Impact of organizational inertia on business model innovation, open innovation and corporate performance

Abstract Business model design becomes an essential source of firm innovation in the current competitive world. Business model innovation refers to the creation or reinvention of existing business models by designing novel value-creation systems, proposing new value propositions, and building original value-capturing mechanisms. However, to adopt the innovative business model in any organization, the inertia to change is a substantial barrier, and its role has not been examined completely. The purpose of this study is to examine the impact of organizational inertia on open innovation, business model innovation, and corporate performance. Using the survey as the research model, data were collected from 160 companies operating in the information technology industry in the city of Tehran. These firms were selected via judgment sampling method. The hypotheses were tested using structural equation modeling technique via SmartPLS2 software. Based on the findings, organizational inertia has a negative relationship with business model innovation and open innovation; though, business model innovation and open innovation have a positive effect on the performance.