Tweaks and pivots: The impact of customer ties on young firms' business model adaptation in an emerging industry

We shed light on the question of why some firms in emerging industries experiment with their business models while others do not, and why some firms make small incremental changes while others make radical pivots. Contrary to popular wisdom, business model changes are not primarily undertaken by unsuccessful firms trying to pivot to a more viable business model. Instead, using a longitudinal sample of 187 young firms in the mobile health industry, we find that customer portfolio breadth (a novel construct capturing both customer portfolio size and diversity) drives both the likelihood and degree of business model changes and that these effects are strongest in the earliest stages of industry emergence. Our findings contribute to the literatures on business models, organizational learning, and entrepreneurship.