Conversation on Business Models and Cognition

Sea Matilda Bez ()
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Sea Matilda Bez: MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier

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Abstract: Successful business models (BMs) contain a dark side that is often overlooked: a successful model can cause managers to filter out technologies that are promising but do not fit their current BMs (Chesbrough & Rosenbloom, 2002). These promising but rejected technologies can be called "false negative" technologies and end up unused and unknown (Chesbrough, 2003). A more recent branch of the BM literature advises to allow unused and unknown technologies to flow to the outside (Chesbrough 2019; Zott, Amit, & Massa, 2011). However, these flows of technologies outside the companies are rarely practiced. My research co-authored with Henry Chesbrough searched for an explanation with a cognitive perspective for barriers that limit the technologies to flow outside the company, and thus limit development of new BMs (Bez and Chesbrough, 2021). We found an explanation, what we call the Fear of Looking Foolish (FOLF) effect. FOLF is a behavioral constraint generated by a successful BM that consists of preferring to allow a technology to languish rather than being referred to an external partner. Managers fear to look foolish if the latent value of the denied technology is revealed. They feel safer not to let it flow outside. This FOLF greatly inhibits the chance to allow unused internal technologies to go outside for others to use in their businesses and BMs. Yet to our knowledge, this behavior has not yet been introduced into the academic literature on searching, designing, or improving BMs. We suggest that this is an oversight, and that organizations may be leaving money on the table by not opening unused internal technologies to others for them to evaluate and use in their businesses and BMs.

Keywords: FOLF; Business Model; Cognition; Open Innovation; Inside-out (search for similar items in EconPapers)
Date: 2021-07-29
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Published in Academy of Management, Jul 2021, online, United States

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03189031

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