Empirical analysis shows that business model change boosts Total Factor Productivity in firms, suggesting enhanced adaptability is essential.
This paper provides empirical evidence that business model change significantly enhances firm productivity. Using a global panel dataset of over 18,000 companies across multiple industries from 2009 to 2023, the study quantifies the impact of business model reinvention, proxied by changes in the Net Asset Turnover (NAT) ratio. The analysis employs both fixed-effects regression and instrumental variable approaches to address endogeneity concerns. Results show that firms in the top quartile of business model change outperform laggards by 1.5% to 8.5%, and that doubling the pace of change can increase Total Factor Productivity (TFP) by up to 36.7%. Sectoral analysis reveals variation in impact, with the strongest effects in wholesale, mining, and business services. The study highlights the growing importance of strategic adaptability in response to technological, regulatory, and market shifts.
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Baarsma et al. (2025) studied this question.
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