The Role of Corporate Reputation & Distinctive Organization Capability in Developing Business Model Innovation: Case Study of Indonesian ICT Firms in Facing Industry Resolution 4.0

Business model innovation is key in facing industry 4.0 where digital technology through Internet and mobile technology influences people’s lifestyle. This paper has the objective to provide the antecedents of business model innovation and compare the effects of corporate reputation and distinctive organizational capability in developing business model innovation. The study is based on the digital disruption phenomenon, where established companies are disrupted by the new entries with the new business model that leverages digital capability. The study focuses on information, communication and technology (ICT) of the incumbent companies in developing business model innovations as the second curve in sustaining the business. The ICT industry is an important sector in the development of other industries and has a significant influence on economic growth, which currently relies on emerging markets such as Indonesia. The Indonesian ICT market has unique characteristics where innovation grows rapidly, but infrastructure lacks behind and the market is very competitive. This creates a gap between innovation opportunities and development of digital infrastructure. As for the incumbent firms, the mitigation of risks of the investment of ICT infrastructure and competition with new entries with their new business model and market. Incumbent firms still have the advantage of corporate reputation and are required to develop distinctive capability. However, the study of developing business model innovations for incumbent firms in the market with a focus on corporate reputation is still limited. The current study is an empirical study using a sample of 35 Indonesian ICT firms. Smart Partial Least Square (SmartPLS) is the analytical approach and solution technique used in the study. Research findings show that the distinctive organization capability has more influence compared to corporate reputation in developing business model innovations. The study implicates on the theory that the development of business model innovations should focus on distinctive organization capabilities rather than relying more heavily on corporate reputation. This means that ICT Incumbent firms are required to transform their capabilities to align with market changes. In terms of management, the study also implicates the urgency in developing distinctive organizational capabilities in respective units, especially in intangible assets. Further research can be explored by expanding the research sample and industry conducting longitudinal study on the transformational model of incumbent firms. © 2018, Universidad del Zulia. All rights reserved.