Institutional influences on business model choice by new ventures in the microgenerated energy industry

Business model choice plays an important source of competitive advantage for new ventures in the microgeneration sector. Yet, existing literature focuses on strategic management of internal resources as the constraints in this choice process. In the energy sector, external factors may be at least as influential in shaping these business models. This paper examines the roles of politico‐institutional and socio‐institutional dynamics in the choice of business models for microgeneration ventures. Business models have traditionally been viewed as constructions of the internal values, strategies, and resources of organizations. But, this perspective overlooks the role that external forces have on these models, particularly in more highly institutionalized contexts like microgeneration. When these factors are introduced into the existing framework for business model choice, the business model based less on firm decision‐making and more about variables that exist within national innovation systems and political structure, local socio‐technological conditions, and cognitive abilities of the entrepreneur and corresponding stakeholders.