Abstract
This study examines how firm-level, industry-level, and macroeconomic demand uncertainties influence capital market reactions to business model extensions (BMEs).
The value-creation potential of BME in incumbent companies remains a subject of ongoing debate and is currently not substantiated by market–value-focused empirical research. Similarly, our understanding of the moderators of the BME-performance relationship is limited, particularly for external moderators. Contributing to the emerging literature on BME and strategic value creation, we provide empirical evidence on how demand uncertainty shapes market perceptions of BMEs.
Using a unique dataset of joint ventures in the high-tech industry, we analyze the impact of BME and its moderators on abnormal stock market returns. Our findings confirm that BMEs generate positive abnormal stock returns. This effect is amplified under company-level, industry-level, and macroeconomic demand uncertainty.