Business Model Innovation and SME Performance and Performance Variability: the Role of CEO Persistence

In order to maintain and enhance the competitive advantage, small and medium-sized enterprises (SMEs) are forced to constantly reconfigure their business models. This study aims to broaden the understanding of the role business model innovation (BMI) plays in shaping SMEs’ business outcomes and how the strength of this relationship is affected by persistence of a Chief Executive Officer (CEO). Drawing upon resource-based view (RBV) and upper echelons theory (UET), we argue that BMI improves the mean firm performance, however, being a risky endeavour, increases the variability of performance outcomes, making them less reliable. At the same time, it is hypothesised that entrepreneurial persistence strengthens the BMI-performance link and weakens the relationship between BMI and performance variability. Employing the multiplicative heteroscedasticity regression model on a sample of 367 Russian small and medium-sized enterprises we find full support for the proposed theoretical model, contributing to the ever-growing body of literature on BMI and providing practical value for stakeholders involved in the examined relationship.