Researchers Suggest Facebook’s Meta Change Is Evolutionary, Not Revolutionary

Meta: Radical business move or needed rebranding efforts?

Even though Facebook’s name change to Meta and move toward shifting focus to Metaverse technologies looks like a radical business move, a team of researchers suggest the change will result in an incremental evolution of the company’s business model, not a radical new one.

In a study, the researchers said that Facebook, which became Meta in October 2021, signaled the change would bring about a radical new business model that would revision its value creation, value proposition and value capture. However, the team suggests the move was more about internal and external perception, much like tobacco company Philip Morris’s rebranding effort to the Altria Group in 2003 after sustaining a withering amount of negative publicity about the health effects of their products.

“Our investigation indicates that the underlying logic of the straightforward communicative efforts primarily serves two purposes: to improve the external perception of the company and to disseminate an internal change signal within the
organization,” the researchers write.

They report that the branding may be a late stage effort in a company’s entrepreneurial journey. Like most companies, Facebook will see four phases of development — creation and experimentation, growth and expansion, efficiency and profitability and innovation or dissolution. The researchers argue that Facebook, with nearly 3 billion users and $86 billion in revenue is nearing the end of its efficiency and profitability stage and faces the need for greater innovation. The Metaverse, which the researchers define as a new form of social network in an interactive virtual world that connects different users for the purpose of gaming, working, and entertainment, is Facebook’s innovative leap.

The company’s focus on value creation through technology will represents an incremental, rather than revolutionary change, according to the researchers, who report their findings in the International Journal of Entrepreneurial Behavior & Research.

They write: “In summary, despite Meta’s approach to build new technology, the company’s announcement represents an evolutionary development in its value creation mechanism rather than a revolutionary change. The company alr eady has most of the relevant capabilities it requires, including internal processes and partnerships, to build on to develop the technology.”

Similarly, Facebook’s value proposition would still be focused primarily on new user experience and not effect its core offerings.

Finally,  value capture would likely be an incremental change in the new Metaverse model.

“Revenues rely on existing revenue streams until a successful technology integration and user adaptation might create new revenue sources. The company ́s cost structures might be affected by an increase in one-time investments in R&D and constant costs associated with value delivery,” they write.

The team does not discount Meta’s ability to navigate this critical stage of their company’s history and offers praise of Meta’s history of entrepreneurial drive that will be a powerful tool in fulfilling its Metaverse vision: “By advancing a strong vision to build the metaverse, Meta has once again demonstrated a strong entrepreneurial behavior in announcing that the company will use its existing capabilities, processes, and partnerships to shift the adjacent BM into a more virtual future. Thus, the metaverse promises to provide a new experience for users and customers in terms of communication, work , and entertainment. Nevertheless, further research is required to understand the potential uses and capabilities of this new virtual platform world, especially when the technology matures in a later phase.”

To conduct the research, the team took a structured case study approach gathering about 153 data points from academic studies and publicly available information. They added that to make sure their results would reproducible and transparent, they used a systematic sampling strategy that used three steps: a review and identification protocol, data choice and reporting and distribution.

The research team included Sascha Kraus, Free University of Bozen-Bolzano;  Dominik K. Kanbach, Peter Krysta and Nino Tomini, all of Handelshochschule Leipzig and Maurice Steinhoff, of HHL Leipzig Graduate School of Management.

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