The co-evolution between organizational learning and business model design in incumbent firms: The role of firm life cycle

Prior research indicates the sequential dynamic learning process when firms learn about a market to develop effective business model, leaving the impact of different types of learning on effective business model design unexplored. Utilizing the lens of organizational learning theory and evolutionary adjustment approach, we explore the common and differential effects of two types of learning strategies (i.e., exploration and exploitation) on novelty-centered business model design (NBMD) and efficiency-centered business model design (EBMD). We also examine whether and how these relationships vary at distinct stages of development. Based on 303 Chinese incumbent firms, results demonstrate that both exploratory and exploitative learning are positively associated with NBMD and EBMD. Compared with exploitative learning, exploratory learning has a stronger positive impact on NBMD, but exerts no distinctly positive impact on EBMD. Additionally, stage of development is identified as a boundary condition of the relationship between exploitative learning on NBMD. These findings highlight the co-evolution between learning and business model design.