Entrepreneurial firms typically operate multiple core and non-core business models (BMs) in parallel. Yet little is known about how BMs interrelate within a BM portfolio. This paper addresses this research gap with a longitudinal embedded case study of the car manufacturer BMW. Using a dynamic capability lens, we collected a rich set of archival data from 1916 to 1991, supplemented by interview data, and conducted historical analyses. The analyses reveal three mechanisms that explain how core BMs interrelate with non-core BMs over time: 1) Leverage Mechanism: Non-core BMs leverage a firm’s core BM to utilize excess resources and capabilities. 2) Protect Mechanism: Non-core BMs protect the core BM by building new resources and capabilities. 3) Transition Mechanism: Non-core BMs aid in transitioning to new core BMs by cultivating resources that potentially replace existing core BMs. Moreover, our data shows that the focus of sensing and seizing influences how non-core BMs affect core BMs, driving the leverage, protect, and transition mechanisms. Specifically, sensing and seizing unlock inter-temporal feedback based on information gained from the non-core BMs. We argue that entrepreneurial firms can develop a meta-capability to aids to adapt the BM portfolio through feedback over time. This work contributes to the literature on strategic entrepreneurship by showcasing how the intersection of BM portfolios and dynamic capabilities can be used for creating innovation.
