When more is not better: how business model portfolios drive performance in multi-business model entrepreneurial firms

Purpose Drawing on configuration theory, this study examines how different combinations of business model (BM) design themes shape the financial performance of entrepreneurial firms that simultaneously adopt multiple business models. We thus depart from typical BM research that investigates design themes in isolation to focus on how configurations of design themes differentially influence the performance of firms that operate BM portfolios. Design/methodology/approach We employ fuzzy-set qualitative comparative analysis (fsQCA) to test whether specific configurations of BM design themes relate to high financial performance. fsQCA aligns well with the main objectives of this study because it captures equifinality and causal complexity, allowing for the empirical examination of multiple configurations that can lead to high performance. The final sample consists of 107 UK software firms characterized by rapid innovation adoption and frequent use of BM portfolios. Findings The results indicate three distinct configurations that relate to high financial performance: (1) novelty combined with the absence of customer lock-in and product/service complementarities; (2) novelty combined with efficiency and the absence of product/service complementarities; and (3) novelty combined with customer lock-in and product/service complementarities in the absence of efficiency. Across all these configurations, novelty clearly emerges as a core BM theme. Notably, we do not find a configuration in which all four BM design themes are present, suggesting that high performance relates with specific combinations rather than the cumulative presence of all themes. Research limitations/implications This study contributes to BM literature by providing new theoretical arguments and evidence on how firms with BM portfolios can realize performance benefits. We therefore extend pertinent BM theory to the portfolio level and shift scholarly attention from optimizing individual BMs to understanding how design themes are configured across multiple BMs within the same firm. Practical implications Our findings show how software firms can combine different design themes in their BM portfolio to achieve high performance. The results suggest that performance benefits relate to specific combinations of novelty, efficiency, customer lock-in, and product/service complementarities. Although our findings are specific to the context of UK software companies, they provide managers with a practical guide on how to design their BM portfolios when pursuing high financial performance. Originality/value Despite the growing attention to the design of business models, our understanding of BM portfolios in entrepreneurial firms remains limited. This study advances this stream of literature by theorizing and empirically examining configurations of BM design themes (novelty, efficiency, customer lock-in and product/service complementarities) at the portfolio level. Based on configuration theory, it moves beyond analyzing individual design themes in isolation and contributes to a more nuanced understanding of how combinations of BM design themes are associated with high performance.