The Effect of Business Model Innovation on Share Prices – A Study of US Listed Technology Firms




High-tech, stock market, share prices, business models, business model innovation, performance



In this study, we empirically investigate the link between business model innovation and stock market performance, as measured by volatility, accumulated growth, exponential growth and earnings per share, in 147 US stock market listed technology companies between 2014 and 2016. As such, the purpose of the study is to examine how business model innovation behavior is received by stock market investors and consequently reflected in their stock market performance. We also propose that multiple business model innovations have a more positive stock market impact than a single business model innovation.


This paper employs a quantitative research design, utilizing stock market data from Bloomberg together with secondary data gathered for assessing business model innovations. To test the hypotheses, we specify and estimate a set of similarly unrelated regressions (SUR) with market indicators as dependent variables (DVs) and business model innovation as core independent variable (IV), controlling for market capitalization and industry affiliation of the firm. As market performance indicators are likely to be affected by the same unobservables, SUR is a preferred specification as it allows accounting for contemporaneous correlations (Greene, 2012).


The results yielded significant and positive results, by conventional measures, regarding two out of four of the dependent variables, namely exponential growth and cumulative growth regarding multiple business model innovations. However, for the other two dependent variables, volatility and earnings per share, the results were positive for multiple business model innovations and more so than single business model innovation. Although, not quite statistically significant by conventional measurements.

Research limitations/implications

Limitations of this study include a single country-focus, relatively few firms and a single industry. Further research in this area might do well to mitigate all these factors, by looking, for example, at cross-country samples across a few or several different industries. Another limitation to our research is the limited information regarding the precise number of BMIs within the companies, which did not allow us to assign continuous values to the BMI variable; nevertheless, it can be done in the future studies.

Regardless of the study’s limitations, it contributes to recent academic debates with regard to business model innovation and the effects of different types of performance that business model innovation can have. Few studies have looked at BMI in conjunction with stock market data before and more studies of this type are likely needed to solidify results for more generalized conclusions

Practical implications

The study gives the signal to managers in high-technology listed firms that business model portfolios and multiple business model innovation, while each being smaller “bets” is looked upon favorably by stock market investors in the short term and can, therefore, also be good for the focal company in the shorter term. Hence, the study provides empirical support to the notion that listed firms should dare to be innovative and experiment with several concurrent business models to pursue new growth opportunities, as the stock market rewards such behavior.


Few studies have previously looked at business model innovation and stock market performance across different performance metrics. In addition, this study argues that portfolios of business model innovations are driving stock market performance and therefore offer insight into how listed companies can manage their business model innovation efforts in alignment with stock market expectations.