The Role of Business Model Design in the Diffusion of Innovations: An Analysis of a Sample of Unicorn-Tech Companies

Innovation scholars have long studied how and why new products and services diffuse into the market following trajectories such as the S-curve and in accordance with epidemic, social, and information cascade models. However, we see today many new products and services, especially those enabled by digital technologies, which do not seem to fit the above-mentioned trajectories and models due to the incredibly high speed and virulence at which they diffuse. Moreover, the diffusion of these innovations does not seem to depend, contrary to what the previous patterns of innovation diffusion argue, on their technological characteristics or on demand-side factors, such as the word-of-mouth effect or the feedback they receive from their early adopters. Rather, their diffusion seems to be affected by the characteristics of the business model adopted by the companies that have created and commercialized them into the market. Accordingly, our study analyzes through the historical research methodology the business model of a sample of 50 Unicorn tech-companies, which have experienced incredibly fast diffusion rates and business growth and are disrupting entire industries. The outcome of our study is a framework that maps two business model configurations that explain the role of different business model design and innovation choices in the diffusion of new products and services enabled by digital technologies.