Corporate Business Model Transformation and Inter-Organizational Cognition: The Case of Nokia

This article distinguishes between a firm's corporate business model and business models of its various business units. Our aim is to provide new insights into how executives' cognitive processes can influence corporate business model transformation decisions. We focus especially on top managers' recognition of inter-organizational cognitions, that is, such cognitions about the firm and its businesses that are shared by the top managers and stakeholders of the firm in the industries and communities where it operates. We support our theoretical work with an historical case study of Nokia's corporate business model transformation between 1990 and 1996, which proved highly successful. We find that its transformation involved using the current reputational rankings of Nokia's businesses as selection criteria for which businesses to retain and which ones to divest - as well as the elimination of businesses which embodied business model elements which were attributed as factors in past business failures.