Methodological Case Study Approach for Detecting Business Model Enablers in Copycat Ventures

Introduction

Potential benefits of founding a business range from “being one’s own boss” and the resulting self-determination to facing new and unique challenges to steadily reinvigorate motivation. Especially young adults tend to pursue these advantages in contrast to mere monetary compensation (ADP Research Institute, 2016). Obviously, becoming an entrepreneur that runs a prosperous venture does not constitute a trivial task at all. According to Gompers et al., only 18% of first-time innovative entrepreneurs complete the initial achievement of “going public” with their business (Gompers, Kovner, Lerner, Josh, & Scharfstein, 2008). Business ideas that seem successful or innovative in their approach attract venture capitalists to participate. Companies such as Accel and Andreessen Horowitz are specialized in investing in developing companies and holding them profitably or selling shares to big players typical of the industry.

In Germany, another approach of founding is pursued by Rocket Internet. Baumann and Köhler characterize the organization as an “incubator and investment firm” or “startup factory” (Baumann et al., 2018). Rocket Internet’s track record boasts more than 100 companies launched since its establishment in 2007. As opposed to the entrepreneurial method, Rocket Internet does not rely on creating innovative business ideas. In reality, this translates to copying auspicious business models, especially from e-commerce, and applying them to a local, potentially untapped market (Baumann et al., 2018). The resulting organizations are so-called “copycats” because their construction is based on an already existing business concept. Accordingly, this idea of founding companies is highly contentious and has a bad reputation (Shenkar, 2010). However, according to Posen and Martignoni, the plain imitation of market leaders without any improvements or adaptations does not resolve to success (Posen & Martignoni, 2018). Therefore, the goal persists in “executing better on the same idea”. This so-called “post-imitation learning” helps remaster known practices to close possible knowledge gaps to achieve higher performance levels (Posen & Martignoni, 2018).

Copycats are able to rely on lots of experiences from their originals and thus, are more likely to be successful initially in comparison to “classic” entrepreneurs (Toft-Kehler, Wennberg, & Kim, 2014). Nevertheless, just a few copycats show that they sustain their prosperity in the long run unlike for example MyVideo, DaWanda or studiVZ. Hence, it is not fully clear which features need to be considered to ensure long-lasting success when it comes to the imitation of known business models. Due to this problem, the following research question is addressed in the contribution at hand:

• RQ1: “Which features of a copycat’s business model serve as enablers for its success?”

In order to provide an answer, the paper proposes a Case Study methodology in which the business models of copycats and their originals can be compared argumentatively to find aspects that are potentially critical to the well-being of these firms. In this process, the authors use renowned business model templates for providing a lucid summary of the cases’ business ideas. This helps also to contrast the business models. With the suggestion of an approach to answer RQ1, this article also engages in giving a response to the following related research question:

• RQ2: “How can enablers for the success of (business model) copycats be detected?”