword(s)

Business Model; Business Model Innovation; Retail Business; SME; Thailand

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