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Purpose - The purpose of this paper is to show that the way home-based internet businesses (HBIBs) are operated and the reasons for which they are started enable HBIBs to bring about variety, and to argue that this variety has a broader impact on the industry and the economy. Design/methodology/approach - The paper adopts a multiple case study approach, studying the best practices of eight HBIBs. Findings - The study finds that HBIBs generate variety because of the unique way in which they operate, and because of the reasons why they are started. How HBIBs operate can be captured in the acronym SMILES: Speed, Multiple income, Inexpensive, LEan, and Smart. They are founded (amongst other motives) for reasons of autonomy, freedom and independence. Both aspects - the how and why - of HBIBs are conducive to the creation of variety as they facilitate trial-and-error commercialisation of authentic ideas. Research limitations/implications - Five theoretical perspectives posit that variety is important for the industry and the economy: evolutionary theory, strategic management, organic urban planning, opportunity recognition, and the knowledge economy. The findings are discussed in the context of each perspective, showing how HBIBs play a role in each perspective. Practical implications - Policy makers should be aware of the importance of HBIBs, which can be promoted, providing generic facilities for business information, training, and mentoring, and by making compliance burdens more proportional to business size. Originality/value - The paper shows how and why HBIBs are drivers of variety. This paper argues, by means of five theoretical perspectives, that because of the variety HBIBs generate, they contribute to the economy over and above their direct and indirect contributions in terms of revenue and employment. [ABSTRACT FROM AUTHOR]