CONTEXT

Technological innovation in the financial industry (fintech) has accelerated since the 2008 financial crisis and is viewed as an important catalyst for financial inclusion, especially in emerging markets (Liu, Li and Wang, 2020; Cele and Mlitwa, 2024). Therefore, understanding fintech business model innovation (BMI) has a positive company-level and socio-economic impact.

LITERATURE

The research was conducted at the intersection of business model innovation (Foss and Saebi, 2017), dynamic capability (Teece, 2007) and fintech literature (Liu, Chan and Chimhundu, 2024).

LITERATURE GAP

Understanding the microfoundations of BMI, in relation to the enabling high-level organisational capabilities from which it emerges, is incomplete, and empirical research to explicate their characteristics remains underdeveloped (Rabetino et al., 2025; Cruz-Sánchez, Cruz-Cázares and Hernandez-Vivanco, 2026). Furthermore, fintech is a nascent area of academic interest with limited research into BMI in this industry (Liu, Chan and Chimhundu, 2024).

RESEARCH QUESTION

What are the multi-level causal mechanisms that allow a business model innovation dynamic capability (BMI-DC) to emerge within the South African fintech industry?

Three research objectives were investigated: (1) identify the organisational context, individual action and interaction, and external factors to explicate the causal mechanisms underpinning a BMI-DC; (2) identify business model events and explain them as outcomes of a BMI-DC; (3) evaluate the strategic fit and performance outcomes of BMI.

METHODOLOGY

To explain BMI-DC emergence, a critical realist research paradigm and a constructivist epistemological stance were adopted (Olsen, 2009; Danermark, Ekström and Karlsson, 2019). Consequently, a qualitative, case-based, critical realist grounded theory (CRGT) research design (Oliver, 2012) was employed to develop an explanatory framework through in-case and cross-case comparative analysis (Chun Tie, Birks and Francis, 2019).

EMPIRICAL MATERIAL

Thirty semi-structured interviews, extending over 1554 minutes, were conducted with 15 fintech executives from five companies. Where appropriate, primary source documentation was also incorporated into the data collection and analysis process.

RESULTS

First, through the abductive redescription of case data (Danermark, Ekström and Karlsson, 2019), nine causal mechanisms were identified that underpin a BMI-DC. These causal mechanisms are constituted by individual action and interaction mediated by norms and practices. Thereafter, through retroductive inference (Danermark, Ekström and Karlsson, 2019), utilising a complex adaptive systems theoretical lens (Holland, 1996), an explanatory framework depicted as a causal loop diagram (Barbrook-Johnson and Penn, 2022) was developed to explain the emergence of a BMI-DC. Feedback loops define relationships between causal mechanisms to enact changes to a business model configuration. The explanatory framework is depicted in Figure 1.

Figure 1: Dynamic Capability – Complex Adaptive System (DC-CAS) Explanatory Framework

THEORETICAL CONTRIBUTION

This study contributes to dynamic capability theory-building by developing a practice-based conception of dynamic capabilities (Salvato, 2021). Furthermore, by explicating the DC-CAS the complexity view of BMI is further developed, thereby moving beyond linear and process-orientated explanations of the phenomena (Liu, Tong and Sinfield, 2021; Cutrì, 2023). Finally, this study provides a scholarly understanding of fintech BMI and indicates fintech’s potential to improve the quality of financial inclusion in emerging markets.

MANAGERIAL CONTRIBUTION

The characteristics of the causal mechanism and the findings of the DC-CAS explanatory framework underpin a practical managerial framework to develop and sustain a BMI-DC. It links BMI objectives to firm-level strategic objective setting and provides tools to evaluate the maturity of a DC-BMI and recommendations to develop it. It also suggests an approach to BMI management, including prioritisation, business model architecture design and regulatory governance. The managerial framework is depicted in Figure 2.

Figure 2: BMI-DC Managerial Framework

Summary

This study contributes to a complexity and emergent understanding of BMI. Furthermore, although the research was conducted within the context of emerging market financial technology innovation, its findings may find wider applicability to different industry and market conditions.

References

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