C:JFORSC8-02ORSC0232.DVI

OrganizationScience informs® Vol.18,No.2,March–April2007,pp.181–199 doi10.1287/orsc.1060.0232 issn1047-7039eissn1526-54550718020181 ©2007INFORMS BusinessModelDesignandthePerformanceof EntrepreneurialFirms ChristophZott INSEAD,BoulevarddeConstance,77305FontainebleauCedex,France, christoph.zott@insead.edu RaphaelAmit TheWhartonSchool,UniversityofPennsylvania,3620LocustWalk, Philadelphia,Pennsylvania19104-6370,amit@wharton.upenn.edu efocusonthedesignofanorganization’ssetofboundary-spanningtransactions—businessmodeldesign—andaskWhowbusinessmodeldesignaffectstheperformanceofentrepreneurialfirms.Byextendingandintegratingtheoretical perspectivesthatinformthestudyofboundary-spanningorganizationdesign,weproposehypothesesabouttheimpactof efficiency-centeredandnovelty-centeredbusinessmodeldesignontheperformanceofentrepreneurialfirms.Totestthese hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial firms that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. Additionally, we find indications of potential diseconomies of scope in design; that is, entrepreneurs’ attempts to incorporate both efficiency- and novelty-centered design elements into their businessmodelsmaybecounterproductive.