The process of business model innovation driven by IoT: Exploring the case of incumbent SMEs

Industry 4.0 is dramatically affecting firms' strategies. In particular, technologies like the Internet of Things (IoT) are offering firms the possibility to manage product functions, remotely and globally, enabling the design of innovative business models. The aim of the article is to investigate how incumbent small and medium enterprises can manage the evolution of a new IoT-based business model in parallel with its extant one. A qualitative and longitudinal case study research has been conducted on two Italian firms involved in a process of IoT-driven business model innovation. The empirical evidence show that the process of business model innovation is incremental in terms of resources dedicated to the new business, with a fine tuning based on trial-and-error learning. During the phases of this process, namely inception, experimentation, and replication, the effective management of the interaction between the two business models with their dedicated resources and the customer-related capabilities play a crucial role.