1 Introduction
A CEO-level survey done by IBM has already indicated that business model innovation attaches great importance in order to substantially change the way of more value creation
[1]. The increasing popularity of business model and the rise of many successful business model innovation companies imply that managers should take business model innovation into consideration and progress their traditional way of thinking
[2].
Examples of both new entrants and incumbent companies pursuing business model innovation are prevalent. In particular, sometimes a firm's business model innovation will cause other firm's business model innovation, and this in turn will result in this firm's business model innovation. Therefore, how to explain such phenomenon and what's the mechanisms of such interdependence of business model innovation process between companies (rather than between a company and its external environment) become an interesting research topic. However, looking back on the business model study, few paper has focused on such topic: Qualitative researches such as case studies led the way for business model study, and great efforts were made to understand the definition, components and dimensions of a business model
[3]; Later, researchers also attach great importance to the architecture and the underlying mechanism of a business model
[4,5]. What's more, it is until recent years that business model innovation draw researchers' attention
[6,7].
To take a step further, this paper not only identifies with the importance of business model innovation, but also explores the interdependence of business model innovation process between companies. Since few papers pointed out and analyzed such topic, this paper follows the business model study method, and explores such phenomenon by a case in Chinese context. In this case, the focal firm's business model evolves in tune with times, and at the same time, the evolution of its business model contributes to other party's business model change. To explore and explain such interesting phenomenon, this paper combines the perspectives of co-evolution with the study of business model, uncovers the phenomenon of "business model co-evolution" and analyzes the mechanisms of business model co-evolution. In particular, the focal firm is not a typical large firm, thereby other small and medium size companies and companies involved in traditional industries can learn from this study, take the co-evolution perspective and applying the four levers to enable their business model innovation.
The paper is arranged as follows. Section 2 puts forward the framework of business model co-evolution, which combines the studies on business model and perspective of co-evolution. Section 3 presents the methods part. Section 4 goes to the in-depth case analysis. Followed is the part of discussion and conclusion in Section 5, which discusses the findings, contributions and possible future research of this paper.
2 Framework of Business Model Co-evolution
The perspective of co-evolution derives from the perspective of evolution in biology, and it has already been introduced into many non-biological contexts. "
A co-evolutionary approach assumes that change may occur in all interacting populations of organizations, permitting change to be driven by both direct interactions and feedback from rest of system"
[8]. Following this approach, many scholars has made contributions to explain the causal inter-relationships between populations like producers, users, technologies, institutions etc. and how these interactions affected other's evolution
[9-12]. Many co-evolutionary papers show "
the interaction of individuals, subunits within the organization (micro evolution) or between the firm and its environment (interaction of intra and inter-firm VSR processes)"
[8], and a typical co-evolutionary framework is the framework of co-evolution of firm, its industry and environment illustrated by Lewin, et al.
[13]. This framework depicts the macro evolution, micro evolution and the coevolution between these different levels. The macro evolution includes the institutional environment from countries (e.g., regulatory, rule making, capital markets education system, employment relationship and governance structure) and the industrial competitive dynamics, while the micro evolution includes managerial action (CEO, Top management team), strategic intent (Strategic choice, strategic fit, organization design), organizational adaptation (exploitation and exploration), mediating factors (founding conditions, history of adaptation, absoption capability, legacy, management logic) and the performance (normal returns and above average returns)
[13].
When applied into the field of business model, the dynamic interactions across different levels has also been recognized by many papers
[12,14-17]. However, such studies are more related to business model co-evolution between firms and the macro level systems. Some other papers either applies evolutionary perspective (rather than co-evolutionary perspective for study), e.g., Brannon
[18], or focuses on other themes or just mention business model, e.g., Rodrigues and Child
[19]. Therefore, to the best of the authors' knowledge, there are few researches focusing on business model co-evolution between cooperative firms. To improve the studies of business model co-evolution, it is necessary to combine macro and meso level business model co-evolution (business model co-evolution with macro and meso environment) as well as the micro-level business model co-evolution (business model co-evolution between firms).
The thinking of business model co-evolution with macro and meso environment has already embodied in the business model Iceberg Theory put forward by Wang, et al.
[20]. This business model Iceberg model attaches importance to the Iceberg's part under water, which consists of the macro and meso level business model co-evolution factors such as technology, industry and geographical environment. Therefore, in order to understand a company's business model and grasp business model innovation, the interaction of noticeable business model components as well as the hidden macro and meso level business model components are important. This is one part of business model co-evolution which has been analyzed by many other researchers as mentioned above. Based on this model, this paper is trying to explore firm-level business model co-evolution. The whole model is depicted below. What's more, the business model co-evolution mechanisms are explored and it can be summarized by the four levers in the business model activity system put forward by Amit and Zott
[21]: Novelty, lock-In, Complementarity and Efficiency.
Figure 1 Business model co-evolution |
Full size|PPT slide
3 Methods
This paper adopts a qualitative design because qualitative research design is great for addressing "how" questions and studying processes
[22]. Besides, since there are few papers talking about business models dynamically from the perspective of co-evolution, the adoption of a qualitative case study research design would be appropriate
[23,24]. Methods of data collection and data analysis are given as follows.
3.1 Data Collection
Data sources includes documents and information from different secondary channels as well as first-hand interviews of the focal firm. Different sources of data also enable the author to verify the collected materials and evidence
[23,24].
In this research, the author first carried out interviews with two interviewees in the focal firm in China. Another round of interviews were carried out in Denmark with two Danish interviewees in media company. Three interviews from the China side were carried out again during this process. Additionally, another two experts were involved. One is from China and another is from America. The information of interviews is listed below in Table 1.
Table 1 Interview overview |
| Interview | Gender | Nation | Company | Date | Type |
| 1 | Female | China | TVM | 22.09.2016 | Face to face |
| 2 | Male | China | TVM | 22.09.2016 | Face to face |
| 3 | Female | Denmark | Nordjyskemedier | 03.05.2017 | Face to face |
| 4 | Female | Denmark | Nordjyskemedier | 03.05.2017 | Face to face |
| 5 | Male | China | TVM | 17.05.2017 | Online |
| 6 | Female | China | TVM | 26.05.2017 | Online |
| 7 | Male | China | Alipay | 27.07.2017 | Cellphone |
| Experts | Gender | Nation | Company | Date | Type |
| 1 | Female | China | CCTV | 04.10.2016 | Face to face |
| 2 | Male | America | Academy of Television | 07.09.2017 | Online |
| | | | Arts and Sciences | | |
During the study process, the literature materials and news online are also fully utilized. This also enables the analysis of both internal firm level environment (i.e., from available news, videos and information related to the focal firm)and external macro and meso level environment (i.e., from history literature and industry news). Besides, triangulation and respondent validation
[23] get further improved as the author also let the interviewees to check the draft and the research team to discuss about case.
3.2 Data Analysis
3.2.1 Analysis of Business Model Co-evolution
As case study frequently involves a longitudinal element
[23], and co-evolutionary research should also satisfy one of the requirements of longitudinal time
[8], the analysis will divide focal firm's business model evolution into three stages according to the big events happened during its development trajectory and the environment change the business model co-evolution parties faces.
The evolution of business model in each stage will use a certain business model type so as to facilitate the business model co-evolution analysis. Because business model as an activity system
[21,25,26], is difficult to clearly separate each part. Further, if one uses the multiple dimensions of a company's business model to analyze the business model co-evolution, for example, the nine building blocks of business model canvas put forward by Osterwalder
[27], it would be too complicated, let alone there is no identical dimensions among scholars. Secondly, focusing on business model co-evolution between firms, it is not necessary to deconstruct one firm's business model into components and analyze each firm's business model in depth; rather, it is more appropriate to analyze the co-evolution by seeing a firm's business model as a whole. After identifying the business model type of the firm during its evolution, the four business model themes including Novelty, lock-In, Complementarity and Efficiency, which explains the interdependence of the two parties' co-evolution process, are utilized to illustrate the reciprocal mechanisms between both parties' business models.
3.2.2 Business Model Co-evolution Mechanisms
In terms of Novelty, as different from the traditional innovation in the field of products, services, production methods, distribution and marketing, business model innovation implies a new way of doing business. Therefore, business model innovation for value creation is through "
connecting previously unconnected parties, eliminating inefficiencies in the buying and selling processes through adopting innovative transaction methods, capturing latent consumer needs, and/or by creating entirely new markets"
[21].
In terms of lock-In, it means the extent to which target customers are willing to retain and the extent to which partners are willing to maintain and even improve their relationships
[21]. In other words, a business model without the attribute of lock-In will lose their customers to competitors and their partners might turn to other cooperative partners or establish partnerships with other similar companies. Therefore, if the brand name is more famous, the trust between players are higher, the higher the lock-in effects; if there are more members in a platform, it will attract more other people. It is the same that the higher the switching cost, the higher the lock-In effects.
In terms of Complementarity, it occurs when a bundle of goods together could generate more value than the sum of value offered by each good
[21]. Strategically, if an actor holds a product that is a complementor of another actor's product, the products offers more value to target customers. What's more, value may also be created through complementarities among resources and assets, activities and technologies and finally increasing revenue through the collaborative network
[21].
In terms of Efficiency, enhanced efficiency will reduce the costs due to the reduction of uncertainty, complexity, information asymmetry, and small numbers bargaining conditions; good reputation, established trust and transactional experience can also reduce the cost
[21]. Especially in the era of mobile internet, with the application of cloud computing and big data technology, it is easier for companies to make quick response to markets, to search for target customers and partnerships, and communicating with them in real-time.
The four levers above, NICE in short, are used to explain how focal firm's business model evolution caused other party's business model innovation and how the interactions in turn result in focal firm's business model innovation, thus the phenomenon of business model co-evolution.
4 Case Presentation
4.1 Case Description
TV Mining (TVM for short) is a video big data mining, cloud computing and new media technology company in China. Building on its self-developed technologies in the field of video cloud computing and big data mining, as well as the application of mobile internet, TVM is dedicated in exploring the way of vibrating the traditional television industry and providing a platform for the innovation of media of television. Besides the headquarter and another two subsidiaries in Beijing, TVM also has many subsidiaries in Chinese other provinces of Jiangsu, Shanghai, Guangdong and Shanxi. In addition, it also has other companies and offices globally, including offices in Washington, London and Taipei. However, the context overseas is rather different. Unlike the well developing business area of TV interaction and education informatization in China, the business overseas only involves internet TV. This paper examines the business area of TV interaction.
Reasons for choosing focal firm as the case are as follows. Firstly, it is a unique case in China which would never happen in Europe or other places as said in interview 3 and 4, and its efforts in transforming traditional television media has created many phenomenal events
[28]. This echoes the elements under business model iceberg, i.e., the geographical environment. Secondly, it defined itself as a technology company as mentioned in interview 1 and it is in a certain industry, which also echoes the other two elements of business model iceberg under water.
4.2 Business Model Co-evolution Analysis
4.2.1 The First Stage of Business Model Co-evolution
In brief, Chinese broadcast and television industry has experienced several turning points. It started from 1958 under the environment of lagging economic and technology, which operated as public institutions and relied on financial appropriation during that period. Later, the industry kept progressing after the reform and opening-up policy, transformed to more market-oriented and more revenue was gained through sources like commercial advertisements, rating fee, payment channels, shopping channels
[29,30].
A digitization business model, or rather, digitization, means "
transforming an existing product or service into a digital variant"
[5]. This business model vividly depicts the innovation direction for television stations in this period and also reflects "
the principle technological, social and economic developments of recent decades" embodied in the digitization business model
[5].
Owning to the improvement of Chinese economic and technological environment, the State Administration of Radio, Film, and Television (SARFT for short) took digitization as a specific goal for the technological development of the 9th Five-Year Plan (1996–2000) and 10th Five-Year Plan (2001–2005)
[31]. Since then, taking CCTV as an example, the digitization process began first from the equipment digitization and then the content digitization. The digitization of equipment means transforming the analogue equipment and system into the digital equipment, thereby making the overall program shooting, recording, producing and broadcasting quality of the TV station reach a new level. Content digitization means converting the video content into file form for processing and utilization, thereby making better use of the network to support content sharing and improving the efficiency of storing, searching, producing and acquiring media resource. What's more, with the rapid development of digital TV industry, digital TV transfer replace the analog signal transfer and the popularization of digital cable TV enabled more channels to be available to audience, and the development further made the function of human-television interaction possible: The video on-demand service, pay television, connecting to the internet through television, television bank service, remote teaching and medical treatment etc.
[32,33]. Such comprehensive service also provided more new revenue sources for television media industry.
During this stage from 2008 to 2014, focal firm took the business model of Layer player, which "
works like a specialized service provider", "
focusing on one or just a few activities within the value chain", and "
benefiting from it both in terms of efficiency gains and multiplying know-how and intellectual property rights"
[5].
Ambitious to be the Google in the video area, which could be understood as aiming to make every piece of video searchable to the content users, TVM strategically established the cloud base in Wuxi to collect and digitize video contents of television programmes all around China. Then with its cloud computing capability which amounts to the total addressing capability of all the television stations in China
[33], television stations' demands for digital contents are fulfilled. Further, by providing interactive broadcasting service such as IP broadcasting services, and building all media interactive broadcast center such as for Beijing Network Television Station (BRTN), the advantage of content digitization is made into full play. For example, the media content stored in the cloud can be retrieved in real-time and displayed in the studio during the program broadcast. What's more, TVM also helped to construct the network television stations for television stations such as China Educational TV stations and Zhejiang network broadcast television station, and even launching mobile phone TV products with CNTV. This is just like a typical digitization business model example: Radio station not only broadcast its programmes on FM, but also over the internet
[5]. During this process, TVM has accumulated more than 1000 technology patents and software copyrights. Besides, as TVM's CEO once mentioned, if every institution went to establish their own cloud computing base, digitalizing their contents, it's a waste of money let alone some technology difficulty for traditional television stations
[34]. Therefore, through the layer player business model of TVM, much human and technology input of television stations could also be saved. Television stations can focus on their main business and reduce their operation complexity, thus more value is created for both parties. Finally, during this stage, TVM is a more technology-oriented company, it did not adopt a new way of doing business; and since the partnerships were just established, lock-In effects are not reflected.
Such complementarities between technology capability from the focal firm side and content resources from the television station side helped television stations to be more efficient to deal with the media resources, and TVM also took a step further for its ambition. Thereby the two parties' business model evolution were levered by complementarity and efficiency. It should also be noted that digitization is a trend of continuous development. In other words, it not only occurs in the first phase, but also retains and continues in the following phases.
Table 2 The first stage of BM co-evolution: Between TVM and TV stations |
| TVM | Mechanisms of BM co-evolution | TV stations |
| BM type: Layer player | -Complementarity: | BM type: Digitization |
| -Benefiting from specialized know-how | complementary capabilities and resources | -Digitizing existing product or service |
| -Evidence: The first cloud base and big data center of television and video was built in Wuxi and TVM began to collect the data of more than 300 television programs and 6000 television columns all around China so as to provide refined processing and indexing service, and video cloud computing service. | -Eficiency: storage, search, production and broadcast efficiency of media resources; complexity reduction | -Evidence: Since the late 1990s, the use of digital technology already began to popularize in television area. TV stations kept undergoing digitization transformation so as to adapt to the changing environment. |
4.2.2 The Second Stage of Business Model Co-evolution
As Berman et.al said, new media has gained favor among populations, the internet giants such as YouTube and their audience growth rates make the traditional media such as television feel jealous
[35]. The deepening of digitization combined with the rapid development of internet accelerated the rising and popularization of video website such as Netflix and Youtube overseas, Souhu and Youku in China. For television stations, Internet portals become a more convenient way to get real-time news and programmes can be watched online. Under such background, television stations are faced up with declining TV rating and the advertising revenue
[36]. In addition, there is a trend that more and more programmes produced by production companies broadcast first via video websites such as IQIYI, Youku and Tencent (hold by BAT respectively) etc. and latter broadcast on traditional TV channel; or even some programmes produced by these video websites in turn broadcast on TV stations, which is totally different from the way that TV stations take the lead before. There is no denying that television station themselves are exploring solutions to solve those problems, but the focal firm also takes initiative and tries to enable the renaissance of television stations.
During the second stage from 2014 to 2016, instead of simply providing technology services, our focal firm initiated in grafting internet business models onto television stations. A typical internet business model it grated onto television stations are E-commerce. With this business model, "
traditional products or services are delivered via online channels"
[5].
What TVM did during this stage is to open those media content resources and help television stations link those resources to their Wechat service account, thus television stations can actually link to every individual users on Wechat, instead of audience sitting in front of the television screen. Therefore, the focal firm creatively finding a new way of connecting television and mobile phone as well as television studios and individual audience. For example, people can watch live broadcast through mobile phone and pattern of Fenda (a pattern of expert/celebrity question-answering with payment so as to commercializing the knowledge hold by experts etc.) is used during live broadcast; TV programme derives such as mobile games can become a built-in function on TV station's Wechat Official Account; an community are established on Wechat Official Account for TV stations and TV stations can propagandize their programmes and hold different activities.
During this process, focal firm's business model got evolved and the new type of revenue sharing business model, which "
refers to individuals, groups or companies working together and sharing resulting revenues"
[5] occurred.
Revenue sharing is helpful for strategic partnership establishment. What's more, in order to make this type of business model work effectively, one party (television stations in this paper) needs to increase revenues and then share with the other party, thus contributing to a symbiotic, win-win result
[5]. This is exactly what the focal firm was doing. By linking television stations to Wechat and all the new business carried out by the collaboration of TVM and television stations, television stations gained more revenue sources and TVM was able to share those values. For example, revenue sharing through the interactive advertising in the ratio of 3:7 or in the ration of 4:6, through Fenda pattern in the ratio of 3:7 and live broadcast on internet in the ratio of 6:4, etc. The focal firm can also got some service fees from the new e-commerce business model of the television stations.
As for the co-evolution mechanism, firstly, interactive advertising through TV shaking, mobile live broadcast (and the Fenda pattern associated with it), mobile e-commerce are all new trials for television stations, especially when using the new connection of Wechat. Secondly, e-commerce is already a much efficient way compared with traditional shopping channels. With an e-commerce business model and through TV shaking, products and services are transacted online, intermediaries are reduced and customers can reduce searching time and cost, thus eliminate inefficiency
[5,21]. Thirdly, such kind of co-evolution is also complementary. For example, without the TV Watch (a system used in TV shaking, which gained more than 100 patents) developed by the focal firm, such business model co-evolution will not exist. Without the coordination of television stations and the attractive programmes they produced or broadcast, TVM also could not evolve the revenue sharing business model. Finally, lock-In effects stemming from brand, trust and network effect
[21] also exist. TVM began to provide service and products for television stations much earlier, and had already collaborated with hundreds of channels. They both have trust on each other and television stations would like to retain their relationships or even improve their relationships when TVM offered better solutions to improve their situations. With more and more television stations adopt TVM's new services, other stations were also attracted to this service. Therefore, the business model co-evolution is levered by Novelty, lock-In, Complementarity and Efficiency.
Table 3 The second stage of BM co-evolution: Between TVM and TV stations |
| TVM | Mechanisms of BM co-evolution | TV stations |
| New BM type: Revenue sharing | -Novelty: activities, linkages, and stakeholders | New BM type: E-commerce |
| -Win-win with symbiosis | -Lock-in: years of collaboration, trust | -Traditional business via online channels |
| -Evidence: Revenue sharing with TV stations in interactive advertising, Fenda pattern and live broadcast etc. | -Efficiency: e-commerce compared with shopping Channels; interactive advertising through TV shaking | -Evidence: Operation of E-commerce platform on the mobile portal with the help of TVM. |
| | -Complementarity: complementary capabilities and resources | |
4.2.3 The Third Stage of Business Model Co-evolution
The in-depth technology development made the application of big data analysis (providing sources for real-time personalization by large amounts of information), virtual reality (providing interactive virtual worlds), machine learning and artificial intelligence (enabling customization and recommendation, etc.)
[16] feasible, and these technology has already been used in various fields. For example, with the technology of data mining, the enormous data that is difficult to evaluate with conventional measures are able to be analyzed, thus the big data becomes the new oil and can be used in various industries like manufacturing, energy, finance, etc.
[5].
During the third stage from 2016, the focal firm also realized the potential of such technology. Therefore, TVM initiated in using the making more of it business model, which means "
a company's know-how or other resources are offered to outside companies in addition to being used in-house"; additionally, it is also likely to pave the way to new fields by doing so
[5].
Collected data can be used to establish customers' profiles, and such data is able to contain up to thousand attributes. The large amounts of data are termed as "Big data" in real life
[5]. When applied to TVM's business model evolution in the third stage, Make More of Big Data is the core. In the second stage of business model co-evolution, TVM collected a lot of interaction data from all the new activities such as TV shaking. Then what the focal firm can do with the data is to make more of it. In particular, the focal firm collaborated with Alipay, thereby the potential value of data can be enlarged further. Because such collaboration combined the data from the television portal with the end consumer portal. That is, the focal firm accumulated the data from television station side, and Alibaba owns the data from the end consumer side. The combination of the two could be used for advertising. Therefore, the focal firm reached a new market and intended to provide services for advertisers.
Benefiting from technological progress and facilitated by the two firms' collaboration, leveraging customer data becomes the new type of business model for television advertisers, the main client for television stations. The leveraging customer data business model means "
focusing on customer data as a profitable resource that needs to be tapped into", and through collection and procession, those data can be used to establish people's profiles, carrying out market analysis in real time, and enable effective advertisements
[5,21].
Specifically, advertisers cannot monitor the communication effects, reach the individual consumers and know each consumer's information through traditional television advertising. TVM can collaborate with television stations, set up interactive points during advertising broadcast time on TV, display the advertisements through video, games, posters etc. and even lead the audience to complete purchase. With the big data report of every advertisement, the interactive data in real-time, the advertising distribution and exposure conditions among channels, advertising can be more accurate and the effects would be better. What's more, after collaboration with Alipay, not only customer profiles from Alipay (including geographical distribution, consumption preference, purchasing power and time bucket etc.) is acquired, business channels from T-mall and Koubei (an internet local living service platform established by Alibaba and Ant Financial) can also be integrated. Thereby, the advertisements not only enjoy more exposure through both television and mobile terminal, personalized advertisements is possible for advertisers, and customers can buy the goods right after seeing the advertisements.
Such business model co-evolution is facilitated by the element of efficiency offered to advertisers. Through making more of the data, advertisers achieved more efficient advertising. Since connecting with internet giants' platform was already used in the second stage, transaction methods is the existing e-commerce (a familiar way for advertising companies), so it's neither a novel connection nor a novel traction method. The lock-In effects and complementarity are also not so strong as TVM with television stations in the second stage. Thereby the lever used are only efficiency.
Table 4 The third stage of BM co-evolution: Between TVM and TV advertisers |
| TVM | Mechanisms of BM co-evolution | TV advertisers |
| New BM type: Make more of it | -Efficiency: precision advertising | New BM type: Leverage customer data |
| -Multiply competencies outside your core business | | -Make use of what you know |
| -Evidence: Make full use of the real-time TV interactive data through the combination with Alipay. | | -Evidence: Use big data including geographical distribution, consumption preference, purchasing power and time bucket, consumers' click history and purchase records etc of consumers |
It is obvious that TVM's business model evolution brings about business model innovation for television stations, and television stations' business model change also affect TVM's next evolution stage. In the first stage, with complementarity and efficiency, the focal firm contributed television stations' digitization process with its layer player business model. In the second stage, with Novelty, lock-In, Complementarity and Efficiency, television stations achieved business model innovation with the help of the focal firm, and focal firm also benefited from it and added the revenue sharing business model. Further, growing through the co-evolution process above, the focal firm adopted the make more of it business model, and this further contributed to television stations' leverage customer data business model innovation.
5 Discussion and Conclusion
Scholars have emphasized the importance of business model innovation for companies to compete in the contemporary society. As Chesbrough and Rosenbloom pointed out, even companies equipped with great technology need to commercialize its technology through business model innovation, otherwise companies even like Xerox will lose opportunities and be eliminated
[37]. Previously, there are also not so many papers talking about business model and business model innovation in traditional industries and for small and medium companies. On the contrary, many papers are talking about business model in the context of e-commerce and high-tech industries
[18]. However, it is those companies that are in badly need of business model innovation.
To enlighten those companies, this paper applies the new perspectives to study business model and business model innovation, i.e., co-evolution. Few papers have focused on the phenomenon of business model co-evolution, especially between firms, to the best of the authors' knowledge. This is actually an interesting finding of this study. By analyzing how two parties' business model evolution causes each other's business model evolution, and the interdependence of the business model co-evolution process, this paper uncovers the business model co-evolution dynamics. Specifically, the paper first develops a more complete business model co-evolution framework including the two layers co-evolution based on the business model ice-berg theory
[20], but focusing on the layer above (i.e., between firms) for analysis as many paper concerning business model co-evolution have already implies the layer below. Further, the in-depth analysis goes into the exploration of how firms can use the interweaving elements of Novelty, lock-In, Complementarities and Efficiency to achieve business model co-evolution. Findings are that for companies, especially those small or medium companies and traditional companies, to seek survival and compete in the increasing competitive environment, waiting to be saved or bowing to fate are not wise choices; instead, they should take initiative, act as enablers and seize business model innovation by taking the perspective of co-evolution. This can be seen from the study: The focal firm, although without large scale, is always taking initiatives and trying to be enablers for other party's business model innovation. Then it also realizes business model innovation during the co-evolution process. Moreover, the interdependence of the business model co-evolution process can be explained by the four levers: Novelty, lock-In, Complementarity, Efficiency. Therefore, companies can select Novelty, lock-In, Complementarity, Efficiency or the combination of the four as mediators to achieve each other's business model innovation, thus business model co-evolution. Collaborating with both industrial and cross-industrial actors can be an important approach for companies. However, the mechanisms including Novelty, lock-In, Complementarity and Efficiency should be carefully designed. For example, in this study, the focal firm only takes the lever of efficiency in the third co-evolution stage. This could cause some problems in the long run. For example, without strong lock-In effects with advertising companies and Alipay, it is easy for other companies to replace the focal firms' position or provide the same service.
Finally, research on the topic of business model co-evolution could be further extended. As some scholars put forward, there are many kinds of co-evolution such as cooperative, competitive, predatory or dominative co-evolution
[9]. Therefore, if this paper discussed the type of cooperative co-evolution, then other types could also be examined. In particular, since there is a sense of competition in both predatory and dominative co-evolution, and firms are in continuous interaction of cooperation and competition, the examination of competitive co-evolution (e.g. how does one company eliminate or even destroy other party's Novelty, lock-In, Complementarity and/or Efficiency) could not only render as a contrast of cooperative co-evolution in this paper, but also offer more enlightenments for companies after such contrast. Additionally, when combined with the overall framework of business model co-evolution, circumstances under which cooperative co-evolution and competitive co-evolution are likely to emerge can also be another aspect for future study (e.g., does scale and other attributes of the co-evolutionary companies, the intensity of industrial competition, or even the institutions around the companies affect the co-evolution type). Such extensions lead to further combination of business model studies and theories such as transaction economy theories, contingency theories and institutional theories etc.
[8].
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Figure 1 Business model co-evolution
Table 1 Interview overview
