Business Models

The growing body of research on business models draws upon a range

of sub-disciplines, including strategic management, entrepreneurship,
organization studies and management accounting.
Business Models: A Research Overview provides a research map for
business scholars, incorporating theoretical and applied perspectives. It
develops the field of business model research by offering a critique of the
field as it has developed to date and provides a guide for future research
and theorization. The research performed as a basis for this book im-
proves and extends prior subjective and less-documented work by using
a scientific approach to identifying impactful research. The book argues
that business model research is a mature field and that future research
should focus on performative and ecosystem-based contributions, with
the timely identification of four distinct stages of business model re-
search. The study here provokes a new set of research questions, which
are addressed in the concluding passages of Chapters 5–8, as a point of
departure for those researching business models.
This book is essential primary reading for scholars and practition-
ers of business models who are looking to seek out new knowledge and
build new perspectives.

Christian Nielsen is Professor at the Department of Business and

­Management, Aalborg University, Denmark. Christian currently serves
as Head of Department as well as being Co-Editor-in-Chief of the
­Journal of Business Models. He is a global thought leader in the design of
scalable business models.

Morten Lund is Associate Professor and Director of the Business

Design Center at Aalborg University, Denmark. Morten is an expe-
rienced entrepreneur and executive manager who has founded, con-
sulted on and invested in multiple ventures with disruptive business
models. He holds a Ph.D. in Business Models.
Marco Montemari is Assistant Professor at the Università Politecnica
delle Marche, Italy. His research interests concern management ac-
counting, intellectual capital and business models. Marco’s research
has been published in the Journal of Intellectual Capital and the
­E uropean Journal of Innovation Management, among others.

Francesco Paolone holds a degree in Business Administration from

­Bocconi University, Italy. He is currently a postdoctoral r­ esearcher at
Parthenope University of Naples. His research profiles are focused on
financial reporting, corporate governance and business models. He is the
author of several international scientific contributions.

Maurizio Massaro is Associate Professor at Ca’ Foscari University of

Venice and Udine University, Italy. One of Maurizio’s articles has re-
cently been awarded the Emerald Literati Award for Excellence. He
is a member of the Global Most Innovative Knowledge Enterprise
(MIKE) Award as the Italian representative.

John Dumay is Professor of Accounting and Finance, Macquarie Univer-

sity, Sydney, Australia, and a highly cited author of over 100 peer-reviewed
articles, book chapters and conference papers. His Ph.D. Intellectual
­Capital in Action: Australian Studies won the Emerald/EFMD Outstand-
ing Doctoral Research Award in 2008 for Knowledge Management.
State of the Art in Business Research
Edited by Professor Geoffrey Wood

Recent advances in theory, methods and applied knowledge (alongside

structural changes in the global economic ecosystem) have presented
researchers with challenges in seeking to stay abreast of their fields
and navigate new scholarly terrains.
State of the Art in Business Research presents shortform books which
provide an expert map to guide readers through new and rapidly evolv-
ing areas of research. Each title will provide an overview of the area, a
guide to the key literature and theories and time-saving summaries of
how theory interacts with practice.
As a collection, these books provide a library of theoretical and
conceptual insights, and exposure to novel research tools and applied
knowledge, that aid and facilitate in defining the state of the art, as a
foundation stone for a new generation of research.

Print ISSN: 2575-4815; Online ISSN: 2575-4807

Business and the Natural Environment

A Research Overview
Andrew Hoffman and Susse Georg

Nonprofit Marketing and Fundraising

A Research Overview
Roger Bennett

Mergers and Acquisitions

A Research Overview
David R. King, Florian Bauer and Svante Schriber

Business Models
A Research Overview
Christian Nielsen, Morten Lund, Marco Montemari, Francesco
Paolone, Maurizio Massaro and John Dumay
Business Models
A Research Overview

Christian Nielsen, Morten Lund,

Marco Montemari, Francesco Paolone,
Maurizio Massaro and John Dumay
First published 2019
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
52 Vanderbilt Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa
business
© 2019 Christian Nielsen, Morten Lund, Marco Montemari,
Francesco Paolone, Maurizio Massaro and John Dumay
The right of Christian Nielsen, Morten Lund, Marco Montemari,
Francesco Paolone, Maurizio Massaro and John Dumay to be
identified as authors of this work has been asserted by them in
accordance with sections 77 and 78 of the Copyright, Designs and
Patents Act 1988.
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks
or registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
A catalog record has been requested for this book

ISBN: 978-0-8153-7851-8 (hbk)

ISBN: 978-1-351-23227-2 (ebk)
Typeset in Times New Roman
by codeMantra
Contents

List of figures x
List of tables xi
Foreword xii
Y v e s Pign e u r

Acknowledgements xiii

1 The rising relevance of understanding business models 1

Brief history and popularity drivers across time 2
Recent developments in business model research 11

2 Applied research methodology 16

Publication impact 17
Defining the analytical framework 17
Developing reliability 21
Testing literature review validity 21
Publication coding 21

3 Insights: how the field of business models is developing 22

When: paper evolution over time 22
Who: author demographics 23
Where: author origins and publication outlets 24
What: business model definition and research themes 28
How: research questions and research methods 30
Which implications: practical and research
implications 33
viii Contents
4 Critique and transformative redefinition 38
Critique 1. Author and outlet specialization
and practitioners’ involvement 38
Critique 2. What business model, and for whom 39
Critique 3. Sustainable value and stakeholder
involvement 40
Transformative redefinitions 41

5 First stage business model research: definitions and concepts 48

Existing ‘business model’ definitions 48
Business models and strategy 59
Transformative redefinition: relevant first
stage business model research paths 61

6 Second stage business model research: the innovation

of business models 63
Innovation and technology 64
E-business innovation 66
Why is business model innovation crucial? 69
Business model conceptualized as building
blocks: moving towards a dynamic perspective 71
Business model archetypes and patterns 74
Transformative redefinition: relevant second
stage business model research paths 78

7 Third stage business model research: design

frameworks and foundations for theory-building 80
Clarifying the business model foundations 80
Business model ecosystems 84
The need for taxonomies of business models 85
Designing frameworks for describing,
designing and innovating business models 88
Towards a consistent perspective on business
model innovation 91
Transformative redefinition: relevant third
stage business model research paths 93
 Contents  ix
8 Fourth stage business model research:
the performative phase 95
Transformative redefinition: relevant fourth
stage business model research paths 100

9 Concluding remarks 102

Bibliography 103
Index 123
Figures

  1 Use of the term ‘business model’ in the Google

Scholar database (1980–2017) 5
  2 Popularity drivers of the business model concept over time 11
  3 Citation index (CI) and citation per year index (CPY)
of published articles23
  4 Citation index (CI) between non-academics,
academics and total 27
  5 First author country of origin 27
  6 Development of business model definition
inclusion over time 28
  7 Business model definitions 29
  8 Business model themes and their evolution over time 30
  9 Types of research questions and their evolution
over time (darker is older while lighter is more recent) 32
10 Research method, evolution over time (darker is
older while lighter is more recent) 33
11 Practical implications 34
12 Research implications 36
13 Possible concept overlaps between business
models and strategy (adapted from Seddon et al., 2004)60
14 The Business Model Canvas (adapted from
Osterwalder and Pigneur, 2010;
see www.businessmodelgeneration.com) 74
15 The relationship between business model
archetypes and categories (adapted from
Osterwalder et al., 2005)85
16 Extension of Foss and Saebi’s (2017) business
model innovation research framework 93
17 Porter’s generic value chain (adapted from Porter, 1985) 99
Tables

1 Dimensions of the structured literature review 18

2 Top cited articles 25
3 Theme and country of the first author 31
4 Selected business model definitions 51
5 Features and functions of typologies and taxonomies 87
Foreword

The field of business models has undergone an immense development

in the last decade, and chances are that this is going to continue at ever
more accelerating speeds in the years to come.
At the beginning of the 2000s, together with Alexander ­Osterwalder,
we defined an ontology of business models; then we created the Busi-
ness Model Canvas, which became the foundation for our co-authored
bestseller Business Model Generation. This book and the canvas
marked a turning point for the field of business models because it con-
vened academic insights with practitioner needs. I believe this is the
core strength of the field of business models, and this is also evident
in this present contribution, which in many instances highlights this
crucial connection. After all, if academics cannot provide insights that
company owners and managers can apply towards improving their or-
ganizations, then what are they good for?
Who better than Christian Nielsen and his colleagues to write this
state of the art of business model research? Dear readers and research-
ers, let yourselves be charmed by this novel and timely contribution to
business model research.

Yves Pigneur
Professor at the University of Lausanne and
Co-Author with Alex Osterwalder of
Business Model Generation
Acknowledgements

The authors wish to thank participants at the Business Model

­Leadership seminar and the 1st Business Model Conference in V ­ enice,
17–19 May 2017, as well as the participants at the 2nd Business Model
­Conference in Florence, 5–6 June 2018, for their comments and sug-
gestions. Furthermore, we would also like to thank participants at the
Future Research Directions in Business Models seminar with Charles
Baden-Fuller, hosted by Business Design Center on 5 October 2017 in
Aalborg, for fruitful discussions. Further thanks go to Jesper Sort, Peter
Thomsen, Christian Byrge, Kristian Brøndum, Erik ­Bjurström, ­Torben
Toft Kristensen, Martin Krogstrup Nielsen and Robin ­Roslender for
comments on previous versions of the manuscript. ­Finally, we wish to
thank Fiona Crawford for proofreading assistance and Thor F. Jensen
for graphical reproductions.
1 The rising relevance of
understanding business
models

Growing attention around the business model concept is based on the

combination of two major factors that have arisen over the last 25 years
and radically changed the competitive landscape. First, the advent of
the digital era and new information and communication technologies
have disrupted traditional ways of doing business and unlocked new
ways of creating value. For example, in industries like transportation
(Uber), accommodation (Airbnb), music (Spotify), retail (Amazon)
and telecommunications (Skype), where new agile technology-based
businesses using mainly bits and bytes have replaced traditional bricks
and mortar businesses.
Second, hyper-dynamic and globalized markets have forced compa-
nies to rethink and innovate how they do business. A notable example
is that of Apple, which has integrated its initial offerings of personal
computers with music delivery devices and services, including mobile
phones.
Against this constantly changing landscape, from the late 20th cen-
tury, a new concept, the business model, has gradually arisen as one
of the fundamental drivers to create, maintain and expand competi-
tive advantage. As such, it must be carefully designed and constantly
­updated. Awareness that companies do not create value in the same
way, and that the features of the business model significantly affect
­performance, has gradually attracted significant attention to this
concept, as evidenced by the proliferation of frameworks and tools
for business model design (Chatterjee, 2013; Casadesus-Masanell and
­Ricart, 2011) and innovation (Gassmann et al., 2014; Taran et al., 2016),
the use of business models in companies and the spate of recent re-
views of the business model (Foss and Saebi, 2017; Wirtz et al., 2016b).
The two words making up the term ‘business model’ have specific
meanings: a ‘business’ is the activity of providing goods and services,
involving financial, commercial and industrial aspects. A ‘model’ is a
2  Understanding business models
simplified description and representation of a complex entity or pro-
cess. By joining the two words, Osterwalder et al. (2005, p. 3) provides
a general definition:

A business model is a conceptual tool containing a set of objects,

concepts and their relationships with the objective to express
the business logic of a specific firm. Therefore, we must consider
which concepts and relationships allow a simplified description
and representation of what value is provided to customers, how
this is done and with which financial consequences.

Several prior definitions (Galper, 2001; Gebauer and Ginsburg, 2003) in-
dicate a constant use of the ‘business model’ term in regard to the way in
which companies do business, highlighting the way the model is used to
reduce complexity to an understandable level (Osterwalder, 2004; Taran
et al., 2016). In sum, the essence of the business model is that it identifies
the elements and relationships that describe how companies do business.
It is worth noting that there is still no generally accepted definition
of what a business model is, but there is consensus about the descrip-
tion of a business model as the framework through which companies
implement their strategy (McGrath, 2010; Nielsen and Montemari,
2012; Nielsen et al., 2009), thus clarifying how value is created and cap-
tured (Osterwalder and Pigneur, 2010; Teece, 2010). In particular, the
business model concept views a company as a set of interrelated deci-
sions that concern its main strategic elements, such as the value prop-
osition, along with the activities, resources and partners required to
develop the value proposition itself, as well as target customers and the
channels and relationships needed to reach the customers themselves
(Morris et al., 2005). Thus, the business model concept is valuable for
managers and entrepreneurs as it enables the comprehension of the
value creation process and the identification of the value drivers that
arise as strategy is being executed (Montemari and Chiucchi, 2017).
This introduction outlines the reasons for the development of the
business model and why it is a concept worthy of analysis. The follow-
ing sections discuss the initial stages of the business model research
area and the drivers that have made the business model concept pop-
ular over time.

Brief history and popularity drivers across time

This chapter outlines the state of the art in the field of business models.
First it looks at some important initial phases in the research area by
 Understanding business models  3
shedding light on the origins of the term ‘business model’, on the contexts
where it has been used and on the meanings that it was initially given.
The term ‘business model’ was first mentioned in 1957 by Bellman
et al. in their article analyzing the construction of business games for
training purposes. The term was cited just once: “And many more
problems arise to plague us in the construction of these business mod-
els than ever confronted an engineer” (Bellman et al., 1957, p. 474).
This mention seems to relate the business model concept to a simpli-
fied representation of the real world though a model.
Three years later, Jones (1960) published the first academic article
using ‘business model’ in its title; however, the term was not mentioned
further within the paper, which was aimed at addressing some ques-
tions about how college students should be trained and how technolo-
gies should support them.
During the 1960s there were a number of discussions concerning the
interrelationships among strategy, organizational structure and tech-
nologies from a business model perspective. The origins of the business
model concept can be traced back to Chandler’s seminal book Strategy
and Structure from 1962, where strategy is defined as “the determina-
tion of the basic long-term goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of resources necessary
for carrying out these goals” (Chandler, 1962, p. 13). Here Chandler’s
focus is on execution, which implicitly highlights the relevance of the
business model concept; new strategic decisions, like becoming diver-
sified or expanding the volume of activities, entail not only new stra-
tegic goals, but also new courses of actions and a revised allocation of
resources. Thompson’s Organizations in ­Action from 1967 is a seminal
contribution with respect to technology’s impact from a business model
perspective. In particular, Thompson proposes a ­typology of different
kinds of organizational technologies, distinguishing between long-
linked, intensive and mediating technologies. These different technol-
ogy types play different roles in connection with value creation as well
as structuring of companies and their value chains.
Further developments in the concept are seen in Andrews’ distinc-
tion between corporate and business strategy (Andrews, 1971): the
former defines the businesses in which a company competes, its goals
and the plans to achieve these goals, as well as the nature of its human
and economic organization that it aims to convert from distinctive
competences into competitive advantage; the latter determines how
a company competes in a given business and its position compared to
competitors, namely the choice of products or services and the market
for individual businesses.
4  Understanding business models
By referring to Chandler’s work, Child’s paper from 1972 on “Organ-
izational structure, environment and performance: The role of strate-
gic choice” is one of the earliest to gather and present these thoughts
diagrammatically. Although Child does use the term business model
within his schema of “The role of strategic choice in a theory of or-
ganization” (Child, 1972, p. 18), the thoughts presented incorporate
many of the central elements presented within the recent literature on
this emerging concept. For instance, Child’s term “prior ideology”
covers the aspects of an organization’s vision and value proposition,
objectives and strategy, while “operating effectiveness” is viewed as
an outcome of the organizational strategy and the elements scale of
operations, technology, structure and human resources.
A commonly stated adage is that having an adaptive organization
is essential to survive in today’s competitive business environment.
­Starbuck and Dutton commented as early as 1973, that the “central
issue in designing adaptive organizations is to choose strategies and
structures that will allow organizations to exploit their environments”
(Starbuck and Dutton, 1973, p. 166). Chandler’s influence is clear.
While the notion of strategy has subsequently developed in a myriad
of directions, one branch of its development that prefigures the argu-
ment here is research into how managers can leverage the resources of
an organization beyond that organization’s current business. For ex-
ample, Prahalad and Bettis (1986), in their account of the link between
diversity and performance, describe how mental maps developed in
the core business are applicable in, for example, other divisions of an
enterprise as representations of top management’s ideals. This exam-
ple shows the richness and diversity of perspectives relating to busi-
ness models.
This brief review shows that for several decades the term ‘business
model’ had no real prominence in the literature or in practice. This
changed in the second half of the 1990s, when a significant increase in
the usage of the term emerged with the ‘dot-com’ period (Mahadevan,
2000; Rappa, 2004; Slywotsky, 1996; Timmers, 1998). Figure 1 clearly
illustrates this phenomenon, by depicting the increasing use of the
term in the Google Scholar database between 1980 and 2017.
Already at the turn of the millennium, there was a lot of aware-
ness around a globalizing, fast-communicating world. “The nature of
business had changed”, was a common exclamation, and arguments
relating to globalization of markets, greater mobility of the workforce,
the application of information technology (IT) and technologies in
general were readily thrown into debate among academics and prac-
titioners, and in the media (Hand, 2001). The aforementioned factors,
 Understanding business models  5

Figure 1  Use of the term ‘business model’ in the Google Scholar database
(1980–2017).

among others, seemed to generate significant changes in the nature of

value creation. In addition, intangible assets and knowledge resources
had become ever more important for companies to manage and utilize
(Arthur, 1994; Drucker, 1993). In the ‘new economy’, intangibles rather
than physical and financial capital had become the pivotal factor un-
derlying value creation (Bontis, 2001; Eustace, 2000).
From an economics perspective, wealth creation was often referred
to as being more dynamic in the new economy. In 2001, Schmid (2001,
p. 44) argued that the design of value creation systems was challenged
as new forces, for example, IT, were changing the structures of the
economy. Evans and Wurster (1997, p. 19) reasoned that “the chang-
ing economics of information threaten to undermine established value
chains in many sectors of the economy, requiring virtually every com-
pany to rethink its strategy – not incrementally, but fundamentally”.
Palenzuela (2001) confirmed the observed industrial restructuring
mentioned previously, highlighting that sources of economic renewal,
that is, wealth creation, increasingly derive from knowledge-based in-
dustries rather than traditional industries. In continuation of this line
of reasoning, such changes in the nature of value creation inevitably
place pressure on the way companies understand themselves, their
role in industrial value chains and the way they communicate about
their activities (see also Feng et al., 2001).
The term ‘business model’ has been predominantly connected with
e-business (e.g. Alt and Zimmermann, 2001; Kodama, 1999; M ­ ahadevan,
2000; Timmers, 1998), as the application of the Internet has caused a
6  Understanding business models
revolution in possible ways of doing business and unlocked the potential
to create an array of new business models. A major focal point of the
literature on business models from an e-business perspective has been
how to migrate successfully to e-business models and how to capture
value through e-business models (see, for example, Hedman and Kalling
(2003) for a thorough review). Therefore, much of the business model
literature focusing on the e-business context concerns how such organi-
zations can create value in comparison to their bricks and mortar coun-
terparts (Alt and Zimmermann, 2001; Rappa, 2001). There is an almost
unprecedented number of ways of creating business opportunities by
applying IT to existing business concepts. Rappa (2001) has conducted
an extensive review of business models on the Web, identifying a total
of 29 different e-business models distributed across nine industry-based
categories.
Amit and Zott (2001) identify four interdependent dimensions of
value creation potential in e-businesses. For an e-business model to
be profitable, it must create efficiencies in comparison to existing ways
of doing business, facilitate complementarities and/or novelty or ena-
ble the lock-in of customers. For example, the creation of efficiencies
is precisely the underlying notion of Internet-based business models
in the banking industry (DeYoung, 2005), while Gallaugher (2002)
­illustrates how e-commerce as a new distribution channel has created
efficiencies, thus enabling new business models.
As indicated by Alt and Zimmermann (2001, p. 1), “much talk re-
volves around how traditional business models are being changed and
the future of e-based business models”. However, this is merely half
the story. Business models are perhaps the most discussed and least
understood of the newer business concepts, although many e­ nterprises
do not have clearly articulated or presented business models (Shipley,
1995). Furthermore, Alt and Zimmermann (2001) conclude that there
is an incomplete and confusing picture of the dimensions, perspec-
tives and core issues of the business model concept (Arendt, 2013).
There is no clear definition of what a business model is and which
­characteristics and components such a model should incorporate. As
Porter (2001, p. 73) states, “The definition of a business model is murky
at best”. Similarly, Hedman and Kalling (2001) acknowledge that a
theoretically sound definition of the business model does not exist at
present.
Starting from these considerations, with the turn of the millennium,
some attempts to portray the business model as an independent con-
cept began to appear, the aim being to distinguish it from established
concepts, such as strategy or business planning.
 Understanding business models  7
In 2000, Gary Hamel, in his book Leading the Revolution (p. 15),
argued for the need to look beyond competition between firms in sim-
ilar segments to viewing competitive strategy on the level of whole
business concepts, also labelled value networks or value chains, that
is, as competing business models. Working with the concept of the
business model can help management obtain an understanding of the
nuances of the business and to envisage the connection to the compa-
ny’s competitive strategy (Sandberg, 2002). Magretta (2002, p. 6) also
posits this, although stressing that a company’s business model and
competitive strategy is not the same. According to Magretta, the role
of the business model is to describe how the pieces of the business fit
together, while competitive strategy concerns how the business will do
better than its competitors.
In parallel, the concept was becoming more popular and established
itself outside the sphere of Internet commerce. Hence, every firm was
recognized as having a business model (Katkalo, 2008; Stewart and
Zhao, 2000) and this led to an increase in the number of publications
describing business models and employing a given author’s own defi-
nition of the business model, its key components and schemes for
analysis (Amit and Zott, 2001; Chesbrough and Rosenbloom, 2002;
Linder and Cantrell, 2000; Osterwalder et al., 2005; for a thorough
review, please see Morris et al., 2005). For example, Chesbrough and
Rosenbloom (2002, p. 550) took a clear starting point in the strategy
literature and argued that the business model is offered as a construct
that mediates the value creation process as it “translates between the
technical and the economic domains, selecting and filtering technolo-
gies, and packaging them into particular configurations to be offered
to a chosen target market”. Although Chesbrough and Rosenbloom’s
construct clearly relies on a “firm and market” approach, the cases
presented exemplify how the companies’ business models emerge from
interactive processes involving, for example, entrepreneurs, customers
and sources of funding.
The business model concept also has intimate connections to the
corporate disclosure and communication and transparency per-
spective as illustrated by Nielsen (2005). With regard to the existing
debate on companies’ lack of disclosure of relevant information to
the investment community, especially when dealing with dynamic,
­k nowledge-intensive and high-growth companies, the critics all too
often state that there is an inherent lack of disclosure on non-financial,
forward-looking data (Beattie and Pratt, 2002; Eccles and Mavrinac,
1995; Gelb, 2002; Holland, 1997, 2001; Lev, 2001) of the type associated
with describing business models. Garten (2001, p. 1) identifies business
8  Understanding business models
model descriptions as a major missing piece alongside, for example,
market information, operating performance measurements and intel-
lectual capital. Furthermore, business models enable the creation of a
comprehensive and more correct set of non-financial value drivers of
the company (Kozberg, 2001).
Many efforts are currently under way to support sufficient commu-
nication regarding companies’ value creation processes. Integrated
reporting (see www.iirc.org) is an interesting example of this, as it is
essentially reporting – more thoroughly than traditional financial re-
porting enables – on company strategy, drivers of value creation and
intellectual capital: all components relating to a company’s business
model. As a matter of fact, the business model is at the very core of the
International Integrated Reporting Council’s (IIRC) framework. This
trajectory shows that, from being a buzzword associated with dot-com
companies at the turn of the millennium with dubious performance,
the term business model has gradually become the new hot manage-
ment and strategy topic.
As mentioned by DaSilva and Trkman (2014), the number of contri-
butions with ‘business model’ in their title has remained relatively sta-
ble between 2004 and 2007 at 25–42 papers each year. It began to grow
again, with 45, 68 and 83 papers, in 2008, 2009 and 2010, respectively.
The trend indicates that the 2004–2007 period was characterized by a
change in focus from the business model of Internet companies to the
analysis of business models in ‘general business’.
The business model term quickly spread to the analysis of indus-
tries such as airlines (Lawton and Solomko, 2005; Tretheway, 2004),
­biotechnology (Bigliardi et al., 2005; Nosella et al., 2005), media
and telecommunications (Amberg and Schröder, 2007; Eriksson
and Kalling, 2007; Ha and Ganahl, 2004) and music (Manafy, 2006;
­Swatman et al., 2006; for a thorough analysis, see Lambert and
­Davidson, 2013). ­Classifying enterprises according to their business
models has provided a new perspective to the analysis of young and
fast-growing industries or traditional sectors disrupted by technolog-
ical changes. Business-­model-based classifications lend themselves to
performing other studies, the aim being to analyze the relationship
between homogenous groups of business models and performance
(DeYoung, 2005; Flouris and Walker, 2007; Zott and Amit, 2007). This
body of research has contributed to the identification of the business
model as one of the factors that influence company success in terms of
profitability, revenue growth and/or market capitalization.
Also, within the realm of corporate valuation, the business model
concept has gradually arisen as one of the main factors to be considered
 Understanding business models  9
overall concerning the valuation of high-tech companies, such as bi-
otechnology companies. Although the fundamental principles of in-
vestment remain the same, whether dealing with a high-tech enterprise
or a traditional production company (Fenigstein, 2003), there is of-
ten much greater uncertainty regarding high-tech companies’ future
prospects. Fenigstein (2003, p. 1) highlights that valuation of high-tech
companies should be based upon an analysis of “the critical success
factors on which a business can survive and succeed”, including value
drivers such as the business opportunity, the unique value proposition
and technology, customer base, competitive advantages and strategic
alliances, all of which are elements relating to business models.
Along these lines, Teece (2010) concludes that to be a source of com-
petitive advantage, a business model must be something more than
just a good, logical way of doing business. Such a model, he argues,
must be honed to meet particular customer needs. It must also be in-
imitable in certain respects, either by virtue of being difficult to rep-
licate, or by being problematic for competitors to replicate because it
would disturb their existing relationships with customers, suppliers or
important alliance partners.
In parallel to the body of research focused on the relationship be-
tween business models and performance, another relevant stream of
research has arisen, concerning business model innovation.
Rising attention on this form of innovation is due to companies’
awareness that business models are not static and enduring items. On
the contrary, they must be changed, refined and innovated on a system-
atic basis if companies aim to survive and stay competitive over time.
Over the years, attempts have been made to define when a change
can be called business model innovation (Chesbrough, 2007a; Garcia
and Calantone, 2002), and several aspects of this phenomenon have
been explored: drivers of business model innovation (de Reuver et al.,
2009; Moyon and Lecocq, 2010), features of the process of business
model innovation (Dunford, 2010; McGrath, 2010), tools to support
the process of business model innovation (Gnatzy and Moser, 2012;
Hienerth et al., 2011), and levers to successful business model innova-
tion (Giesen et al., 2010; Sosna et al., 2010).
Following this, Nunes and Breene (2011) argue that companies suc-
cessfully reinventing themselves have in common the ability to broaden
their focus beyond what they denote “the financial S curve” where the
profitability of a product or service will decline over time as competi-
tion rises in the product lifecycle. Rather, they argue that companies
should focus on managing three much shorter but vitally important
“hidden S curves”: (1) tracking the basis of competition in the industry;
10  Understanding business models
(2) renewal of the capabilities in the organization; and (3) nurturing a
ready supply of talent. In essence, this means that managers should
constantly focus on fixing what does not yet appear to be broken.
The literature has also been rich with frameworks and ontologies
for conceptualizing the potential concept of what’s in and what’s out
of a business model analysis, as well as representing and explaining
relationships among business model components. One such example
is Richardson’s (2008) framework that integrates business models with
the concept of strategy execution. His framework addresses the no-
tions of value proposition, value creation and delivery system, and
value capture. Richardson’s (2008, p. 138) Business Model Framework
is as follows:

• The value proposition – what the firm will deliver to its customers,
why they will be willing to pay for it, and the firm’s basic approach
to competitive advantage
a The offering
b The target customer
c The basic strategy to win customers and gain competitive
advantage
• The value creation and delivery system – how the firm will create
and deliver that value to its customers and the source of its com-
petitive advantage
a Resources and capabilities
b Organization: the value chain, activity system and business
processes
c Position in the value network: links to suppliers, partners, and
customers
• Value capture – how the firm generates revenue and profit
a Revenue sources
b The economics of the business

Figure 2 provides a timeline diagram that summarizes the most pop-

ular drivers of the business model concept over time. Interestingly,
the popularity of the business model can in part also be attributed
to research articles on business models outside the business sphere
(DaSilva and Trkman, 2014), and the term has been used in a variety
of different scientific disciplines in recent years:

• Political parties such as the Labour Party in the UK (Faucher-King,

2008);
• Terrorist organizations such as Al-Qaeda (Vardi, 2010);
 Understanding business models  11

Figure 2  Popularity drivers of the business model concept over time.

• Environmental conservation (Sovinc, 2009);

• The model of the US economy (Cappelli, 2009);
• Any kind of human endeavour with a wide range of interpreta-
tions (Ghaziani and Ventresca, 2005); and
• The development of rare diseases (Ferry, 2010).

Whether dealing with innovation, entrepreneurship, organizational

change or strategy and so forth, the general argument that can be de-
veloped from the earlier sections is that the business model perspective
holds an advantageous starting point for creating a comprehensive
and mutual understanding of how a company creates value. However,
as will be evident from the following review, although there are numer-
ous attempts at defining what a business model is, a clear definition
remains elusive.

Recent developments in business model research

The term business model suggests a sophisticated and structured ap-
proach to business, one that is at the heart of business success. It sug-
gests that a recipe for success can be taken from an ­organization – such
as Apple, Amazon, Facebook or Twitter – and applied to other organi-
zations, bringing similar success. However, each of these companies has
achieved success in different ways, and there is no one size fits all busi-
ness model – the field is more complex and nuanced than that. Thus, ac-
ademics and practitioners ask, “What is a business model?”, and “How
can companies develop their own successful business model?” These big
questions are still unanswered in business model research and practice.
From its origin more than 60 years ago, the concept of the business
model (Bellman et al., 1957), has developed through what Wirtz et al.
12  Understanding business models
(2016b) call the “formation phase” of business model research in the
1990s. From a practitioner perspective, a negative association with the
term business model developed around the same time due to the in-
volvement of e-businesses in the dot-com bubble (Nielsen and Bukh,
2011). Since the end of the dot-com bubble, Wirtz et al. (2016b) have
identified a “differentiation phase”, incorporating an increase in
­practice-oriented articles and books, as well as several special issues in
leading academic journals, such as Long Range Planning1 and the
Harvard Business Review.2 Research into business models continues to
thrive, with a surge in conference tracks at well-established academic
conferences and the advent of the Business Model Community, with
over 400 members.3 This increase in attention may be due to prac-
titioners’ increasing perception of the relevance of business models,
which is seeing growth in the use of business model terminology and
frameworks in relation to business development (Johnson et al., 2008),
management (Arend, 2013) and entrepreneurship (Certo et al., 2009;
Doganova and Eyquem-Renault, 2009).
One notable framework is Osterwalder and Pigneur’s (2010) Business
Model Canvas, presented in their book Business Model ­G eneration,
which to date has sold more than 1.3 million copies and has been
translated into over 30 languages. Additionally, there are now several
dedicated journals in the field, such as Journal of Business Models and
Open Journal of Business Model Innovation that provide an opportu-
nity for the exploration of new research contributions. The field of
business model research is both vibrant and progressive.
For example, the Journal of Business Models has recently published
contributions that analyze business models from several, new per-
spectives, such as scalability (Lund and Nielsen, 2018), ecosystems
(D’Souza et al., 2015; Iivari et al., 2016), performance measurement
(Heikkilä et al., 2014) or accounting (Haslam et al., 2013). Business
models have also been investigated within particular contexts, like
small to medium-sized enterprises (Iivari, 2015; Schüle et al., 2016),
networks (Hakanen et al., 2016; Lund and Nielsen, 2014) or born
global firms (Johansson and Abrahamsson, 2016).
Moreover, business model innovation has been explored from dif-
ferent angles: for example, the market-driven perspective (­Zalewska-
Kurek et al., 2016), the patterns perspective (Lüttgens and Diener,
2016), the portfolio strategy perspective (Verhoeven and Johnson,
2016) or the risk management perspective (Taran et al., 2013).
In addition, the investigation of business models’ theoretical un-
derpinnings has progressed. For example, Foss and Saebi (2017) use
complexity theory to analyze the business model concept from a
 Understanding business models  13
theoretical perspective. On the one hand, this entails conceptualiz-
ing the business model as a set of interdependent and complementary
subsystems that interact in a complex way; on the other hand, this
lends ­itself to identifying different types of business models (highly
modular, non-decomposable, nearly decomposable), according to the
degree of interdependency among subsystems, and, therefore, differ-
ent types of business model innovation.
Business model research is also prominent in fields outside of busi-
ness and management, such as practical entrepreneurship (­Osterwalder
et al., 2014), production and technology (Bocken et al., 2014), sustaina-
bility (Prahalad and Hart, 2002) and software development (O’Reilly,
2007). Research in these fields generally reviews and discusses defini-
tions, concepts and frameworks for describing and developing business
models from different perspectives, such as Timmers’ (1998) review of
business model for e-business. These domain-specific reviews are typi-
cally motivated by an interest in examination of a specific field and do
not necessarily take a broad approach to the business model concept,
conveying only a partial picture of the business model field. For ex-
ample, the business model definitions used in these papers are often
narrow and overlook the complexity of the business model (Hedman
and Kalling, 2003; Mahadevan, 2000; Timmers, 1998), while the stud-
ies in these papers are frequently authorship reviews based on subjec-
tive interpretations, rather than on empirically structured approaches
(Massaro et al., 2016a). Shafer et al. (2005, p. 199) argue that “while it
has become quite fashionable to discuss business models, there is still
much confusion about what business models are and how they can be
used”.
To counter these limitations in the field of business model research,
contributions published in the differentiation phase, as outlined by
Wirtz et al. (2016b), tend to be more structured in a search for the com-
mon elements of a business model. For example, Schafer et al. (2005)
uncovered 12 different business model definitions between 1998 and
2002 to create their own definition: a business model is a “representa-
tion of a firm’s underlying core logic and strategic choices for creat-
ing and capturing value within a value network” (p. 202). Osterwalder
et al. (2005, p. 33), in relation to the working information systems do-
main, argue that

one of the shortcomings in the business model literature is that the

different authors rarely build on each other’s work. Consequently,
business model research as a whole, advances more slowly than it
could and often stays at a superficial level.
14  Understanding business models
Following along these lines, Teece (2010, p. 192) states:

The paucity of literature (both theoretical and practical) on the

topic is remarkable, given the importance of business design, par-
ticularly in the context of innovation. The economics literature
has failed to even flag the importance of the phenomenon, in part
because of an implicit assumption that markets are perfect or
very nearly so. The strategy and organization literature has done
little better. Like other interdisciplinary topics, business models
are frequently mentioned but rarely analyzed: therefore, they are
often poorly understood. Not surprisingly, it is common to see
great technological achievements fail commercially because little,
if any, attention has been given to designing a business model to
take them to market properly.

Zott et al. (2011) set out to uncover contemporary developments and

future research by providing a comprehensive literature review on the
business model. They also identify the absence of a generally accepted
idea of what a business model is and concluded that contemporary
research is evolving into silos based on “(1) e-business and the use of
information technology in organizations; (2) strategic issues, such as
value creation, competitive advantage, and firm performance; and
(3) innovation and technology management” (p. 1020).
Similarly, Wirtz et al. (2016a, 2016b) examine the current state of
business model research using a “synoptic literature analysis”. They
identify four essential research areas: innovation, change and evolu-
tion, performance and controlling and design. However, their review is
based on an initial subjective analysis, and while the authors confirm
these research foci with a panel of experts, the areas identified are gen-
eral concepts rather than outlines of specific research questions.
As the previous sections have shown, the business model is a very
heterogeneous research area that over time has developed in several,
different directions, drawing on a multitude of management disci-
plines, including entrepreneurship, strategy, organization, informa-
tion systems and innovation. The lack of constructs clarity and the
uncertainty of the theoretical underpinnings prevent the process of
cumulative growth of knowledge as different authors rarely build on
each other’s work, making research efforts disconnected and charac-
terized by conceptual ambiguity.
By nature, previous domain specific and non-structured reviews can
only partially solve this problem. This situation demands a structured
and comprehensive analysis that assesses and evaluates the current
 Understanding business models  15
state of research on business models, identifies the experts in this re-
search area, pinpoints the methodologies used in previous studies and
highlights key questions, research gaps and areas that deserve addi-
tional attention, with the aim to establish a sound foundation for fu-
ture research.

Notes
1 2010, Volume 43, Issues 2/3.
2 For example, December 2008 and January–February 2011.
3 see www.businessmodelcommunity.com.
2 Applied research
methodology

This chapter uses a structured literature review (SLR) methodology

“to develop insights, critical reflections, future research paths and re-
search questions” for the field of business model research (Massaro
et al., 2016a, p. 767). The SLR methodology potentially offers less bias
and more transparency because it relies on a set of rules that underpin
validation and reliability. Given that business model research to date
lacks specific research questions needed to drive future research, the
SLR methodology is ideally suited to building on the work of Zott
et al. (2011) and Wirtz et al. (2016b).
According to Hart (1998, p. 1) a literature reviews allow understand-
ing of a topic, focusing on “what has already been done on it, how
it has been researched, and what the key issues are”. Massaro et al.
(2016a, p. 767) outline that there are several different literature review
methodologies, and the SLR is a methodology “for studying a corpus
of scholarly literature, to develop insights, critical reflections, future
research paths and research questions”. Therefore, we use the SLR
methodology to develop a “systematic, objective, replicable and relia-
ble process” (Massaro et al., 2016a, p. 767).
In developing a literature review, researchers “should adopt a ques-
tioning and critical attitude” (Hart, 1998, p. 30). Alveson and Deetz
(2000) highlight that there are three tasks of critical management
research – insight, critique and transformative redefinitions – and
following these, we develope three research questions (RQs) for this
book.

RQ1: Insights. How is the field of business model developing?

RQ2: Critique. What is the critique of business model research?
RQ3: Transformative redefinitions. What are the likely future scenarios
for business model research?
 Applied research methodology  17
In developing our review and critique, we design our research in line
with a number of other recent contributions critically investigating
business model research (Arend, 2013; Baden-Fuller and Mangema-
tin, 2013; Jensen, 2014). The research for this article begins with the
data set used in Zott et al. (2011) and expands it to include publications
from a wider range of information sources that go beyond academic
articles from selected outlets. Consistent with Massaro et al. (2016b),
to help understand the impact of publications in the field of business
models, we supplement the data set by including citation data from
Google Scholar and thereby develop a publication impact analysis
that is presented in the following subsection (Dumay, 2014).

Publication impact
Citation counts are becoming a shared measure for identifying the im-
pact of scientific publications and can be used to analyze how specific
topics evolve over time (Massaro et al., 2016a, pp. 780–781). Each pub-
lication selected for this study was measured using Google Scholar
­Citations (GSC), citations per year (CPY) and the last five years
(CI5Y). Initially, 365 cited sources were found on Google Scholar
using the search term “business model*”. This meant that the search
captured sources using terminologies such as business model, business
models and business modelling. Next, we constructed three league ta-
bles of the top 100 sources according to the three criteria: GSC, CPY
and CI5Y. From these league tables, we identified the 79 publications
that appear in all three top-100 tables. These 79 publications thereby
represent the most impactful work in the field of business models.

Defining the analytical framework

In developing a SLR, it must be decided “what is to be observed as
well as how observations are to be recorded and thereafter considered
data” (Krippendorff, 2013). The first level of our analytical framework
focuses on the ‘when’ dimension. Papers are analyzed considering their
evolution over time, both in terms of number of papers and number of
citations. The second level focuses on the ‘who’ dimensions. Author
demographics are recorded focusing on the number of publications
by each author and the background of the first author. Furthermore,
we distinguish between academics and non-academics. The objective
here is to analyze who are the most prominent authors in the field, as
well as to understand the role of practitioners. The third and fourth
18  Applied research methodology
levels of analysis focus on the ‘what’ and ‘how’ dimensions respec-
tively, studying the research questions and the research methods used
to gain an understanding of the scientific maturity of the field. The last
level of analysis focuses on the ‘which’ dimension, or main implica-
tions, distinguishing between practical and research definitions.
The categories in Table 1 were designed to answer RQ1 concerning
how the field of business models has been developing on an overall
level. The analysis of these questions is furthermore expected to lead
to insights that generate critique of the field (RQ2) and also to a trans-
formative redefinition (RQ3).

Table 1  D
 imensions of the structured literature review

Level Description Details Total % Krippendorff ’s

results alpha

When. Article evolution over time

Years 80 100 1.000
<= 2000 13 16
2001–2005 33 41
2006–2010 31 39
2011–2015 3 14

Who. Author demographics

All authors 144 100 1.000
N. of authors with more 15 10
than one publication
of which among the top 9 64
cited
First author 80 100 1.000
Non-Academic 9 11
Junior Academic 25 31
Professor 46 58

Where. Country of origin and publication outlet

Country of origin* 80 100
Not applicable 60 75
Europe 13 16
England 1 1
Finland 1 1
France 2 3
Germany 2 3
Italy 1 1
Norway 1 1
Spain 1 1
Switzerland 2 3
The Netherlands 1 1
Level Description Details Total % Krippendorff ’s
results alpha

North America 10 13
United States 10 13
Asia 2 3
Bangladesh 1 1
India 1 1
Oceania 1 1
Australia 1 1
Publication outlet 80 100 1.000
Long-range Planning 13 15
Harvard Business School 6 8
Press
Harvard Business Review 4 5
Strategic Management 4 5
Journal
European Journal of 3 4
Information Systems
MIT Sloan Management 3 4
Review
Organization Science 3 4
Academy of Management 2 3
Perspectives
Electronic Markets 2 3
Journal of Management 2 3
Journal of Marketing 2 3
Management Decision 2 3
Management Science 2 3
McGraw-Hill 2 3
Research Policy 2 3
Others (only one article 28 35
per outlet)

What. Business model definition and research themes

Business model definition 80 100 0.974
Provide a business model 47 59
definition
Does not provide a 33 41
business model
definition

How. Research questions and research methods

Research questions 80 100 0.974
Provide a research 31 39
question
Does not provide a 49 61
research question
Main research questions 31 100 Not
provided* applicable*
(Continued)
Level Description Details Total % Krippendorff ’s
results alpha

What’s the definition of 7 23

business model?
How does business model 4 13
evolve?
How can business model 8 26
be implemented and
used?
How can the business 2 6
model support
innovation?
What are the barriers 1 3
to business model
implementation?
How does business model 2 6
interact with managerial
cognition and action?
How does business model 8 26
affect performance?
What are emerging 2 6
business models?
Which are the strategies 2 6
implemented in new
business models?
What are the factors 4 13
affecting business model
adoption?
Applied research methods* 80 100 1.000
Literature review 11 14
Conceptual Article 48 60
Survey, Questionnaire 4 5
Panel Data or Similar 1 1
Quantitative Study
Case Study 12 15
(Non-Intervention)
Action Research 0 0
(Intervention Research)
Mixed Methods 4 5

Which implications. Practical and research implications

Practical implications 80 100 1.000
Reports practical 25 31
implications
Does not report practical 55 69
implications
Research implications 80 100 1.000
Reports research 28 35
implications
Does not report research 52 65
implications
 Applied research methodology  21
Developing reliability
The coding was done by two researchers. First, three publications
were coded independently by reading them and recording the codes
onto separate spreadsheets. Notes were compared and major coding
discrepancies were discussed as well as issues relating to jurisdiction.
This process was repeated until the reliability of the results was satis-
factory. Additionally, the authors performed a Krippendorff’s alpha
test to assure coding reliability (Krippendorff, 2013).

Testing literature review validity

External validity of this type of content analysis is aimed at establish-
ing whether the results of a study can be generalized. In this study, the
authors performed queries in the EBSCO database, as well as through
Google Scholar and existing literature reviews containing data on pub-
lications, to confirm whether the selected works were representative of
the literature. Among these literature reviews was Zott et al. (2011).
Two researchers read the abstracts of identified papers, and in some
cases the full paper, to establish their relevance. Publications that were
discarded as being within the scope of this research typically did not
have the theme of business models as a substantive subject matter, but
rather used the term superficially in relation to another discipline.

Publication coding
After defining the analytical framework and checking the framework’s
reliability as described earlier, one researcher coded the remainder of
the works. Reliability checking and discussion of codes where there
was uncertainty was carried out continuously throughout the process
by the authors.
3 Insights
How the field of business
models is developing

This section answers the first research question: “How is the field of
business models developing?” Table 1 depicts the results of this analy-
sis, while the following subsections discuss the main findings.

When: paper evolution over time

Focusing on the ‘when’ dimension, Figure 1 summarizes the results
according to total citation by year to identify trends in citation pat-
terns. Results show that most of the citations on the topic are concen-
trated around the period 2001–2003 with two further citation spikes in
2007 and 2010. It is worth noting that of the contributions published in
the period 2001–2003, eight publications out of 20 have received more
than 1,000 citations, with six publications having a CPY in excess of
100. From the 2007 citation spike, only two of seven of the published
works have received more than 1,000 citations to date, and only these
two contributions have a CPY of over 100. Similarly, only two of 14 of
the works published from 2010 and onwards have more than 1,000 ci-
tations and show a CPY over 100. These results indicate that the busi-
ness model literature may already have reached maturity in the period
2001–2003, with some important innovations to the field being pub-
lished in 2007 and 2010. Figure 3 indicates that there is a distinct set of
stages in business model research. Axes on the left and right measure
total citations and CPY of contributions published for each year.
The first citation spike revealed in the data relates to the period
2001–2003. This citation spike is driven by several authors, all of whom
were well known in their respective fields prior to their business model
publication. The contributions primarily relate to the definition of
business models and especially how they differ from strategy (Hamel,
2000; Magretta, 2002; Porter, 2001). Several papers that describe early
conceptual models and typologies depicting the possible content of a
 Field of business models  23

Figure 3  Citation index (CI) and citation per year index (CPY) of published
articles.

business model are likewise present in this citation spike, for example,
Chesbrough and Rosenbloom (2002). A dominant sub-theme among
the works published during this first spike is the e-business perspec-
tive, which is typically closely linked to developing either conceptual
models, typologies or business model definitions.
The second citation spike, in 2007, relates mainly to publications
about innovating business models. The most cited work, O’Reilley
(2007), argues that successful business model patterns create value in
the Web 2.0 context, also called social media. It is also worth noting
that Teece’s (2007) article discussing dynamic capabilities, is an im-
portant seminal contribution aimed at theorising business models.
The third citation spike occurs in 2010. The primary driver here is
­Osterwalder and Pigneur’s (2010) book about the Business Model Canvas.
This spike is also driven by the special issue of Long Range Planning that
includes several of the dominant authors already present in the first spike
of citations described earlier. It is interesting to note that all three citation
spikes are driven both by practitioner and academic insights, but where
the academic literature is more dispersed across the whole period of study,
the practitioner insights are more concentrated around these spikes.

Who: author demographics

The second measure depicted in the analytical framework focuses
on author demographics. The results show that 148 authors are
24  Field of business models
responsible for publishing the 79 works analyzed. Only 15 authors
published more than one work, and of these 15, nine are within the
top cited works that reached more than 1,000 citations each. Addi-
tionally, focusing on those top cited publications, 77% are written by
authors who wrote more than one piece in this category. The most
prominent authors are Henry Chesbrough, who has co-authored six
works, three of which are among the most cited (Chesbrough, 2003,
2006; Chesbrough and Rosenbloom, 2002), Alexander Osterwalder,
who has co-authored four works, of which three with Yves Pigneur
are among the most cited (Osterwalder, 2004; Osterwalder and
Pigneur, 2010; Osterwalder et al., 2005), and Prahalad and Teece, who
have co-authored two works, each among the most cited (Prahalad
and Hammond, 2002; Prahalad and Hart, 2002; Teece, 2007, 2010).
These findings confirm trends found in different disciplines (Massaro
et al., 2015, 2016b), where prominent authors attract more citations
and gain greater recognition in the field.
Studying the work of the prominent authors within the field demon-
strates that these authors take a narrow focus; that is, they special-
ize in an aspect of the field. For example, Henry Chesbrough’s focus
is open innovation in a business model context, David Teece depicts
the business model relationship to strategy, and Alex Osterwalder
and Yves Pigneur develop their framework that eventually becomes
the Business Model Canvas in 2010. Table 2 reports the top cited
publications.
Additionally, focusing on the distribution of the first author of the
publications, results show that 11% of the publications have a non-­
academic first author. By cross-matching with the number of citations,
our results show that the non-academic works published in the spike
periods 2007 and 2010 account for 45% and 28% of all citations. While
the non-academics were not drivers of the citation development of the
first studies on business models in the period 2001–2003, they largely
contribute to the development of the following spikes in 2007 and 2010.
Thus, while both practitioners and academics contribute to the first
development of the research field at the end of the 1990s, the topic was
largely dominated by academics until the two more recent spikes in
2007 and 2010. Figure 4 depicts these results.

Where: author origins and publication outlets

Analyzing the first author’s geographic origin, results show that most
of the relevant studies have been published in the US and in the UK. In
continental Europe, Spain and France are the most prolific countries.
Table 2  T
 op cited articles

Article Author Year No. of citations Source

Open innovation – The new imperative for Chesbrough, 2003 9227 Harvard Business School Press
creating and profiting from technology Henry W.
Strategy and the internet Porter, Michael E. 2001 4920 Harvard Business Review
The fortune at the bottom of the pyramid Prahalad, C.K.; 2002 4088 Strategy + Business
Hart, Stuart L.
What is Web 2.0: design patterns and O’Reilly, T. 2007 3991 Communications & Strategies
business models for the next generation
of software
Value creation in e-business Amit, Raphael; 2001 3304 Strategic Management Journal
Zott, Christoph
Explicating dynamic capabilities: the Teece, David J. 2007 3021 Strategic Management Journal
nature and microfoundations of
(sustainable) enterprise performance
Leading the revolution Hamel, G. 2000 2727 Harvard Business School Press
Business models for electronic markets Timmers, P. 1998 2354 Electronic Markets
The role of the business model in capturing Chesbrough, 2002 2154 Industrial and Corporate Change
value from innovation: evidence from Henry;
Xerox Corporation’ s technology Rosenbloom,
spin-off companies Richard S.
Business Model Generation: A Handbook Osterwalder, 2010 2097 John Wiley & Sons
for Visionaries, Game Changers, and Alexander;
Challengers Pigneur, Yves
Why business models matter Magretta, Joan 2002 1842 Harvard Business Review
Open Business Models: How to Thrive in Chesbrough, 2006 1750 Harvard Business School Press
the New Innovation Landscape Henry W.
Internet business models and strategies: Afuah, A; Tucci, 2004 1552 McGraw-Hill
Text and cases C.L.

(Continued)
Article Author Year No. of citations Source

Configuring value for competitive Stabell, Charles 1998 1387 Strategic Management Journal
advantage: on chains, shops, and B.; Fjeldstad,
networks Øystein D.
Shifting paradigms for sustainable for Gladwin, Thomas 1995 1376 Academy of Management Review
sustainable development – implications N.; Kennelly,
for management theory and research James J.;
Krause,
Tara-Shelomith
Business models, business strategy and Teece, David J. 2010 1368 Long Range Planning
innovation
Clarifying business models: origins, Osterwalder, 2005 1302 Communications of the
present, and future of the concept Alexander; Association for Information
Pigneur, Systems
Yves; Tucci,
Christopher
Serving the world’s poor, profitably Prahalad, C.K.; 2002 1206 Harvard Business Review
Hammond,
Allen
The business model ontology – a Osterwalder, 2004 1169 Dissertation, University of
proposition in a design science approach Alexander Lausanne
Digital capital: Harnessing the Power of Tapscott, D.; 2001 1094 Harvard Business School Press
Business Webs Lowy, A.;
Ticoll, D.
The entrepreneur’s business model: toward Morris, Michael; 2005 1093 Journal of Business Research
a unified perspective Schindehutte,
Minet; Allen,
Jeffrey
 Field of business models  27

Figure 4  Citation index (CI) between non-academics, academics and total.

Figure 5  First author country of origin.

Interestingly, there are no relevant studies published in any emerg-

ing countries such as China, South America or any African country.
­Figure 5 depicts these results.
Similar results can be gained focusing on the publication outlet.
Most of the outlets where prominent articles have been published are
from the US with Long Range Planning, Harvard Business Review and
Strategic Management Journal that together account for more than
33% of all the papers published in the field.
28  Field of business models
What: business model definition and research themes
The third level of the analytical framework focuses on the ‘what’
­dimension. First, we look at papers that apply a definition of ­business
model. Results show that only 58% of the publications explicitly
(46 of 79) define the concept of business model. Additionally, in ana-
lyzing this trend over time, the more recent publications have a higher
tendency to include a business model definition. After 2005, more than
60% of the works provide a definition of business model, compared
to only 37% in the previous period. Figure 6 depicts the number of
publications (absolute and percentage) that provide a business model
definition. These results confirm Zott et al.’s (2011, p. 1034) findings
that “definitional and conceptual disagreement is to be expected dur-
ing the emergent phase of any new potentially big idea of general use-
fulness”. The evolution of different definitions is forcing authors to
clarify the definition they apply (Jensen, 2014). However, despite the
growing trend, almost 40% of the recent publications still do not pro-
vide a business model definition.
Additionally, our empirical analysis illustrates that business model
definitions fall into five overall categories:

1 Logic and value chain;

2 Components and structure;
3 Value and value proposition;
4 Market and customers; and
5 Processes.

Figure 6  Development of business model definition inclusion over time.

 Field of business models  29

Figure 7  Business model definitions.

Figure 7 shows that each of these categories consists of a number of

subcategories.
Focusing on research themes, the results show that some topics
are recent. For example, business model innovation has 80% of the
articles after 2005, while encompassing boundary spanning activi-
ties and strategic partners has six of seven papers after 2005. Other
topics are declining. For example, the connection with value crea-
tion has only one paper after 2005. Additionally, there are no links to
the impact in terms of policymakers. Figure 8 depicts these results.
Interestingly, some topics are country-centred. Definitions are ad-
dressed from either Switzerland or the US, whereas for example, sev-
eral themes are highly US based: sustainability (four papers out of
30  Field of business models

Figure 8  Business model themes and their evolution over time.

five), strategy (seven out of thirteen), technology (three out of four); and
value creation (six out of eight). Other themes are more balanced. For
example, frameworks are proposed in Europe, the US and ­Australia, as
well as e-business focused papers. Additionally, analyzing the ­different
type of authors, we can see that junior academics are more focused on
frameworks and definitions. Table 3 depicts these results.

How: research questions and research methods

The fourth level of the analytical framework also focuses on the ‘how’
dimension. Results show that only 38% of the analyzed publications
(30 out of 79) specifically present one or more research questions. Pub-
lications with one or more research questions are generally published
more recently and the percentage of publications that state research
questions increases over time. According to Zott et al. (2011, p. 1020),
“it appears that researchers (and practitioners) have yet to develop a
common and widely accepted language that would allow researchers
who examine the business model construct through different lenses to
draw effectively on the work of others”. This might in part explain the
lack of idea-sharing among the dominant authors as highlighted ear-
lier in the ‘who’ section. Massaro et al. (2016a, p. 273) suggest that “un-
derstanding if and how the articles analyzed provide specific research
questions could help in understanding the evolution of the research
topic”. Therefore, the use of a research question can help to increase
the transparency (Ketokivi and Choi, 2014) of research and may be
seen as a sign of the field’s scientific maturity (Massaro et al., 2015).
Table 3  T
 heme and country of the first author
Country Definitions Creating E-business Sustainability Business Relations Utilisation Start- Performance Value; Activity Cost, Encompassing Total
frameworks, configurations and socially model to of ups value systems revenue boundary-
models and oriented innovation, strategy technology creation perspective architectures spanning
techniques business Evolution and pricing activities
models mechanisms and strategic
partners

Greece – 1 – – – – – – – – – – – 1
US 2 8 4 4 5 7 3 – – 6 – 1 4 44
UK – 3 – – 1 1 – – – 1 1 – 1 8
Finland – 2 – – – – – – – – – – – 2
France – – – – 1 2 – 1 1 – – – 1 6
Spain – 1 1 – 1 1 – – – – 2 1 – 7
Switzerland 2 4 – – 1 – – – – – – – – 7
Belgium – – 1 – – – – – – – – – – 1
India – – 1 – – – – – – – – – – 1
Italy – – – – – 1 1 – – – – – – 2
Norway – – – – – – – – – 1 – – – 1
Netherlands – – 1 – 1 – – – – – – 1 1 4
Austria – 1 – – – – – – – – – – – 1
Canada – – 1 1 – 1 – – – – – – – 3
Australia – 1 – – – – – – – – – – – 1
Germany – 1 1 – – – – – – – – – 1 3
Sweden – 1 – – – – – – – – – – – 1
Total 4 23 10 5 10 13 4 1 1 8 3 3 8 93
32  Field of business models

Figure 9  Types of research questions and their evolution over time (darker is
older while lighter is more recent).

Our analyses (Figure 9) shows that the most important research ques-
tions (eight works each) relate to the impact of the business model on
performance and the implementation of business models. For example,
Zott and Amit (2007, p. 182) specifically ask “how business model design
can be measured, and how it affects firm performance”. Interestingly,
the definition of business model and its evolution, such as the factors
affecting business model adoption, is a research question in 14 publi-
cations. For example, Al-Debei and Avison (2010, p. 360) address the
following issue: “The dimensions and elements of the business model
concept, that is, what constitutes business models, or what aspects need
examining when designing, evaluating, and managing business mod-
els”. Other research questions are related to the barriers to implemen-
tation (e.g. Chesbrough, 2010) and innovation of business models, such
as the strategic approach to the business model and the definition of
the emerging business model. Even though papers with research ques-
tions are published more frequently, the results show that the dispersion
over time differs significantly. Some research questions, such as “how
to implement business models”, occur more frequently in recent contri-
butions, while other research questions, such as the impact of business
models on performance, are more equally distributed across time.
Next, our study analyses the research methods applied in each
of the contributions. Our findings (Figure 10) show that 60% of the
 Field of business models  33

Figure 10  Research method, evolution over time (darker is older while lighter
is more recent).

publications (48 of 79) are conceptual in nature. Empirical studies rep-

resent 27% of the studies (21 of 79), while literature reviews represent
12% of the studies (10 of 79). This is quite similar to the results presented
by Wirtz et al. (2016b), although that study does not consider the impact
of the identified works. Analyzing the methods used over time, we find
that conceptual contributions are fairly evenly distributed over the pe-
riod of analysis, although there is a concentration of papers published
in the period 2000–2003 (19 papers), in 2007 (4 papers) and in 2010 (9
papers). Empirical contributions represent a minority of papers (only
25 papers) and are more recently published, with 14 of 25 papers pub-
lished after  2007. Interestingly, six of the 15 literature reviews were
published in the period 2000–2003, while seven literature reviews were
published after 2010. Finally, citation trends show that conceptual work
attracts considerably more citations compared to other contributions,
since 60% of these publications garner 74% of the total citations.

Which implications: practical and research implications

The final level of the analytical framework focuses on practical and re-
search implications. The results show that only 13% (or 10) of the pub-
lications analyzed specifically report practical implications. F
­ igure 11
reports most common practical implications.
34  Field of business models

Figure 11  P
 ractical implications.

For example, Dubosson-Torbay et al. (2002, p. 22) state “the out-

comes of this article should help the managers design a new business
model by using the suggested framework and by which, asking the
right questions, such as what is exactly my value proposition”. Sim-
ilarly, Demil and Lecocq (2010, p. 242) state that their “framework
may constitute a useful artifact to help them [the managers] reflect
on  the design of their business model and how to change it”. Impli-
cations analyzed refer to the need for understanding the components
of the business model and how to integrate them into the company.
One example of this is Chesbrough (2007a, p. 17), who states that “a
promising model will have to be scaled up, and integrated across the
company”. Finally, 10 publications discuss the implications of their
results for innovating the current business model. For example, Ches-
brough (2010, p. 362) states

at the same time, the organization’s culture must find ways to em-
brace the new model, while maintaining the effectiveness of the
current business model until the new one is ready to take over
 Field of business models  35
completely. Only in this way can business model innovation help
companies escape the ‘trap’ of their earlier business models, and
renew growth and profits.

Managerial implications are discussed by 12 publications, of which

10 focus on the managerial process. For example, Linder and Cantrell
(2000, p. 14) discuss the implications for well-established business
practices, such as the development of business plans and state “the
days of comprehensive annual business plans that actually stick are
over”. Other studies focus on the implementation of changed organ-
izational routines. For example, Wirtz et al. (2010, p. 287) state “fi-
nally, after successfully identifying important trends in their markets
and redesigning their business model components accordingly, man-
agers need to implement their new structure and establish modified
organizational routines that best address the new environmental
landscape”.
The two remaining contributions focus on leadership and educa-
tional implications. For example, Prahalad and Hart (2002, p. 12)
state “it is imperative, however, that managers recognize the nature
of business leadership required” while Tikkanen et al. (2005, p. 805)
state “the business model framework has proven to be a useful tool in
business education”. Therefore, the main implications have a corpo-
rate focus, encompassing implications for the business framework and
its evolution and on managerial practices and leadership. None of the
studies focused on implications for policymakers.
Focusing on the research implications, results show that only 34%
of the publications explicitly discuss research implications and these
are dispersed across three main areas of analysis. Figure 12 depicts the
main research implications.
The most prominent implication for research in business models re-
lates to scholars proposing research opportunities that focus on the
connections between business models and strategy, entrepreneurship,
and organizational aspects. For example, Zott and Amit (2010, p. 224)
state

an activity systems perspective on business models encourages

the incorporation of those ideas, and thus promotes a synthesis
of theoretical perspectives … For example … how activities are
produced by organizational actors drawing on various resources –
that is … the social aspects of relationships between business
model participants, as well as the transactional dimension of their
relationships.
36  Field of business models

Figure 12  Research implications.

Similarly, Al-Debei and Avison (2010, p. 373) state

Although we have provided theoretical insights concerning the

role of the business model in providing the needed fit between the
business strategy and IS [Information System] within digital or-
ganizations, there is still a need for future research in this particu-
lar area.

The need to better understand how business models evolve is recog-

nized by eight studies. For example, Yunus et al. (2010, p. 789) state
“The article proposes that the business model can be scrutinized in fu-
ture studies, especially from the viewpoints of cognition, thus creating
new avenues for intra-firm evolutionary studies”. Similarly, Zott and
Amit (2007, p. 195) recognize new research opportunities in under-
standing “what factors give rise to and shape business model designs”.
Finally, specific attention is paid to the relationship between business
models and market structures. For example, Mahadevan (2000, p. 68)
states “A deeper empirical understanding of the relationship between
 Field of business models  37
the market structure and the choice of the business model can be inves-
tigated by specific case studies”. Therefore, an important research im-
plication for the business model literature is connected with the need
to develop and test business model ontologies that can support their
design and evolution over time, with specific attention to the market
implications and its connection with strategy, entrepreneurship and
other organizational aspects, such as existing routines.
Another important research implication connects to value creation
and opportunity creation. This is recognized by seven works. More
precisely, Jacobides et al. (2006, p. 1217) state

we hope to stimulate further research by reformulating some ba-

sic questions, e.g. shifting the question from how do you protect
innovation in order to reap the maximum amount of surplus to,
how can you find a way to generate value and capture the greatest
possible amount of surplus, regardless of whether others emulate
the ideas or not.

Similarly, Stabell and Fjeldstad (1998, p. 435) suggest “there are per-
haps equally interesting challenges in considering the implications at
the business value system level”, thus indicating that value creation,
and opportunity creation might be related to systems that are broader
than the single firm. That is, business models have been recognized in
the literature at the ecosystem level but may also be considered from
the perspective of broader social consequences.
4 Critique and transformative
redefinition

This section answers the second research question: “What is the cri-
tique of business model research?” According to Alvesson and Deetz
(2000, p. 44), critique revolves around the analysis of dominating
messages, structures and power relations; therefore, critique is not
a negative concept. Additionally, the development of critical in-
sight is all about the art of interpretation to produce new meanings
­(Alvesson and Deetz, 2000, p. 44). These are presented in the follow-
ing subsections.

Critique 1. Author and outlet specialization and

practitioners’ involvement
The findings show that only a few authors have a high specialization
and have produced more than one ranked publication. Our findings
show that these specialized authors attract more citations. In other
disciplines, such as knowledge management, author distribution has
been attributed to the high number of practitioners involved, and
­Serenko et al. (2010, p. 18) state that “this phenomenon took place
­b ecause of the high number of practitioners who contributed only
once”. Our findings show that practitioners contributed significantly
to the citation spikes in 2007 and 2010. These results build on the
role of practitioners in science innovation. Several authors write
about the academia–practice divide, also known as the European
paradox, ­b ecause Europe is known for having a strong science base
but weak innovation performance on the basis of this. According to
­Hodgkinson et al. (2001, p. 41), the “research-base of the business
and management studies field is failing to meet the needs of various
parties who are (or ought to be) valid stakeholders in the knowl-
edge production process”. Additionally, in a speech at the Academy
of Management conference (reported by Huff, 2000, p. 55) James
 Critique and transformative redefinition  39
G. March stated that “fundamental knowledge becomes more useful
to managers in changing worlds, in new ventures, and when faced
with the unexpected”.
The results of this study show that practitioners are not only
­consumers of science innovation but also have an important role as
producers of innovation. Evolution of technology as well as innova-
tion in society (such as internationalization and globalization) create
new ways of doing business, pushing practitioners to the front line of
scientific innovation in business models, leaving academics behind.
Most of the influential practitioner pieces in our study are concep-
tual works, typically published as books or working papers and not in
traditional academic outlets with limited access to practitioners and
policymakers. These results call for a new approach to science produc-
tion, a transformative redefinition, that sees a greater involvement of
policymakers and practitioners not only to develop research needs but
also to learn from them.

Critique 2. What business model, and for whom

Consistent with Wirtz et al. (2010), the findings of this study indicate
that more emphasis should be placed on the managerial process of
the business model. The role of leadership and the evolution of tra-
ditional managerial tools, such as ‘business plans’ is recognized as a
topic that deserves further research (Prahalad and Hammond, 2002;
Tikkanen et al., 2005). These results lead to questioning of the edu-
cational implications of the business model. According to Tapscott
et al. (2000, p. 186) “the revolution in the net-enabled business model
is intersecting with a demographic revolution which is changing the
culture of work”. Our findings illustrate that besides the e-business
movement, business models provide new ways and different forms
of value creation to customers, in turn reshaping the rules of busi-
ness. However, none of the publications analyzed here focus on the
­educational implications of this movement, and thereby open up new
research opportunities.
The concept of the business model is largely applied to private
or listed companies. But what about the public sector? Developing
a search on Scopus for the words ‘Business Model*’ returns 18,408
articles. In adding the words ‘public sector’, Scopus returns only 142
­articles.1 As suggested by Kaplan (2011, p. 4)

business models aren’t just for business ... if an organization has a

viable way to create, deliver, and capture value, it has a business
40  Critique and transformative redefinition
model. It doesn’t matter whether an organization is in the public
or private sector. It doesn’t matter if it’s a non-profit or a for-profit
enterprise. All organizations have a business model.

However, even though business model research can be extended

to different sectors (public versus private, profit versus non-profit)
and organizational dimensions (big versus small), public sector
business models deserve a separate research agenda. For example,
as suggested by Massaro et al. (2015, p. 530) “the public sector is
organizationally specific, has different effectiveness concerns and
has different levels of representativeness, accountability, and re-
sponsiveness”. Similarly, “SMEs are not smaller versions of large
firms” (Olejnik, 2014), and ­medium size firms should receive more
attention due to their importance in supporting national growth in
many countries (Massaro et  al., 2016b, p. 278). Therefore, new re-
search opportunities can be seen in extending the business model
research agenda to the public sector and varying enterprise sizes
such as SMEs.

Critique 3. Sustainable value and stakeholder

involvement
According to Hart and Milstein (2003, p. 56), “the global challenges
associated with sustainable development are also multifaceted, in-
volving economic, social, and environmental concerns”. While value
and value creation is a well-investigated topic, only a few studies fo-
cus on different meanings of value. Few of the works present in our
sample of influential business model contributions are positioned
within ­sustainability and social innovation, where value is sought
and dispersed more equally to the stakeholders that encompass the
firm and its i­ mmediate partnerships (Tweedie et al., forthcoming).
This indicates that the economic logic underpinning the under-
standing of mainstream business models should be redefined. For
example, Seelos and Mair (2005, p. 242) report the case of OneWorld
Health, which

has adopted an entrepreneurial business model to deliver med-

icines to those most in need in developing countries. It aims to
redesign the whole value chain of drug delivery, and so challenges
traditional profitability thinking, which seems incompatible with
developing the much-needed cures.
 Critique and transformative redefinition  41
Therefore, the business model literature should be open to ­d ifferent
value concepts, extending to sustainability and ­c orporate ­social ­resp
onsibility, since they can create “novel business ­models, ­organizational
structures, and strategies for brokering between very limited and
disparate resources to create social value” (Seelos and Mair, 2005,
p. 244). Similarly, research should be extended to emerging countries.

Transformative redefinitions
This section aims to answer the third research question: What are
the likely future scenarios for business model research? The trans-
formative redefinition addresses the need to reconceptualize what
we learn from insights and critique; it “directs us to avoid hyper
critique and negativity through taking the notion of critical prag-
matism and positive action seriously” (Alvesson and Deetz (2000,
p. 20). Subsequently, our analyses uncover that the field of busi-
ness model research has reached a level of maturity and that there
are four distinct stages of business model research that point to-
wards future business model ­r esearch opportunities and help us to
pose a set of research questions for the academic community. This
probing is necessary because, throughout the literature, business
models are readily defined as a wonderful invention, a new unit of
analysis for academics and practitioners and a concept that has the
ability to develop businesses and hence create value and wealth for
the generations to come. These are rhetorical diffusions that we
must consider with caution.
Perhaps it is true that business models are a new conceptualization
that really does make a difference to organizations. However, if we
avoid work that is critical of the concept, has limitations and outlines
the potential negative consequences of the business model for firms, we
are guilty of limiting our investigations. Like innovation studies, busi-
ness model research often outlines how different buisness ­models may
create wealth when successful (Johnson et al., 2008). None of the pub-
lications in our review analyzed business model failure.2 A research
agenda that only reveals the good news is incomplete and inadequate.
We claim that future research should also address the limitations of
the business model concept and the negative effects that it may cause
for the development and management of companies and other types
of organization.
In this context, it is useful to recall the work of Sveiby (2012, p. 1)
who addresses the concepts of managerial incompetence and of
42  Critique and transformative redefinition
unintended consequences when exploring the development of a radi-
cal financial innovation, that is, securitization. He mantains that

This innovation changed the context for all actors in the financial
industry repeatedly to such a degree that even the highest regarded
experts repeatedly made prediction errors. The negative effects of
prediction errors have since 1980 gradually became larger until to-
day when even a single individual decision by a portfolio manager
may risk global financial mayhem.

All in all, this underlines the need to to train managers to be adapt-

able to new scenarios rather than teaching them to deal with known
conditions.
It is clear from the data presented here that the field of business
model research has developed over time. New themes emerge and
­become more dominant, while others decline in interest; some even
­return to the spotlight in revitalized formats. The methodology
­applied in this study does not track the field of business models by the
number of works published, but instead according to the work that is
highly cited, and thereby dominant. It may therefore be the case that
there are alternative themes that are emerging in the literature, but just
not being cited very often – yet.
According to our analytical framework, we analyzed papers con-
sidering their evolution over time, in terms of number of papers and
citations (the first level of ‘when’). The second level is based on the
‘who’ dimensions, with the aim to analyze who are the most prominent
authors in the discipline and to understand the role of practitioners:
author demographics are recorded focusing on the number of publica-
tions by each author and the background of the first author. We also
make a distinction between academics and non-academics. The third
and fourth levels focus, respectively, on the ‘what’ and ‘how’ dimen-
sions, addressing the research questions and methods used for reach-
ing an understanding of the scientific maturity of the field. Lastly, the
fifth level of analysis focuses on ‘which’, where we distinguish between
practical and research implications.
We argue that there currently are four dominant stages of business
model research present in the field, and identifying these four stages
allows for identification of future scenarios.
Concerning the ‘what’, several thematic gaps revealed themselves
in our four sub-conclusions to Chapters 5–8, and these gaps pro-
vide new, relevant contexts and opportunities for business model
research.
 Critique and transformative redefinition  43
We cannot deny that the lack of a well-defined theoretical foun-
dation, a general accepted definition of the terms ‘business model’
and ‘business model innovation’ and a general classification scheme
for business models (taxonomies) represent significant gaps for the
business model research. And we call for further research on these,
taking the knowledge created over the four stages as a point of
departure.
Concerning business model design, in accordance with Zott and
Amit (2013), future research should investigate how and why new
business models are designed in companies, how the design process
is planned and executed, which levers and barriers may arise during
the process, who are the key actors, and which tools and managerial
practices are used to achieve consistency among

• the designed business model;

• the company’s strategy, processes, and activity system; and
• the value chain and the ecosystem where the company operates.

Once designed, a business model has to be implemented; we ­maintain

that future research should test tools and managerial practices to
help practitioners in executing this step. Here too, key actors have
to be identified, and levers and barriers have to be explored so that
the first can be capitalized and the latter can be limited. Moreover,
in ­accordance with Arend (2013), it would be interesting to investi-
gate how multiple business models can be implemented and managed
­simultaneously within the same company.
With regard to business model innovation, we argue that future
­research should aim at developing and enriching the current business
model patterns library to enable business model innovation practices
within companies, that is, challenging the status quo and triggering
new business model development patterns. Currently, the most com-
plete approaches are those of Gassmann et al. (2014) and Taran et al.
(2016), who identify 55 and 71 business model patterns, respectively.
Due to the hypercompetitive and dynamic environment, these lists are
by no means final, but they will evolve over time: some new business
model patterns will emerge and will become dominant, while others
will decline and maybe disappear. Thus, the process of updating the
list of available business model patterns is a never-ending one; keeping
this list up to date is a very relevant task because it ensures that com-
panies can innovate their business model by gaining inspiration from
the latest value creation and value capture logics available in their or
in other industries.
44  Critique and transformative redefinition
Additionally, we argue that it would be fruitful to conduct ­research
to shed light on the dominant business model patterns in ­specific
­industries to understand if, and to what extent, companies are
­differentiated from each other. This would lead to the investigation of
relevant research questions like the following: do companies compete
on similar or different business models? Do companies properly use
the business model innovation space available to them? Or is the com-
petition very intense due to the use of a limited portfolio of business
model patterns? Do business model imitation phenomena take place?
Why and how does it happen?
In accordance with Schneider and Spieth (2013) and Spieth et al.
(2014), we also maintain that the antecedents (‘why’) and the timing
(‘when’) of business model innovation have to be explored, as well as
the levers and the barriers that can enable or hinder this process.
Implementing or innovating a business model entails performance
implications that are worthy of analysis. In particular, we assume that
different business model patterns will impact on the performance in
different ways (e.g. higher revenues, faster time to market, stronger
customer lock in, higher channel effectiveness). Thus, it would be in-
teresting to look more closely at the relationships between the adoption
of certain business model patterns and organizational performance.
Finally, the measurement and the disclosure dimensions of the
­business model need to be explored. In particular, we argue that
the business model is a fruitful level of abstraction to extract key
­performance indicators able to provide managers with information on
the ability of a company to create and capture value. In other words,
using the business model as a platform to extract key performance
indicators has the potential to improve the relevance of a performance
measurement system because it can direct the measurement process to
focus only on the material aspects of value creation. Until now, there
has been little discussion about how the business model perspective
can support performance measurement (Montemari and Chiucchi,
2017; Nielsen and Roslender, 2015; Nielsen et al., 2009), and some
­aspects require and deserve additional attention:

• the process that leads from business model to building measures;

• the levers and the barriers that can arise during this process; and
• the pros and the cons of using the business model for measure-
ment purposes.

Beyond the interaction between business models and performance

measurement, we also maintain that another relevant issue to be faced
 Critique and transformative redefinition  45
concerns how the business model is presented in corporate external
disclosures. As there are no guidelines on how to disclose the ­business
model, the effectiveness of this task often depends on the compe-
tences and the skills of the developers who actually design and im-
plement disclosure tools in companies. For the sake of comparability
of business model disclosures in time and space, we call for further
research on how to present the business model in corporate external
­disclosures (e.g. the choice and the implementation of the technique to
map the business model, how to identify the items to be measured and
­disclosed, and so on).
The ‘what’ dimension is somehow related to the context where the
business model concept is analyzed. Our SLR has shown that the busi-
ness model concept has been largely applied to private, for profit or
listed companies. Therefore, new research opportunities can be found
in extending the business model research agenda on the ‘what’ dimen-
sion to the public sector and the non-profit sector, and varying enter-
prise sizes such as SMEs. In this respect, we claim that exploring the
relationships between business models and the notions of sustainabil-
ity and more socially fair dispersions of value is an important avenue
of research.
Also, our SLR has revealed that there are no relevant studies
­published in any emerging countries such as China, South America or
African countries. We believe that these under-studied contexts will
provide fruitful avenues of future research.
Regarding the ‘when’ dimension, it is of course difficult to predict
precisely when research contributions in the future are novel enough
to produce research spikes such as those evident in our current data,
but we expect the field to continue to proceed through citation spikes
from time to time. The current analysis reveals that spikes tend to be
practitioner-­driven; therefore, we might speculate as to what could
possibly spur new types of practitioner interest. Economic and polit-
ical movements such as changes in trade structures, global reforms,
recessions or economic growth may cause interest because new m ­ odels
of doing business will become viable. However, our data suggests
that spikes are more likely to be associated with technology shocks,
­increased digital disruption and Smart City developments in conjunc-
tion with Industry 4.0 and Internet of Things conjectures.
Concerning the ‘who’ dimension, we expect practitioners and aca-
demics to cooperate intensively to develop the next stages of business
model research. On the one hand, we foresee practitioners playing a
key role in the next citation spikes, as happened in 2007 and 2010, and
following the trend started at the beginning of the millenium. Here
46  Critique and transformative redefinition
we see practitioners not only as consumers of knowledge but also as
relevant producers of knowledge on business models.
On the other hand, we argue that it is time for academics to get
their hands dirty inside companies, through interventionist research
to apply and test business model tools, to understand what really
happens when a business model is designed, implemented, innovated,
measured or disclosed. Reflecting on these experiences would provide
insights on what does and does not work, as well as on the reasons be-
hind successful and unsuccessful experiences, that is, business model
success or failure. In turn, fostering the dialogue between academics
and practitioners will ensure that important issues are faced and helps
to avoid the creation of a theory–practice gap.
This consideration leads itself to address the ‘how’ dimension of our
analytical framework. Regarding research method, the SLR has re-
vealed a predominance of papers that are conceptual in nature, which
is typical of emerging fields. For the future, we expect a more balanced
picture, in which theoretical and empirical contributions will play a
more relevant role to advance the literature. In particular, we fore-
see contributions aimed at shedding light on the theoretical under-
pinnings of the business model concept, so that cumulative empirical
inquiries can be developed.
Following along these lines, our SLR has shown that only 38% of
the analyzed papers present one or more research questions, but the
percentage of papers stating research questions increases over time.
We expect that this trend will continue in this direction, and that
­researchers will be able to draw on the work of others more and more
effectively. This trend should go hand in hand with the development of
a shared and common accepted language. All in all, the combination
of these two factors is likely to enhance the transparency and scientific
maturity of the business model research area.
Finally, the analysis of the ‘which’ dimension has highlighted that
only a few publications specifically report practical implications, mainly
related to the need for understanding the components of the business
model and to business model innovation. Managerial implications re-
volve around the consideration that managers have now to deal with a
turbulent and dynamic competitive environment. We foresee an increas-
ing attention on practical and managerial implications for the future,
overall related to the (positive or negative) effects that the business model
concept and tools cause within companies. M ­ oreover, we expect growing
attention on implications for p­ olicymakers and educational implications,
which currently have been given little attention in under-researched con-
texts, such as public sector organizations and emerging markets.
 Critique and transformative redefinition  47
In contrast to the current situation highlighted by our SLR, we also
imagine increasing attention on research implications, mainly related
to the avenues of research that we have identified when we discussed
the ‘what’ dimension of our analytical framework.
The following chapters of this manuscript analyze the existing knowl-
edge base in business model research by identifying four distinct stages.
In particular, Chapter 5 analyzes the first stage of business model re-
search by focusing on definitions and conceptualizations of business
models as well as on the links between business models and strategy;
Chapter 6 frames the content of the second stage, dominated by the re-
search stream of business model innovation; the design of frameworks
and the foundations for theory-building are at the core of Chapter 7,
which addresses the third stage of business model research; Chapter 8
investigates the fourth stage of business model research, centred on the
relationship between business models and performance.

Notes
1 Search performed 18 August 2016.
2 Tretheway (2004) is an example of a relevant case study that analyzes
the failure of network airline business models from the pressure of the
no-frills business models of the low-cost competitors (Taran et al., 2016).
5 First stage business
model research
Definitions and concepts

Dominant authors in the first stage of business model research are

typically already highly cited authors in related fields such as innova-
tion (Henry Chesbrough), strategy (Michael Porter) and management
(David Teece) and so might have a greater chance of being cited. They
typically focus on the relations between the business model and their
own fields of interest and use this to define the concept through sim-
ilarities and differences. A good example of this is Magretta’s (2002)
account of the relationship between business models and strategy. The
dominant authors in this first stage do not share ideas, but their game
plans are identical. Practitioner insights also play a significant role in
developing and forming the field through typological frameworks and
definitions. Timmers (1998) and Petrovic et al. (2001) provide good ex-
amples of this. Following Critique 1 in Chapter 4, policymakers and
practitioners need to be engaged to ensure that they are part of co-­
developing and learning from these insights.
Because the contributions of this stage of research were ­fragmented,
there was a distinct lack of research concerning the different
­functions of business models, that is, as sensemaking tools (Michea,
2016), as tools for optimizing businesses and profits, controlling the
actions of employees or fostering creativity and innovation. Taking
these points into consideration leads to the presentation of two exist-
ing research paths discussed later, namely research into existing busi-
ness model definitions and the relationship between business models
and strategy.

Existing ‘business model’ definitions

There is no generally accepted definition of business model (Jensen,
2014). For this reason, the need to delimit the nature and c­ omponents of
a model and determine what constitutes a good model is a challenging
 First stage business model research  49
task. There is also some confusion around terminology, as business
model, strategy, business concept, revenue model and e­ conomic
model are often used interchangeably (Seddon et al., 2004). Moreo-
ver, the business model has also been referred to as ­architecture, de-
sign, ­pattern, plan, method, assumption and statement. At the most
rudimentary level, the business model is defined solely in terms of the
firm’s economic model.
This section comprises a review of existing business model defini-
tions and the respective background perspectives from which they
emerge. There is consensus as to the fact that no unambiguous defi-
nition exists (Chesbrough and Rosenbloom, 2002; Hedman and
Kalling, 2003; Porter, 2001) and that the theoretical grounding of most
­business model definitions is fragile (Groth and Nielsen, 2015). The
analysis finds four overall background perspectives on which ­business
model definitions can be allocated, based on their characteristics:
­systems of representation, resource-based views of firm performance,
­external prerequisites for profitability and internal prerequisites for
­profitability. In relation to the latter, Itami and Nishino (2010) argue
that a business model is composed of two ­elements, a business system
and a profit model, hence the term business model.
There are multiple perspectives of the purpose of working with
business models, for example, relating to their role, and the ­perceived
­advantages of departing from a business model perspective. ­Osterwalder
(2001, p. 2), for example, offers the following definition of an objective:

Business models have two essential functions. First, they allow

managers to talk about possible implementations of strategic
objectives and understand the relevant issues. Secondly, an ap-
propriately formulated business model can help managers easily
express what they expect from people on the business process level
or from technically oriented people.

There are clear linkages to creating an understanding of the overall

functioning of the firm in Osterwalder’s definition and a focus on
communicating management’s perceptions of the business to its staff.
Highlighting these thoughts on creating a common understanding of
the business, its strategy and objectives within the entire enterprise,
Hoerl (1999) argues that applying a business model helps to structure
the addressing of key business issues and, furthermore, that an ef-
fective business model ought to incorporate aspects such as culture,
values and governance. One possible definition of a business model is
offered by Nielsen (2010, p. 4):
50  First stage business model research
A business model describes the coherence in the strategic choices
that facilitate the handling of the processes and relations, which
create value on both the operational, tactical and strategic levels
in the organization. The business model is therefore the platform,
which connects resources, processes and the supply of a service,
which results in the fact that the company is profitable in the long
term.

This specific definition emphasizes the need to focus on understanding

the connections and the interrelations of the business and its opera-
tions so that the core of a business model description is the connec-
tions that create value. But the definition also reveals the theoretical
perspective by using the term “operational, tactical and strategic levels
in the organization”, which points to elements of management control.
Nielsen (2010) argues that by contemplating the silos by which
­companies are normally managed, we become bogged down in endless
descriptions of customer relations, employee competences, knowledge
sharing, innovation activities and corporate risks that do not tell the
business model story. However, if we start asking how these ­different
elements interrelate, which changes among them need to be moni-
tored and what the status is on operations, strategy and the activities
initiated to create a unique value proposition, we will start to get a
feel for how the chosen business model is performing. In this ­manner,
most business model definitions can be scrutinized and analyzed,
­revealing the many differing theoretical perspectives represented in
this literature.
When we survey the business model literature overall, we can easily
identify more than 60 business model definitions. Table 4 outlines a
selection of business model definitions to give an impression of their
similarities and differences.
The survey in the later sections attempts to structure the existing
business model definitions. These sections are structured so that first,
we consider the generic types of business model definitions, that is,
definitions concentrating solely on which elements such models ought
to be comprised of for them to qualify as business models. This will
give us an indication of the elements considered necessary for creating
value from a business perspective, and also how we can differentiate
business models from other related concepts and areas of research
such as supply chain management (see, for example, Mason and Leek,
2008) and organizations in general. There is no doubt, however, that
there exists a great deal of overlap between business models and other
concepts within business research, such as the value chain and strategy.
Table 4  S
 elected business model definitions

Author Definition Comments

Slywotsky (1996) “Business models refer to the totality of how a company selects its The business model is
customers, defines and differentiates its offerings, defines the conceptualized as a mix of
tasks it will perform itself and those it will outsource, configures decisions to generate profits.
its resources, goes to market, creates utility for customers and
captures profits.”
Timmers (1998) “Business model stands for the architecture for the product, service A broad definition that includes the
and information flows, including a description of the various internal and external actors, their
business actors and their roles, the potential benefits for these roles, the tangible and intangible
actors and the sources of revenues, the business model includes flows among them, and the source
competition and stakeholders”. of revenues.
Venkatraman “An architecture along three dimensions: customer interaction, asset A generic and concise definition,
and configuration and knowledge leverage”. focused solely on which elements
Henderson a business model should include.
(1998)
Selz (1999) “A business model is architecture for the firm’s product, service A broad definition, very consistent
and information flows. This includes a description of the various with that of Timmers (1998).
economic agents and their roles. A business model also describes
the potential benefits for the various agents and provides a
description of the potential revenue flows”.
Mayo and Brown “Business models refer to the design of key interdependent systems The focus of this definition is on the
(1999) that create and sustain a competitive business.” aim of a business model: creating
and sustaining a competitive
business. The components of a
business model are not identified.
Stewart and “Business model is a statement of how a firm will make money and The financial sustainability
Zhao (2000) sustain its profit stream over time”. over time is at the core of this
definition.
(Continued)
Author Definition Comments

Linder and “The business model is the organization’s core logic for creating A very concise definition, focused
Cantrell (2000) value”. solely on the internal dimension
of creating value.
Hamel (2000) “A business model is simply a business concept that has been put A very detailed definition focused
into practice. A business concept has four major components: on business model components.
Core Strategy, Strategic Resources, Customer Interface and Interestingly enough, the
Value Network … (Elements of the core strategy include business core strategy is considered a
mission, product/market scope, and basis for differentiation. dimension of the business model.
Strategic resources include core competencies, key assets, and core
processes. Customer interface includes fulfillment and support,
information and insight, relationships and pricing structure. The
value network consists of suppliers, partners and coalitions)”.
Porter (2001) “The definition of a business model is murky at best. Most often, A very critical definition,
it seems to refer to a loose conception of how a company does highlighting the ambiguity of the
business and generates revenue. Yet simply having a business concept.
model is an exceedingly low bar set for building a company.
[ … ] The business model approach to management becomes an
invitation for faulty thinking and self-delusion”.
Petrovic et al. “Business model describes the logic of a business system for creating Similar to Linder and Cantrell
(2001) value that lies behind the actual processes”. (2000), this definition focuses
on the internal dimension of
creating value.
Weill and Vitale “A description of the roles and relationships among a firm’s Similar to Timmers (1998), a broad
(2001) consumers, customers, allies and suppliers that identifies major definition focused on actors
flows of product, information and money and the major benefits to involved and on the tangible and
participants”. intangible flows among them.
Magretta (2002) “Business models are stories that explain how the enterprises work” The conditions of a successful
  With the enhanced explanation: “Business models describe, as business model are at the core
a system, how the pieces of a business fit together, but they don’t of this definition. Interestingly
factor in one critical dimension of performance: competition” … enough, the focus in on the
“a good business model has to satisfy two conditions. It must relationships among components.
have a good logic – who the customers are, what they value, and The strategic dimension
how the company can make money by providing them that value. (competition) is kept apart from
Second, the business model must generate profits.” the business model concept.
Osterwalder “A conceptual tool that contains a set of elements and their This definition is centred on the
(2004) relationships and allows expressing the business logic of a specific components of a business model
firm. It is a description of the value a company offers to one or and on the relationships among
several segments of customers and the architecture of the firm them.
and its network of partners for creating, marketing and delivering
this value and relationship capital, to generate profitable and
sustainable revenue stream”.
Chesbrough “The business model is a useful framework to link ideas and The business model is viewed as an
(2006) technologies to economic outcomes” … “It also has value enabler to convert technologies
in understanding how companies of all sizes can convert into economic outcomes.
technological potential (e.g. products, feasibility, and
performance) into economic value (price and profits)”… “Every
company has a business model, whether that model is articulated
or not”.
Skarzynski and “The business model is a conceptual framework for identifying The business model is seen as a
Gibson (2008) how a company creates, delivers, and extracts value. It typically source of competitive advantage
includes a whole set of integrated components, all of which can and innovation. The focus is
be looked on as opportunities for innovation and competitive on value creation, delivery and
advantage”. capture.
Zott and Amit “The business model is a structural template of how a focal firm This definition focuses on the whole
(2008) transacts with customers, partners, and vendors; that is, how it enterprise system and how the
chooses to connect with factor and product markets. It refers firm is positioned in the overall
to the overall gestalt of these possibly interlinked boundary- value chain.
spanning transactions.”
54  First stage business model research
Next, the review takes a closer look at business models understood
as the whole enterprise system and how the firm is positioned in the
value chain – or whether their focus is on the specific causal links
­between organizational activities, processes and the like, and do not
consider external aspects.
Within each category, there are a number of subcategories to which
the business model definitions may relate. The subcategories are
somewhat more specific, for example, whether the definitions incor-
porate aspects of representativeness, strategy, value proposition or
value creation. The review, discussion and analysis of the character-
istics of the definitions in each of these gives interesting insight into
which generic elements are thought of as comprising a business model
and which building blocks are thought to be the most important ele-
ments (see, for example, Johnson et al., 2008). Finally, this overview
looks at d­ ifferent opinions relating to incorporating both broad and
narrow components into a business model. The objective of the re-
view here is to get closer to what a good business model definition
must encompass.
Some business model definitions and conceptualizations encompass
not only the company itself, but the entire value creation system of
which it is a part – typically the value chain, that is, including busi-
ness relationships such as suppliers and customers and taking external
forces into account (see, for example, Anderson et al., 2009). This group
of definitions is characterized by a focus on describing the method of
doing business by which the company seeks to sustain itself, including
both internal and external aspects. Sustainability is often equated to
making money and value creation (see also Yip, 2004). Incorporating
business relationships into these definitions distinguishes them from
narrow definitions, for example, by including the value proposition
of the firm (Wirtz et al., 2010). We now look at the existing business
model definitions that can be characterized as broad.
According to Timmers (1998), a business model is the architecture
for product, service and information flows, including a description of
the various business actors and their roles; a description of the po-
tential benefits for the various business actors; and a description of
the sources of revenues. Timmers’ definition is extremely broad and to
some degree also rather unspecific. It could probably be categorized as
a generic definition. However, as it includes elements of representation
(see also Schafer et al., 2005) and value proposition, it relates more
to specific definitions. A similar definition, in that it too has a focus
on representation and value proposition, is that of Weill and Vitale
(2001). They define a business model as “a description of the roles and
 First stage business model research  55
relationships among a firm’s consumers, customers, allies and suppli-
ers that identifies the major flows of product, information, and money,
and the major benefits to participants”. This too is a very broad
­definition, in essence covering all possible aspects of doing business.
A number of the definitions within this category have explicit con-
nections with the term sustainability. Sustainability is, in essence, the
company’s ability to create revenue in the long term. Thus, there is
a weak linkage to the generic definitions that focused on profits and
revenue. According to Afuah and Tucci (2000, p. 2), a business model
describes “how [the firm] plans to make money long-term”, and they
define such a model as one incorporating the following components:
customer value, scope, pricing, revenue source, connected activities,
implementation, capabilities and sustainability (through the firm’s
unique value configuration). KPMG offers the following definition:
“The fundamental logic by which the enterprise creates sustained eco-
nomic value – the organization’s ‘business model’” (2001, p. 3, 11). The
terms ‘fundamental logic’ and ‘value configuration’ resemble Stabell
and Fjeldstad’s value configuration logics (1998), and again these defi-
nitions cover all possible aspects of doing business.
Similarly, Rappa’s definition (2001) states that “a business model is
the method of doing business by which a company can sustain ­itself –
that is, generate revenue. The business model spells out how a c­ ompany
makes money by specifying where it is positioned in the value chain”.
In addition to departing from the notion of sustainability, it also incor-
porates a more specific notion of the position of the firm in the value
chain.
Chesbrough and Rosenbloom (2002, p. 5) offer

the business model as a construct that integrates these earlier

perspectives into a coherent framework that takes technolog-
ical characteristics and potentials as inputs, and converts them
through customers and markets into economic outputs. The busi-
ness model is thus conceived as a focusing device that mediates
between technology development and economic value creation.
We argue that firms need to understand the cognitive role of the
business model, to commercialize technology in ways that will
­allow firms to capture value from their technology investments.

In continuation of this, Chesbrough and Rosenbloom identify a num-

ber of attributes of a business model which ultimately should enable
the company to articulate its value proposition, identify a market seg-
ment, define the structure of the value chain within which it operates,
56  First stage business model research
estimate profit potentials and formulate a competitive strategy. A sim-
ilarly comprehensive definition is Marrs and Mundt’s (2001, p. 28):

A business model is designed to compile, integrate, and convey

information about an organization’s business and industry. Ide-
ally, it depicts the entire system, both internal and external, within
which the organization operates. Not only does the construction
of a model help management better understand the structure, na-
ture, and direction of their organization, but it provides a basis for
communicating such information to employees and other inter-
ested stakeholders. The model can be the catalyst for developing a
shared understanding of what the entity is today and what needs
to be done to move to some desired future state.

Regarding the applied detail of the business model, Marrs and Mundt
state that it should be “as detailed as users deem necessary to fit their
needs, also availability of information is a constrainer” (2001, p. 28).
The application of a business model can facilitate the ­following:
gaining an understanding of the whole business; facilitating a ­common
understanding of the business by others; identifying opportunities for
process improvements; identifying and mitigating business risks; devel-
oping the basis for (process) performance ­measurement; and ­facilitating
the development of the enterprise’s directional course. O­ verall, they state
that there are two applications of business ­models: first, communicating
the nature of the business, and second, i­ mproving the business (e.g. stra-
tegic analysis, business process a­ nalysis, business performance meas-
urement, risk assessment). Marrs and Mundt’s ­definition relates to the
entire business system and ­especially facilitating understanding, with the
outcome being an improvement of the business. Likewise, Doz and Ko-
sonen (2010) incorporate relationships between a firm and its customers.
According to Bell et al.,

the (client) business model is a strategic-systems decision frame

that describes the interlinking activities carried out within a
business entity, the external forces that bear upon the entity, and
the business relationships with persons and other organizations
­outside of the entity.
(1997, pp. 37–39)

Six components of a business model are identified in the ‘Strategic-­

Systems Auditing’ framework: External forces, markets formats, busi-
ness processes (strategic management process, core business processes,
 First stage business model research  57
resource management processes), alliances, core products and services
and customers. This definition is value chain influenced by, and at
the same focused on, internal processes and value drivers. There is
clearly a change in focus between the 1997 and the 2002 definitions of
the ‘Strategic-Systems Auditing’ framework, as will be evident in the
next section, the latter being more narrowly defined with a value driver
focus.
Magretta (2002, p. 4) perceives business models as “stories that
­explain how enterprises work”, explaining that a business model not
only shows how the firm makes money but also by answering the fun-
damental questions: Who is the customer? And what does the cus-
tomer value? In this sense, she touches upon performativity, as is also
evident in Perkmann and Spicer (2010). Finally, Morris (2003) argues
that a business model defines a broad competitive approach to busi-
ness and articulates how a company applies processes (Mansfield and
Fourie, 2004) and technologies to build and sustain effective relation-
ships with customers. These relationships are the most critical factor.
Creating them, understanding them, preserving them, enriching them
and extending them are the critical attributes of success. Everything
that is done must be in service to these relationships; they are the
point. In summary, some of these definitions can be rather difficult
to distinguish from generic definitions. One rule of thumb, however,
is that they are closer to a ‘how’ objective than merely describing a
‘what’ ­objective. Also, they treat the business model as a system of
representation and consider the long-term performance of the firm,
whereas the generic definition is more apt to focus on resources nec-
essary for value creation (see, for example, Verstraete and Jouison-­
Laffitte, 2011).
Other business model definitions include only intra-firm compo-
nents, that is, infrastructure, processes, value drivers, all prerequisites
for value creation. As opposed to the broad definitions, they do not
incorporate relationships external to the entity, that is, customers,
suppliers or other external forces.
Along these lines, Petrovic et al. (2001) argue that a business model
is not a description of a complex social system itself with all its ac-
tors, relations and processes, as opposed to what is stated in the broad
definitions. Instead, they contend, “it describes the logic of a ‘busi-
ness system’ for creating value that lies behind the actual processes. A
business model is the conceptual and architectural implementation of
a business strategy and the foundation for the implementation of busi-
ness processes and Information Systems”. Concentrating solely on the
internal aspects pertaining to value creation, this definition naturally
58  First stage business model research
must be classified as a narrow definition. This definition includes ele-
ments of strategy (see also Smith et al., 2010) and representation and
the authors argue that a business model ought not to be too broad and
should concentrate on specific elements pertaining to value creation.
Similarly, Boulton et al. (2000) emphasize the need to create a busi-
ness model that links combinations of assets to value creation (see also
Björkdahl, 2009 for a similar perspective). Having defined the business
model in their earlier book Cracking the Value Code as “[t]he unique
combination of tangible and intangible assets that drives an organiza-
tion’s ability to create or destroy value” (Boulton et al., 1997, p. 244),
these definitions relate to the business model as a detailed account
for the internal prerequisites for value creation, as there is a clear
value driver and value creation focus. The mention of “assets” also
hints to a resource-based view in the early version. Bell and Solomon
(2002, p. xi) define the business model as “a simplified r­ epresentation
of the network of causes and effects that determine the extent to
which the entity creates value and earns profits”. This definition is
based on a somewhat simplified version of the definition and ideas
from the KPMG Business Measurement Process research published in
Bell et al. (1997). It is a narrow, definition and it has a predominantly
­internal focus, as opposed to the 1997 definition, which incorporates
the elements of value drivers, value creation and representation.
Even more focused on value drivers and processes is Bray’s (2002,
p. 13) definition: “The business model is defined by the performance
drivers, business processes, people and the infrastructure put in place
to achieve the company’s business objectives”. Bray’s explicit link to
business objectives is also a link to strategy and – especially – value
creation, although this is not specifically stated. Value creation is,
however, somewhat more explicitly mentioned in Linder and Cantrell’s
(2002, p. 1) business model definition: “A real business model is the
organization’s core logic for creating value”. More specifically, it is the
following (Linder and Cantrell, 2002, p. 5):

• The set of value propositions an organization offers to its

stakeholders,
• Along with the operating processes to deliver on these,
• Arranged as a coherent system,
• That both relies on and builds assets, capabilities and relation-
ships to create value.

They elaborate further by clarifying that a business model should

explain how the organization offers unique value and be difficult to
 First stage business model research  59
imitate, grounded in reality and able to help in ensuring that differ-
ent stakeholders are speaking the same language. Here is a clear link
between business models and performance, which is likewise found in
Doganova and Eyquem-Renault (2009).
Like Magretta’s ideas on strategy and the business model, Sandberg
(2002) acknowledges that although strategy is not an inherent part of
the business model, there is a very close connection between the two.
Quoting Porter (1996), Sandberg states that competitive strategy is
about being different and that the business model is the vehicle for
operationalizing these differences. A well-constructed business model
focuses employees on the activities that really add value (i.e. via facili-
tating understanding). To fulfil this purpose, a business model should
follow the following steps:

1 Identify the customers you want to serve;

2 Spell out how your business is different from all the others – its
unique value proposition;
3 Explain how you will implement the value proposition; and
4 Describe the profit patterns, the associated cash flows, and the
attendant risks (see also Mullins and Komisar, 2009, for a more
recent discussion of this perspective).

Business models and strategy

Moving to the relationship between business models and strategy (see
also Ammar, 2006; Seddon et al., 2004; Yip, 2004), Zott and Amit
(2008) analyze the fit between product market strategy and business
models. Their findings suggest that novelty-centred business models,
that is, differentiation-based business models and not business models
based on efficiency – coupled with product market strategies that em-
phasize differentiation, cost leadership or early market entry – can en-
hance firm performance. In a later study, Amit and Zott (2012) argue
that competitive advantage (through business models) can be achieved
through the mechanisms of creating novelty, lock-in, complementarity
or efficiency and that business model innovation can occur in a num-
ber of ways – but typically in three categories:

1 by adding novel activities, for example, through forward or back-

ward integration – we refer to this form of business model innova-
tion as new activity system ‘content’;
2 by linking activities in novel ways – we refer to this form of busi-
ness model innovation as new activity system ‘structure’; and
60  First stage business model research
3 by changing one or more parties that perform any of the a­ ctivities –
we refer to this form of business model innovation as new activity
system ‘governance’.

As is evident, the connections among value creation, business models

and strategy are close. Sweet (2001) acknowledges this connection and
argues that the management of fundamental strategic value configu-
ration logics, such as relationships to suppliers, access to technologies,
insight into users’ needs, and so on, is far more relevant than inventing
new revolutionary business models, an opinion supported by Ramirez
(1999) and Stabell and Fjeldstad (1998). These arguments should, how-
ever, be put in perspective by remembering that Sweet (2001), in talk-
ing of new revolutionary business models, is thinking about e-business
models.
It is interesting to note that Chesbrough and Rosenbloom (2002)
take in strategy as an element of the business model, which sug-
gests that the relationship between business models and strategy,
while perhaps not fuzzy, is yet to be decided. In her 2002 book,
Joan Magretta defines business models as “stories that explain how
enterprises work”, and here she notes that strategy, understood as
how to outmanoeuvre your competitors, is something different from
a business model. However, we must remember that Joan Magretta
is Michael Porter’s colleague, and as such, she may be influenced
by the competitive-based school of strategy. Later, Seddon et al.
(2004) take part in this discussion by schematizing the possibilities
in Figure 13.

Figure 13  Possible concept overlaps between business models and strategy
(adapted from Seddon et al., 2004).
 First stage business model research  61
We can use this logic to discuss different authors’ takes on the rela-
tionship between business models and strategy. For example, we recap
Nielsen’s (2010, p. 4) business model definition given earlier:

A business model describes the coherence in the strategic choices

which facilitates the handling of the processes and relations which
create value on both the operational, tactical and strategic levels
in the organization. The business model is therefore the platform
which connects resources, processes and the supply of a service
which results in the fact that the company is profitable in the long
term.

Thus, it is evident that it takes the stance of Seddon et al.’s (2004) op-
tion E because it sees the business model as the platform that enables
strategy execution (see Brousseau and Penard, 2007, for a discussion
of the economics of platforms). Further discussion in this realm might
go into further detail about the level of organization at which this dis-
cussion is taking place. It might, for example, be pondered that a large
multinational (conglomerate) has a strategy of pursuing many busi-
ness models, while on the level of the Strategic Business Unit (SBU), it
is the business that decides the action. Nielsen’s business model defini-
tion might best be allocated to this SBU-level contribution.

Transformative redefinition: relevant first stage

business model research paths
• There is no general accepted definition of business model. The
need to delimit the nature and components of a model and deter-
mine what constitutes a good model is the task of the first stage.
• Business model researchers need to be critical of the business
model concept and its defining elements. Future research should
address the limitations of the concept and the potential negative
consequences it may have for the development and management
of firms and other types of organizations. Among the problems
with the concept of business models is that there is obvious dis-
agreement among terminologies related to business models. For
example, ‘strategy’, ‘business concept’, ‘revenue model’ and ‘eco-
nomic model’ are used as interchangeable terms. In addition,
a business model is compared to architecture, a design, a pat-
tern, a plan, a method, an assumption and even a statement, and
thus there is also disagreement about the form a business model
should take.
62  First stage business model research
Our study here shows a distinct lack of highly cited research con-
cerning the different functions that business models could have in a
firm setting, for example, as mechanisms of control, development or
sense-making. Perhaps the concept of business models might even
take several or all of these functions in the firm at the same time, but
through different levels of abstraction and through different organi-
zational and managerial processes. Research should critically try to
establish relationships between the functions of business models, ap-
plied levels of abstraction and the level of organization at which they
are applied. Finally, this may be related to the pre-existing processes
by which business models are transported throughout the firm.
6 Second stage business
model research
The innovation of business models

Dominant authors in the second stage of business model research

had similar characteristics to those of the first stage insofar as well-­
established authors in related fields were citation leaders. However,
the theme of the research was altered to focus more on the ­innovation
of business models and, to some extent, performance. The most highly
cited publication is the practitioner piece by O’Reilly (2007), which
conceptualizes several business model innovation patterns.1 In this
second stage of business model research, we see the beginnings of
sounder theoretical work gaining momentum, best exemplified by
Teece’s (2007) dynamic capabilities article. Moreover, several con-
tributions set about organizing the discussion. One of these contri-
butions is that of Pateli and Giaglis (2004), who propose an analytic
framework to decompose the area of business model research into
eight research subdomains: definitions, components, conceptual mod-
els, design methods and tools, taxonomies, change methodologies,
evaluation models and adoption factors.
While there were developments towards research questions con-
cerning the dispersion of value between stakeholders surrounding a
business model in the form of sustainability concerns in first-stage
research, we find it surprising that the notions of business mod-
els from an ecosystem and value-sharing perspective are seemingly
­under-researched in the context of innovating business models in these
directions. Some early work on social business models is present in our
sample, but it mostly ignores, for example, ethics. The notion that this
business model innovation stage is a mature area of research is con-
firmed by a recent study by Wirtz et al. (2016a), who argue that future
research into this topic should aim at consolidating and confirming
existing frameworks empirically.
Working with the understanding of the novelty of innovating cost/
revenue structures, Kind et al. (2009) analyze how competitive forces
64  Second stage business model research
may influence the way media firms like TV channels construct their
revenue models. A media firm can either be financed by advertising
revenue, by direct payment from the viewers (or the readers, if we con-
sider newspapers) or by both. Kind et al. (2009) show that the com-
petitiveness of the industry and the ease of substitution to alternative
providers constrains the attractiveness of the advertisement-based
revenue model. Bonaccorsi et al. (2006) also discuss the role of
­competition-levels in a setting of market-entry strategies in the soft-
ware industry.
Another stream of literature where business thinking has played
a major role in new modes of business is within social innovation,
for example, by tapping into bottom of the pyramid (BoP) markets
(Chesbrough, 2006). Seelos and Mair (2007) study the potential of
creating profitable business models in a deep-poverty setting. Un-
der the BoP approach, poor people are identified as potential cus-
tomers who can be served profitably through value configurations
that take their specific context and characteristics into account.
However, companies that are used to competing in industrialized
markets might need to fundamentally rethink their existing strate-
gies and business models, which would involve acquiring and build-
ing new resources and capabilities and forging a multitude of local
partnerships.
Despite an unusual setting, the studies on social innovation provide
extreme situations and sound learning points that we can apply to the
more generic forms of business model innovation. For example, from
precisely such a BoP business model approach, Yunus et al. (2010)
present a series of lessons learned in relation to achieving successful
business model innovation from a longitudinal case study. They find
that using business model thinking helps to challenge conventional
thinking, find complementary partners and undertake continuous
experimentation.

Innovation and technology

While strategy and management in relation to firms are concerned
with how tactical and strategic moves are executed by managers to
change or implement adjustments to the focal firm’s business model,
from the perspective of technology and innovation the contribution
of business models adds a significant and dynamic dimension because
it enables adjustments of exploitation. Johnson (2010) provides inter-
esting insight into seizing new opportunities through business model
innovation (see also Budde et al. 2012).
 Second stage business model research  65
In his work with open innovation and open business model in-
novation, Henry Chesbrough (2006, 2007b) makes us consider the
broader concept of ‘open business models’ in which the focal firm
becomes a much more permeable economic space and boundary in
terms of s­ haring product development, distribution and even other
­administrative functions with strategic partners. For example, large
pharmaceutical companies might outsource product development to
smaller biotechnology companies (see Brink and Holmen, 2009) while
licensing ­technologies and access to markets modifies the business
model (Casper, 2000). Thus, the operating architecture of the business
model becomes a locus for innovation and recalibration.
The combination of leveraged cost and time savings with new rev-
enue opportunities confers powerful advantages for companies will-
ing to open their business models (Chesbrough, 2007b, p. 24). While
Sosna et al. (2010) consider the antecedents and positive drivers of
business model innovation in a Spanish dietary products business
threatened by economic recession and heightened competition result-
ing from liberalization. In a later paper, Chesbrough (2010) considers
the barriers to business model innovation in terms of inertia and a
lack of entrepreneurial and managerial leadership that are required
to experiment and effectuate change to a business model (Tikkanen
et al., 2005).
Andersson et al. (2011) construct a descriptive ‘financialized bi-
opharma business model’ using three organizing elements: narra-
tives about performance, capital market conditions and the variable
motivation of equity investors (Andersson et al., 2011, p. 631). This
alternative framing of the biopharma business model reveals the
complexity and risk attached to the business model (see also Bigliardi
et al., 2005) because all elements that help structure the descrip-
tive model need to be aligned to reduce financial risk to investors
­(Sabatier et al., 2012).
In a biotechnology–pharmaceutical setting, Haslam et al. (2010)
construct a business model that reveals how the product innovation
and development process conjoins with speculative forces in capital
markets. Three organizing elements are employed for conceptualizing
this descriptive business model: (1) narratives about pipeline ­progress
that may (or may not) lead to additional funding from ­equity inves-
tors or other investing partners; (2) capital market c­ onditions that
impact on the supply of funding and market v­ aluations; and (3) the
variable motivations of equity investors who are not in a ­development
­marathon but a relay race where they are anxiously attempting to pass
on ownership and extract higher returns on invested capital through
66  Second stage business model research
realized market value. Hence, in this rather special ­biotechnology–
pharmaceutical setting, where the companies are to be understood as
constituted by investment portfolios of innovations and where prod-
ucts in the pipeline can be evaluated as risky future cash flows, capital
providers trade for shareholder value according to their portfolio and
trading strategies. In this speculative setting, capital market liquidity
becomes a prominent variable and the customer needs – represented
in the customer-centric school of thought in business models (see
Richardson, 2008) – has minor or no influence at all.
Positing a slightly different view in a study on technology’s effect on
firm performance, De Carolis (2003, p. 44) finds that in the short term,
building on prior stocks of knowledge and existing technology may be
a superior strategy. In the long run, however, the development of new
competences and application of new technologies will be crucial to fu-
ture competitive advantage and survival. Therefore, innovation, with
regard to technology and business model concepts is still an indispen-
sable aspect of the business model discussion. For example, compe-
tition in the logistics industry has been changed drastically in recent
years through the introduction and utilization of IT. Illustrating how
these changes have led to closer collaboration between companies and
their logistics partners, Velocci (2001) argues that the differences are
so substantial that it gives meaning to talk of a whole new business
model. Dell is an outstanding example of how a company has refined
and extended an existing business model with IT. With the unique
value proposition of its direct sales and built-to-order business model
(Kraemer et al., 1999), Dell has managed to influence how a whole
industry does business.

E-business innovation
Internet technology has given rise to opportunities for top manage-
ment to create new business models or to rediscover old ones. For
instance, as noted by Rappa (2001), the Internet has allowed for the
rediscovery of auctions. E-business in general has made it possible to
enable transactions between companies in new and more frictionless
manners – in this way creating value (Amit and Zott, 2001), because
the Internet has connected businesses to other businesses or to con-
sumers through either new value streams, revenue streams or logistical
streams (Mahadevan, 2000).
A large proportion of the early work on business models was con-
cerned with understanding the vast opportunities of Internet-based
 Second stage business model research  67
businesses (Mahadevan, 2000; Timmers, 1998). In 1998, Timmers had
already classified ten generic types of Internet business models:

• e-shop;
• e-procurement;
• e-auction;
• third party marketplace;
• e-mall;
• virtual community;
• value chain integrator;
• information broker;
• value chain service provider; and
• collaboration platform.

Bambury (1998) described the business models that take place on the
Internet by using two categories: transplanted real-world business
models and native internet business models. The transplanted r­ eal-
world business models include

• the mail-order model;

• the advertising-based model;
• the subscription model;
• the free trial model;
• the direct marketing model;
• the real estate model;
• the incentive scheme model;
• the business to business model; and
• combinations of these models.

The native Internet business models include (Bambury, 1998) the

following:

• The library model. Internet represents a source of free informa-

tion. Librarians, academics and scientists were among the first
professional groups to grasp the potential of the public network
for disseminating and making available free information.
• The freeware model. It is used by the Internet software commu-
nity. Several software solutions, including popular Web browsers,
are open sources and available for free download.
• The information barter model. It involves the exchange of infor-
mation over the Internet between individuals and organizations.
Sometimes, personal information may be sold to others to create
68  Second stage business model research
mailing lists or the information may be used to create profiles or
customized advertising without the individual’s consent.
• The digital products and the digital delivery model. Those prod-
ucts refer to images, movies, animation, audio, text, certificates
and software. Digital delivery may take place when products are
purchased or where information is bartered.
• The access provision model. This business provides access to the
Internet with firms named Internet Service Providers (ISPs).
• Website hosting and other Internet services. Many ISPs provide
services such as hosting Web servers, electronic mail, and URL
and e-mail redirection services. Some firms provide free Web
hosting and e-mail. These are usually financed by the inclusion of
advertisements on certain sites and within e-mail.

Two years later, Rappa (2001) identified 41 types of Internet business

models and classified them into nine categories, which were fairly sim-
ilar to Weill and Vitale’s eight (e-)business models from 2001, listed as
follows:

1 Content Providers. Firms that provide information, products or

services in a digital form to customers through third parties.
2 Direct to Consumer. Firms where the buyer and seller interact of-
ten bypassing traditional channel members.
3 Full Service Providers. Firms that provide a full service to to-
tally match customer needs in a particular domain, consolidated
through a single point of contact. Domains cover any area where
customer needs cover multiple offerings.
4 Intermediaries. Firms that aim to link multiple buyers and sellers.
Sellers pay the intermediary listing fees and selling commissions
and it is possible that the buyer may pay a purchase or membership
fee. Intermediaries are mostly electronic mall, shopping agents,
electronic auctions and markets, specialty auctions and portals.
5 Shared Infrastructure. Firms that provide infrastructure shared by
their owners offering a service that is not already available in the
marketplace.
6 Value Net Integrators. Firms that coordinate product flows from
suppliers to allies and customers. It strives to own the customer
relationship with the other participants in the model and coordi-
nates the value chain.
7 Virtual Communities. Firms in the centre of the model, situated
between members of the community and suppliers. Members are
able to communicate directly with each other.
 Second stage business model research  69
8 Whole-of-Enterprise/Government. The single point of contact for
the e-business customer is the essence of the whole-of-enterprise
atomic business model. This model plays a relevant role in public
sector organizations but also applies to the private sector.

One of the specific business model taxonomies created with the ad-
vent of e-business was the digital platform, and the recent literature
­(Frankenberger et al., 2013; Gassmann et al., 2014) illustrates a ­number
of business model patterns based on platform thinking. Brousseau and
Penard (2007) analyze the economics of matching, the economics of
assembling and the economics of knowledge management in relation
to platform thinking and attempt to identify the principal trade-offs
at the core of choices among alternative digital business models and
compare them in terms of competitiveness and efficiency.
Conceptualizing the business model is therefore concerned with
identifying this platform, while analyzing it is concerned with gaining
an understanding of precisely which levers of control are appropriate
to deliver the value proposition of the company. Finally, communicat-
ing the business model is concerned with identifying the most impor-
tant performance measures, both absolute and relative measures, and
relating them to the overall value creation story.
As argued earlier, a business model is neither just a value chain, nor
is it a corporate strategy. There exist many value configurations that
are different from that of a value chain, for example, value networks
and hubs. Rather, a business model is concerned with the unique com-
bination of attributes that deliver a certain value proposition. There-
fore, a business model is the platform that enables strategic choices to
become profitable. In some instances, it can be difficult to distinguish
between businesses that succeed because they are the best at execut-
ing a generic strategy and businesses that succeed because they have
unique business models. This is an important distinction to make, and
while some cases are clear-cut, others remain fuzzy.

Why is business model innovation crucial?

One of the best examples of a business model that has changed an ex-
isting industry is Ryanair, which has essentially restructured the busi-
ness model of the airline industry (see also Casadesus-Masanell and
Ricart, 2011). As the air transport markets have matured, incumbent
companies that have developed sophisticated and complex business
models now face tremendous pressure to find less costly approaches
that meet broad customer needs with minimal complexity in products
70  Second stage business model research
and processes. While the generic strategy of Ryanair can be denoted
as a low-price strategy, this does not render much insight into the busi-
ness model of the company.
The low-cost option is per se open to all existing airlines, and many
already compete alongside Ryanair on price. However, Ryanair was
among the first airline companies to mould its business platform to
create a sustainable low-price business. Many unique business models
are easy to communicate because they have a unique quality about
them, that is, either a unique concept or value proposition. This is also
the case for Ryanair. It is the ‘no-service business model’. In fact, the
business model is so well thought-through that even the arrogance and
attitude of the top management matches the culture of the rest of the
business. But they can make money in an industry that has been under
pressure for several decades despite upwards trending demographic
changes and rising globalization, and for this they deserve recogni-
tion. Ryanair’s business model narrative is the story of a novel fly-
ing experience – irrespective of the attitude of the customer after the
ordeal.
A much-applied example in the management literature is Toyota, in
regard to management culture as well as quality control and logistics
systems. However, Toyota did not really change the value p ­ roposition –
or the value chain – of the car industry. They were able to achieve
superior quality through Just In Time (JIT) and lean management
technologies, and they may have made slightly smaller cars than the
American car producers, but their value proposition and operating
platform were otherwise unchanged. The same can be said for Ford in
the early 20th century. Ford’s business setup was not really a new busi-
ness model. It sold one car model in one colour, but so did most other
car manufacturers at the time. Ford was able to reduce costs through a
unique organization of the production setup, but the value proposition
was not unique.
In the 1990s, Dell changed the personal computer industry by ap-
plying the Internet as a novel distribution channel. This platform as a
foundation of the pricing strategy took out several parts of the sales
channel, leaving a larger cut to Dell and cheaper personal comput-
ers to customers. Nowadays this distribution strategy is not a unique
business model, as many other laptop producers apply it. Therefore,
it also exemplifies that what is unique today is not necessarily unique
tomorrow.
This mirrors Christensen’s quote that “today’s competitive ad-
vantage becomes tomorrow’s albatross” (Christensen, 2001, p. 105).
Having the right business model at the present does not necessarily
 Second stage business model research  71
guarantee success for years on end as new technology or changes in
the business environment and customer base can influence profita-
bility. The point to be made here is that if the value proposition is
not affected in some manner, then it is most likely not a new business
model. However, it could be the case that the value proposition is not
affected, but the business’ value-generating attributes are radically
different from those of the competitors. Three examples of this are
as follows.

1 The value proposition of two companies producing kitchen appli-

ances. One may be more high-end than the other, but this is a part
of the competitive strategy, not the actual business model.
2 The value proposition of two companies producing laptops. One
may be priced lower because the range is smaller and the design
kept to one colour. This is not only equivalent to different business
models but also a question of competitive strategy and customer
selection. However, if one of the producers decides to alter the tra-
ditional distribution model, cutting out store placement and set-
ting up technical support as local franchisees only, that could be a
new business model.
3 Two hair salons will both be performing haircuts, but their value
propositions may be vastly different according to the physical
setup around the core attribute – the haircut – in the form of book-
ing services, physical attributes of the salon and its geographic
placement as well as service before and after the haircut.

Business model conceptualized as building blocks: moving

towards a dynamic perspective
While value creation from a typical financially oriented business
­perspective merely constitutes the realization of value at the time of
sale of the product, that is, registration of turnover, from a process
perspective value creation may be characterized as what happens in-
side the company before this financial value realization takes place. In
this genre, we are more concerned with value creation potential, value
creation processes and value creation extraction, all of which can be
said to precede the value realization phase.
In 2002 Chesbrough and Rosenbloom tried to corner the impor-
tant aspects to be considered to comprehensively describe the business
model of the company. They defined the business model as a construct
that integrates activities into a coherent framework. This definition is
worth highlighting because it was among the first to set value creation
72  Second stage business model research
as a central notion of understanding the points of concern in the busi-
ness model of a company. In the wake of this definition, Chesbrough
and Rosenbloom defined the six steps to creating a business model:

1 Articulate the value proposition, that is, the value created for us-
ers by the offering based on the technology.
2 Identify a market segment, that is, the users to whom the technol-
ogy is useful and for what purpose.
3 Define the structure of the value chain within the firm required to
create and distribute the offering.
4 Estimate the cost structure and profit potential of producing the
offering, given the value proposition and value chain structure
chosen.
5 Describe the position of the firm within the value network link-
ing suppliers and customers, including identification of potential
complementarities and competitors.
6 Formulate the competitive strategy by which the innovating firm
will gain and hold advantage over rivals.

Zott and Amit’s (2010) earlier quote on activity systems value capture
is concerned with the balance between what is inside the financial
boundary of a focal firm and what is outside, and how these are ad-
justed to displace costs and expenses and secure an additional margin.
How much margin the focal firm captures from its total value chain de-
pends upon its pricing strategy, pricing power, relation to distributors
and retail network and capacity to outsource and offshore – that is, to
what extent a focal firm has sufficient power benefit from price con-
trol, customer lock-in and ability to adjust internal and external cost
structure through flexibility and/or synergies. As Zott and Amit (2010)
observe, the “business model co-determines the focal firm’s bargain-
ing power”, and this facilitates value capture out of its value-­creating
initiatives. Thus, business models are conceptualized, in general, as
how focal firms’ resources are deployed for value-creating products
and services are located within a partnership network that secures
revenue flows and determines cost structure. Hedman and Kalling
(2003) propose that a generic business model is composed of causally
related components: customers, competitors, the company offering
(generic strategy), activities and organization (including the value
chain), resources (human, physical and organizational) and factor and
production inputs. Other authors offer insight on the most relevant
building blocks (Baden-Fuller and Haefliger, 2013; Chesbrough and
­Rosenbloom, 2002; Demil and Lecocq, 2010; Hamel, 2000; Stähler,
 Second stage business model research  73
2002). For example, Stähler (2002) proposes the following building
blocks: the value proposition, the product or service, the value archi-
tecture and the revenue model.
Remembering that a business model – at least at an SBU level – may
be perceived as a platform that enables the strategic choices within
reach of a firm’s management team to become profitable, it also be-
comes clear that a business model is neither merely a pricing strategy,
a new distribution channel or an IT, nor is it a quality control scheme
in the production setup. That is to say, none of the above actions are
by themselves sufficient. Rather, a business model is concerned with
the value proposition of the company, but it is not the value proposi-
tion alone, as it is in itself supported by a number of parameters and
characteristics – for example, some of the parameters mentioned ear-
lier, like applied distribution channels, customer relationships, pricing
models and sourcing from strategic partnerships. One of the major
questions to answer in relation to understanding business models is,
therefore, how is the strategy and value proposition of the company
aligned and leveraged?
The problem with trying to visualize the ‘business model’ through
separate building blocks is that it can very quickly become a ge-
neric and static organization-like diagram illustrating the process of
transforming inputs to outputs in a chain-like fashion. The reader
is thus more often than not left wondering how the organization ac-
tually functions. Hence, the core of the business model description
should be the connections between the different elements that an
organizational diagram or value chain traditionally depicts, that
is, the actual activities being performed in the company. Compa-
nies often communicate a lot of information about activities, such
as customer relationships, varying distribution channels, employee
competencies, knowledge sharing activities, innovation and risks,
but this information may seem unimportant if the company fails to
show how these various elements of value creation collaborate be-
tween one another and which changes the management team will be
monitoring. One such idea on how to visualize the business model
is the popular Business Model Canvas by Osterwalder and Pigneur
(2010) (Figure 14).
When we perceive relationships and linkages, they often reflect
some kind of tangible transactions, that is, the flow of products, ser-
vices or money. When perceiving and analyzing the value transac-
tions going on inside an organization, or between an organization
and its partners, there is a marked tendency to neglect or forget
the parallel intangible transactions and interrelations that are also
74  Second stage business model research

Figure 14  The Business Model Canvas (adapted from Osterwalder and Pigneur,
2010; see www.businessmodelgeneration.com).

involved. This is supported in Osterwalder and Pigneur’s framework

(2010) and is probably one reason why their book has sold so many
copies to date.
Alt and Zimmermann (2001) discuss these aspects by way of the
concept of the value proposition, which they perceive as a (customer
centric) part of the company’s mission statement together with its vi-
sion and strategic goals. Chesbrough and Rosenbloom (2002) similarly
define the value proposition as the value created for the user of the
company’s offering, while Hedman and Kalling (2003) have a slightly
different perception of the value proposition as the generic strategy
of the company. In Osterwalder et al. (2005), the value proposition
towards customer segments plays a vital role in the configuration of
a business model and in their book, discussing the “Value Proposi-
tion Canvas” tool (Osterwalder et al., 2014). Osterwalder and Pigneur
strengthen the articulation between their Business Model Canvas and
Steve Blank’s (2013) work on customer needs, best reflected in his book
Four Steps to the Epiphany (Blank, 2013).2

Business model archetypes and patterns

Business model archetypes and patterns have been an area of focus in
the field of business models since its emergence in the late 1990s (Bell
et al., 1997; Timmers, 1998). Among the state of the art research within
this particular stream is the work coming out of Oliver Gassmann’s
 Second stage business model research  75
research group at St. Gallen University (see Frankenberger et al., 2013;
Gassmann et al., 2014), Colin Haslam’s research unit at Queen Mary
University (Andersson et al., 2014; Haslam et al., 2013) and ­Christian
Nielsen’s Business Design Center at Aalborg University (Taran et al.,
2016). In general, this research on business model archetypes is
­concerned with finding categorizations that make benchmarking and
innovation of business models easier.
Baden-Fuller and Morgan (2010) take on the discussion of business
models conceptualized as models of reality. Representation is essen-
tially modelling, as it concerns creating images of reality. Thus, im-
ages of the outside world are projected to us through representation
(via, for example, some sort of ‘technology’, that is, a business model
or other management technology). Cooper (1992) and Latour (1999)
ask whether the world outside is different from the one we have in here.
Latour argues that representation becomes reality as it is a construc-
tion of objectivity. From his point of view, interaction is the essence
of existence. Through interaction, objects become real only when
they are circulatable. He develops this argument by stating that 3D
objects – unlike 2D objects – cannot be circulated, in a sense arguing
that representation is reality (Latour, 1999). In this case representation
abbreviates complexity (Zuboff, 1988, pp. 179–180).
Cooper (1992) concludes that representation is the transformation
of the object – in our case the company – into a new form that pro-
duces controllability. Furthermore, influenced by Zuboff (1988), he
argues for three underlying themes of representation; these constitute
the mechanisms by which representation realizes this economy of
mental and physical motion being remote control, displacement and
abbreviation.
Through remote control, symbols and other devices substitute for
direct involvement with and between people – in organizations the
employees and management. Remote control thus underlines an econ-
omy of convenience by enabling control at a distance. The power of
representation is the ability to control an event remotely and can be
described as a form of displacement in which representation is al-
ways a substitution for or representation of the event, and never the
event itself. The mobility of representation, created through displace-
ment, is central to control (and thereby also to power). Displacement
emerges either as a transformation of the object, or as conceptual or
material mobility, for example, via projection. Displacement denotes
mobile and non-localizable associations, while abbreviation makes
possible the economy of convenience that underlies representation.
Abbreviation, inducing a subset of the original object, is a principle of
76  Second stage business model research
condensation, which enables ease and accuracy of perception and ac-
tion. Through abbreviation, representations are made compact, versa-
tile and permutable. Hence the conclusion of this section is that there
are interesting avenues for further research that connects the notions
of models, representation, stories and communication. However, these
aspects of theorization are not at the core of the present book.
One of the specific business model typologies that was created
with the advent of e-business was the digital platform, and the re-
cent literature (Frankenberger et al., 2013; Gassmann et al., 2014;
Taran et al., 2016) illustrates a number of business model patterns
based on platform thinking. Brousseau and Penard (2007) analyze
the economics of matching, the economics of assembling and the
economics of knowledge management in relation to platform think-
ing and attempt to identify the principal trade-offs at the core of
choices among alternative digital business models, and to compare
them in terms of competitiveness and efficiency. No optimal model
can be identified at any one time, but models that result in the best
practical compromise between the specific nature of the assembled
goods, the disparity and nature of users’ preferences, production
constraints faced by the function provider (level of costs, share of
fixed costs in total costs, etc.), and the structure of competition be-
tween platforms.
An archetype can be defined as a typical example of something, or
the original model of something from which others are copied. Ac-
cording to Taran et al. (2016), the psychologist Carl Jung (1875–1961)
was one of the first to introduce the term archetypes and argued that
“All the most powerful ideas in history go back to archetypes. This
is particularly true of religious ideas, but the central concepts of
science, philosophy, and ethics are no exception to this rule” (Jung,
1927, p. 342). The study of archetypes has expanded over the years
into other research disciplines such as biology, neurology, ethology
and pedagogy (see, for example, Mayes, 2010; Samuels et al., 1986),
and there has been a growing interest in trying to identify successful
business models across different industries (see, for example, Linder
and Cantrell, 2000; Osterwalder and Pigneur, 2010).
As is evident from the earlier discussions, many authors have at-
tempted to define business models by discussing and identifying over-
all business model generics and archetypes. In 1998, Timmers had
already classified ten generic types of Internet business models; two
years later, Rappa (2001) identified 41 types of Internet business mod-
els and classified them into nine categories. In recent years, it is in-
creasingly being realized that archetypes of e-business in reality might
 Second stage business model research  77
merely be translations of already existing business models. And thus,
business model archetypes seen through today’s lens could be some-
thing along the lines of

• buyer–seller models;
• advanced buyer–seller models;
• network-based business models;
• multisided business models;
• business models based on ecology;
• BoP business models;
• business models based on social communities;
• co-creation and consumer-collaboration models;
• freemium models.

In particular, identifying these archetypes suggests that business mod-

els work like ‘recipes’ that could be generalized to develop successful
businesses (Pateli and Giaglis, 2004). In other words, business model
archetypes are ideal examples that describe and distinguish the behav-
iour of companies operating in the real world, thus providing manag-
ers, practitioners and academics with recipes that have already been
tried and tested (Fielt, 2014). Just like recipes, business model arche-
types describe the ‘ingredients’ to use as well as the process by which
these ingredients are mixed to obtain the final dish, that is, a success-
ful business model. Despite the relevance of this stream, systematic
research in business model archetypes is still limited, as there is a lack
of knowledge on the conceptual foundations of what a successful busi-
ness model should look like.
A variety of labels have been used to identify business model ar-
chetypes. Linder and Cantrell (2000) coin the expression ‘operating
business model’ by highlighting 33 different formats. Johnson (2010)
pinpoints 19 possible business model configurations, using the term
‘analogies’, while Osterwalder and Pigneur (2010) exploit the term
‘patterns’ by drawing attention to five business model templates: un-
bundling business model; long tail; multi-sided platforms; freemium;
and open business model.
Despite the different terminologies used to frame business model
­archetypes, the underlining aims are common across different ­authors:
identifying and describing business models with similar features,
­dynamics or behaviours to make them comparable, easy to understand
and applicable. Business model archetypes are often labelled with the
names of specific real-life companies, which are supposed to frame par-
ticular strong points and specific features, like the ‘McDonald’s business
78  Second stage business model research
model’ or the ‘eBay business model’. Thus, some archetypes are descrip-
tions of real-life businesses, while others can be considered more ge-
neric conceptualizations of a particular real-world business model, like
the ‘franchising business model’ or the ‘e-auction business model’.
This different way of labelling business model archetypes involves
two conceptions of models, that is, scale models and role models; the
former provides brief descriptions of business models of real compa-
nies that compete on the market, while the latter offers general ideal
cases that work in a particular way (Baden-Fuller and Morgan, 2010).
Archetypes are ready-to-use templates that can be copied by other com-
panies, even with minor variations in the ‘ingredients’ or in the mixing
process, but without changing the basic recipe. Identifying archetypes
suggests there are several ways by which companies can achieve suc-
cess, but also many generic types and many possible changes within
each of them can be identified. All in all, business model archetypes
are practical frameworks, which are ready for copying but also for
modifications and innovations, thus entailing ­opportunities to open
up further developments.

Transformative redefinition: relevant second stage

business model research paths
• Business model researchers need to specifically address our lack
of understanding of the levers and the barriers to business model
innovation and business model implementation, and possibly
identifying decision-support systems for business model innova-
tion processes and business model implementation processes in
order for these practices to spread to the wider array of SMEs
in the economy. While business models spark a natural interest
among entrepreneurs and SMEs, researchers have not yet ad-
dressed the challenges such organizations will face in meeting a
very complex and seemingly all-inclusive conceptualization of
firms’ value creation. In addition to decision-support studies, re-
search should reach out to the SME segment for cases to ground
future theorizing.
• In accordance with Wirtz et al. (2016b), we argue that research
should aim at consolidating and confirming existing business
model frameworks empirically.
• Finally, linking business models with notions of sustainability and
more socially fair dispersions of value is an important avenue to
pursue in terms of validating the consequences of sustainability
and non-sustainability.
 Second stage business model research  79
Notes
1 Interestingly, the notion of business model innovation patterns is also
deeply rooted in the most cited piece of work in the third stage of business
model research, namely Osterwalder and Pigneur’s (2010) Business Model
Generation, but has not been theorized about until recently by Gassmann
et al. (2014) and Taran et al. (2016).
2 The relationships among business model components will be properly ad-
dressed in the third stage of business model research. Conceptualizing
business models as complex systems (Foss and Saebi, 2017) allows one to
consider the interdependencies and the interactions among the compo-
nents. See also Baden-Fuller and Haefliger (2013).
7 Third stage business
model research
Design frameworks and
foundations for theory-building

The third stage of business model research is dominated by a special

issue in Long Range Planning (Volume 43, Issues 2–3) that aims to clar-
ify the links between the concept of business models and related fields
(argued as missing in stage 1 research) but also outlines the contours
for future theorizing in the field. In addition to these contributions,
some literature reviews are carried out (Foss and Saebi, 2017; Lambert
and Davidson, 2013; Massa et al., 2017; Schneider and Spieth, 2013)
to take stock of the extant literature of the first and second stage, lay
the foundations for theory-building and offer suggestions for future
research. Moreover, within the third stage, frameworks for describing,
designing and innovating business models are proposed. The work
typically undertaken in this stage of research focuses on private sector
firms, while public sector research is almost non-existent. A number
of research streams that may be connected to this stage of research are
found in the current literature.

Clarifying the business model foundations

Contributions within the third stage start to investigate the theoret-
ical underpinnings of the business model concept. Before the third
stage, not much attention was paid to the issue of theory (Morris
et al., 2005); a lot has been written about business models, but the lack
of a well-­defined theoretical foundation has led to inconsistent em-
pirical findings, thus inhibiting cumulative research progress (Bock
et al., 2012; Zott et al., 2011). A notable exception can be found in Amit
and Zott (2001), who, in 2001, faced this issue by framing the busi-
ness model as a unifying concept able to capture value from multiple
sources. The authors explore the business model concept from several
theoretical stances, that is, the value chain framework (Porter, 1985),
Schumpeter’s theory of creative destruction (Schumpeter, 1942), the
 Third stage business model research  81
resource-based view of the firm (e.g. Barney, 1991), strategic network
theory (e.g. Dyer and Singh, 1998), and transaction costs economics
(Williamson, 1975). Based on this analysis, Amit and Zott (2001) ar-
gued for a cross-­theoretical perspective, as no single theory, per se,
can explain the value creation potential that lies within the business
model concept.
Morris et al. (2005) find that the business model holds promise as
a unifying unit of analysis that can facilitate theory development in
entrepreneurship, which is more recently highlighted by George and
Bock (2011). Morris et al. (2005) explore the theoretical underpinnings
of a firm’s business model and agree with Amit and Zott (2001) in re-
gard to the cross-theoretical anchoring of the business model concept.
However, these authors add some theoretical lenses that can be helpful
to interpret the business model concept:

• value systems and strategic positioning (Porter, 1996), as the choice

of the position within the value system is critical for the sake of
value creation;
• systems theory (von Bertalanffy, 1951), that allows conceptualiza-
tion of the business model as “interrelated components of a sys-
tem that constitutes the firm’s architectural backbone” (Morris
et al., 2005, p. 729).

Within the concept of the business model, the value chain may be
said to comprise a company’s activities (Hedman and Kalling, 2003)
and structure (Alt and Zimmermann, 2001). Hence there are, at least,
some connections with, for example, Osterwalder and Pigneur’s (2010)
Business Model Canvas. The concept of modelling the organization,
that is, creating organization charts, analyzing how departments and
divisions interact with and affect each other and optimization of the
whole enterprise as opposed to suboptimization, thereby creating an
overview and easing the understanding of how it functions is not a new
concept. Management teams, consultants and academics alike have
been doing this for ages.
Like the value chain, a business model is the company’s underlying
structure, but the business model goes further, because it also describes
the underlying concept, or method, of value creation, which ultimately
leads to profits and long-term sustainability. Technology is not to be
underestimated within the business model concept, as it is a key ele-
ment in determining which organizational structures become profit-
able and can be realized (Kraemer et al., 1999). Among the seminal
contributions with respect to technology’s impact on the feasibility of
82  Third stage business model research
business model concepts is Thompson’s Organizations in Action (1967).
Thompson proposes a typology of different kinds of o ­ rganizational
technologies, distinguishing between long-linked, intensive and me-
diating technologies (see also Stabell and Fjeldstad, 1998). These dif-
ferent technology types play different roles in connection with value
creation and thus also structuring of companies and their value chains.
Changes in the business landscape and technologies for interaction af-
fect a broad range of industries and are not restricted to relevance to
e-business. For example, Chapman et al. (2002) illustrate how entering
into the knowledge society has changed the competitive prerequisites
of the logistics industry. Their research concludes that the rising ap-
plication of IT has changed the ingredients of survival and partnering,
and thereby the business model of that industry.
More recently, a special issue in Long Range Planning (Volume 43,
­Issues 2–3) tried to define the theoretical profile of the business model
concept. Teece (2010) argues that the business model is an interdisci-
plinary topic lacking a theoretical anchoring in economics or business
studies. By assuming that markets are perfect, economic theory under-
plays the relevance of business model factors, such as the mechanisms to
capture value, the fit between value proposition and customer segments
or the choice of a suitable channel. Organizational, strategic and mar-
keting science flag the importance of the business model concept, but
fail to analyze it properly and to provide it a theoretical home; as a re-
sult, the business model is frequently mentioned but poorly understood.
Zott and Amit (2010) conceptualize the business model as a system
of interdependent activities that transcends focal firm and spans its
boundaries. By drawing on activity theory, the authors underscore the
relevance of the architecture of a company’s activity system (the choice
of the activities to perform, the relationships among activities, the ac-
tors who perform the activities). The design of this architecture also
helps define the role played by the company within its ecosystem, that
is, its network of customers, partners and suppliers.
By adopting a Penrosian perspective (Penrose, 1959), Demil and
­Lecocq (2010) position themselves among those who trace back the the-
oretical foundations of business models within the resource-based view
of the firm (Teece, 1984; Wernerfelt, 1984); the competitive advantage
of a company depends on its rare, unique and non-substitutable re-
sources, as well as on management’s ability to extract value from them.
Schneider and Spieth (2013) provide an overview of the theoretical
lenses that can be used to interpret the business model concept. In
particular, the authors take into consideration three theoretical per-
spective that analyze the business model from a different angle.
 Third stage business model research  83
1 The resource-based view. In accordance with previous research
(e.g. Amit and Zott, 2001; Demil and Lecocq, 2010), the authors ac-
knowledge that this theoretical perspective for research on business
models is fruitful, as it traces back the heterogeneity among firms
to the resources at their disposal (Teece, 1984; Wernerfelt, 1984)
as well as to the managerial actions to use these resources (Helfat
et al., 2007; Sirmon et al., 2007). Both these elements emphasize
the relevance of the business model in coordinating the company’s
resources for the sake of achieving a competitive advantage.
2 The dynamic-capabilities perspective, which underscores the con-
stant need of companies to reinvent themselves by applying new
value creation strategies (Grant, 1996; Pisano, 1994) in view of the
hyper-competitive and global business environment, thus implic-
itly underlining the relevance of business model innovation.
3 The strategic entrepreneurship perspective, which is the “integra-
tion of entrepreneurial (i.e. opportunity-seeking behaviour) and
strategic (i.e. advantage-seeking) perspectives” for the purpose of
creating value (Hitt et al., 2001, 480). By including all forms of
innovations aimed at exploring and exploiting new opportunities,
this theoretical framework is suitable to conduct research on busi-
ness models when it comes to changing established ways of doing
business (Amit and Zott, 2010).

Finally, Foss and Saebi (2017) argue that complexity theory can be a
fruitful theoretical framework to analyze the business model concept.
Such a view conceptualizes the business model as a complex system
(Simon, 1962, 1973), meaning that the business model is composed of
a series of interdependent and complementary subsystems (value cre-
ation, value delivery and value capture) that interact in a non-simple
way. Complex systems can be categorized according to the degree of
interdependency among subsystems:

1 highly modular systems, interactions are negligible;

2 non-decomposable systems, interactions are essential;
3 nearly decomposable systems, interactions are weak, but not
negligible.

According to the type of complex system, the effects of innovation are

different. Innovating a highly modular business model may entail only
changes in one or more subsystems, while no architectural change
(i.e. the relationships among subsystems) may be required. On the con-
trary, if a business model is a non-decomposable system, the effects of
84  Third stage business model research
innovation are likely to involve not only one or more subsystems, but
overall a deep redesign of the architecture of the business model itself.

Business model ecosystems

Business models are designed and implemented in specific environ-
ments, which can influence or be influenced by the business models
(Osterwalder and Pigneur, 2010). Considering the ecosystems in which
the business models operate allows managers and practitioners to build
more competitive and consistent business models and it permits academ-
ics to obtain a broader perspective on the business model research area.
Regarding business model ecosystems, Osterwalder and Pigneur
(2010) identify four main elements:

1 market forces (market issues, market segments, needs and de-

mands, switching costs, revenues attractiveness);
2 industry forces (competitors, new entrants, substitute products,
suppliers and other value chain actors, stakeholders);
3 key trends (technology trends, regulatory trends, societal and cul-
tural trends, socio economic trends); and
4 macroeconomic forces (global market conditions, capital mar-
kets, commodities and other resources, economic infrastructure).

Zott and Amit (2013, p. 407) acknowledge the relevance of the ecosys-
tem concept from a business model perspective; the authors indeed
recognize “the need to go beyond a focal firm’s boundaries and adopt
a more systemic perspective that emphasizes interdependencies and
complementarities between a firm and third parties to properly under-
stand how value is created”.
The ecosystem concept allows Sanchez and Ricart (2010) to classify
business models in two categories:

1 isolated business models, which pursue exploitation strategies, the

company’s resources and capabilities are leveraged to achieve effi-
ciency; and
2 interactive business models, which adopt exploration strategies, the
company’s internal resources are integrated with external ones
to foster innovation processes and the creation of new market
opportunities.

Mapping the business model’s ecosystem current features and reflect-

ing upon the future trends of external forces are very relevant activities
 Third stage business model research  85
because they trigger thoughts on potential changes and innovations to
improve the current business model. Indeed, a business model could be
strong and consistent in the current competitive landscape, but it could
rapidly become obsolete because of technology innovations or new
disruptive value propositions. To sum up, the business model should
evolve at the same pace as the ecosystem in which it is deployed. De-
spite the relevance of this stream, how the business model ­ecosystems
influence the evolution (see also Leblebici, 2012) and the dynamics of
business models and vice versa are still areas open for research.1

The need for taxonomies of business models

Classifying objects in homogenous categories is a very relevant acti­
vity within a research domain as it allows researchers to organize ab-
stract and complex concepts (Neuman, 2003), thus triggering ­further
insights to advance research in a certain domain. As Bailey (1994,
p.  15) states, “Theory cannot explain much if it is based on an in-
adequate system of classification”. In the business model research
domain, categorization is possibly a powerful tool as it makes possi-
ble the positioning of business model archetypes close to each other
based on underlying criteria, thus increasing the understanding of the
business model research area and enabling the development of ideal
types (Baden-Fuller and Morgan, 2010). Figure 15 shows Osterwalder

Figure 15  The relationship between business model archetypes and catego-
ries (adapted from Osterwalder et al., 2005).
86  Third stage business model research
et al.’s conceptions of the relationships between business model arche-
types and categories.
As shown by Lambert and Davidson (2013), the business model is
increasingly used as criteria to categorize homogeneous groups of com-
panies. Business-model-based classifications provide a new angle from
which to analyze industries and, moreover, can be the starting point for
other management studies (e.g. investigating the performance of differ-
ent classes of business models). The path towards theorizing strongly
relies on the opportunity to classify objects and on the quality of the
categorization system; as Bailey (1994, p. 15) states, “theory cannot ex-
plain much if it is based on an inadequate system of classification”, and
business model research is not an exception. As a matter of fact, gener-
alizations about categories of business models require a classification
scheme able to identify homogeneous categories of business models
and to make it possible the comparison between heterogeneous classes
(Baden-Fuller and Morgan, 2010; Lambert and Montemari, 2017).
When it comes to classifying objects in homogeneous groups, two
options are possible: typologies and taxonomies (Doty and Glick,
1994). Typologies are designed in a deductive manner and consider
only few variables to define the classes of objects; intuition and/or ex-
isting theories are used to craft the classes, which are only useful for
very specific purposes (i.e. the immediate needs of researchers), while
revealing themselves to be of limited usefulness when it comes to other
purposes. Following along these lines, it can be argued that typologies
provide a basis for only limited generalizations. In contrast, statistical
analysis and empirical data are used to create taxonomies, which are
generated inductively and simultaneously consider several variables.
Only taxonomies can enable generalizations and theorization within a
particular research field. Either way, empirical research plays a central
role when it comes to building classification schemes; it is used either
to validate conceptually derived categories (typologies) or it is used to
determine the categories themselves (taxonomies).
Business model research is dominated by typological classification
schemes; several arbitrary categorizations have been proposed, making
no explicit reference to, or using only a few, classification criteria (see,
for example, Bambury, 1998; Betz, 2002; Chen, 2003; ­Dubosson-Torbay
et al., 2002; Mäkinen and Seppänen, 2007; T ­ immers, 1998). Given that
these typologies were created for very specific purposes, it is only nat-
ural that they are revealed to be mostly inconsistent with one another
(Lambert, 2015; Taran et al., 2016). In contrast, taxonomical research
is scant; the lack of a taxonomical classification scheme is a signif-
icant gap for business model research as it considerably limits the
 Third stage business model research  87
progress towards generalizations on homogeneous groups of business
models as well as the development of business model theories (Groth
and Nielsen, 2015; Lambert, 2015; Lambert and Montemari, 2017;
­Mäkinen and Seppänen, 2007).
Business model archetypes, which present common features, can be
classified in abstract categories (Fielt, 2014; Osterwalder et al., 2005);
in a sense, if archetypes are the ‘recipes’, categories can be considered
the ‘recipe book’. Other authors have made some attempts to identify
business model categorizations without clarifying the criteria used to
differentiate business model archetypes (Applegate, 2001; Bambury,
1998; Eisenmann, 2002; Laudon and Traver, 2003). As for business
model definitions, frameworks and archetypes, business model clas-
sifications are also very heterogeneous as there is little integration of
criteria and dimensions used by the different authors to categorize
business model archetypes (Fielt, 2014; Lambert, 2006). Even though
researchers and practitioners have been highlighting the need for a
generally accepted business model categorization (Hawkins, 2002;
Keen and Qureshi, 2006; Pateli and Giaglis, 2004), the state of the
art in this business model research stream is still unable to provide
exhaustive answers.
Moreover, when business model categorization comes up for discus-
sion, the distinction between specific classifications (typologies) and
generic classifications (taxonomies) has to be addressed (McKelvey,
1982). Table 5 shows the features and the functions of typologies and
taxonomies.
Regarding this distinction, none of the aforementioned business
model classifications can be considered taxonomies, as they are cre-
ated to pursue the particular aims of the researchers and they cannot
be exploited for multiple purposes. Even though these typologies have

Table 5  F
 eatures and functions of typologies and taxonomies

Typologies Taxonomies

Categories (types) are conceptually Categories (taxa) are empirically

derived derived
Few characteristics considered Many characteristics considered
Reasoning by deduction Reasoning by inference
Mostly qualitative classifications Quantitative classifications
Specific/arbitrary/artificial classification General/natural classification
Provides a basis for only limited Provides a basis for
generalizations generalization

Source: Adapted from Lambert (2006).

88  Third stage business model research
contributed to shedding new light on the nature and the role of busi-
ness models, by simplifying such a complex domain and identifying
relationships between a small number of variables, they are not able to
provide a generally accepted nomenclature of business models. All in
all, the aforementioned typologies help to achieve parsimony, but they
are limited in terms of versatility. This aim can be achieved using sta-
tistical analysis to build taxonomies from a large number of variables
to be considered simultaneously (Lambert, 2006).

Designing frameworks for describing, designing and

innovating business models
Zott and Amit (2010, p. 217) observe that “given the vital importance
of the business model for entrepreneurs and general managers, it is
surprising that academic research (with a few exceptions) has so far
devoted little attention to this topic”. Further, they argue that “we
need a conceptual toolkit that enables entrepreneurial managers to
design their future business model, as well as to help managers ana-
lyze and improve their current designs to make them fit for the future”
(Zott and Amit, 2010, p. 217). A notable exception can be found in
Morris et al. (2005), who synthesize a six-component framework for
characterizing a business model, regardless of venture type. These six
components (factors related to the offering, market factors, internal
capability factors, competitive strategy factors, economic factors, per-
sonal/investor factors), they argue, can be viewed on a foundational
level. Additionally, two other levels exist, namely the proprietary
level, which is concerned with the creation of unique combinations
of ­components, and finally, the level of rules, which is concerned with
establishing guiding principles for business model configuration.
Casadesus-Masanell and Zhu (2013), Schneider and Spieth (2013)
and Spieth et al. (2014) also highlight that the process of business
model innovation deserves additional analysis, concerning the design
of tools and methods to support managers and practitioners to actu-
ally execute it. In view of this gap, some frameworks for describing,
designing and innovating the business model are proposed within the
third stage.
Demil and Lecocq (2010) assume that the business model concept is
based on the interaction among three core components:

1 resources (bought externally or developed internally) and compe-

tences (abilities and knowledge of managers in improving the way
in which resources are used);
 Third stage business model research  89
2 organizational structure, that is, the value chain of activities and
the value network (the relations with external stakeholders); and
3 value propositions that a company delivers to its customers.

The Business Model Canvas proposed by Osterwalder and Pigneur

(2010) has gained in popularity among business developers, entrepre-
neurs and academics alike because it provides a shared language to
describe, visualize and assess companies’ business models, bringing
together the different building blocks for a complete understanding
of the business model. Osterwalder and Pigneur (2010) argue that a
business model can be described through nine basic building blocks
that show the logic of how a company intends to make money. The
nine blocks cover the four main areas of a business:

1 customer interface (customer segments, channels, customer

relationships);
2 products and services (value proposition);
3 infrastructure (key activities, key resources, key partnerships); and
4 financial viability (revenue streams, cost structure).

Eyring et al. (2011) are exponents of a recent customer centric school

of thought in the business model literature. In their study of business
configurations in emerging markets (see also Pitelis, 2009) they argue
that a good business model starts with understanding customers. Us-
ing Peter Drucker’s quote, “The customer rarely buys what the busi-
ness thinks it sells him”, the following recipe is provided.

1 Study what your customers are doing with your product.

2 Look at the alternatives to your offerings that consumers buy. In-
vestigate a wide range of substitutes for your products, not just
what your competitors make.
3 Watch for compensating behaviours. Discover what jobs people
are satisfying poorly.
4 Search for explanations. Uncover the root causes of consumers’
behaviour by asking what people are trying to accomplish with
the goods and services they use.

This type of methodology is widespread in some of the customer-­

insight and design-thinking-based entrepreneurship research relating
to opportunity spotting and customer intelligence and provides a neat
link between the field of business models, new venture creation and
design-thinking.
90  Third stage business model research
Gassmann et al. (2014) present the Business Model Navigator, a
framework to help companies innovate their business model. The Busi-
ness Model Navigator assumes that successful business models can
be built by creatively imitating business models from other industries.
To gain inspiration from what already exists, the Navigator presents
an impressive list of 55 various business model patterns (according to
their terminology), which covers 90% of business model innovation
possibilities. Each pattern is analyzed based on a four-­dimensional
framework addressing the value proposition (what?), value chain
(how?), profit mechanism (why?) and target customer (who?).
Taran et al. (2016) develop the 5-V framework, aimed at facilitat-
ing companies in innovating their business model. The framework
includes a toolbox of 71 business model patterns (or business model
configurations, according to their terminology) from which com-
panies can choose to innovate their business model. These business
model patterns are classified within five categories.

1 Value Proposition: it concerns the company’s offering and the fea-

tures for which customers are willing to pay for (e.g. uniqueness,
customization, convenience, brand status, reliability).
2 Value Segment: it is the segment of customers that a company
targets. It also includes the type of relationships that a com-
pany establishes with its customers (e.g. lock-in, co-creation,
self-service).
3 Value Configuration: it includes the mix of key resources needed
and the key activities performed to create the value proposition
as well as the channels used to deliver the value proposition to the
target segment. The costs that a company incurs to configure and
deliver value are also included in this dimension.
4 Value Network: it includes the network of partners who can coop-
erate with a company, with the goal of achieving mutual benefits
(risk reduction, cost reduction, accessing a particular customer
segment, accessing a new key resource).
5 Value Capture: it describes how much customers pay to obtain the
value proposition, that is, the share of the value created that a
company is able to capture. It also includes the different means
that a company can use to capture value (e.g. commission, leasing,
auction, subscription).

The 5-V framework assumes that every real-life company is a combi-

nation of different business model configurations, linked to the five
distinct dimensions.
 Third stage business model research  91
Towards a consistent perspective on business
model innovation
Within the third stage, a number of literature reviews on business
models and business model innovation are carried out to take stock of
the extant literature of the first and second stage and to define future
avenues of research.
Lambert and Davidson (2013) perform a literature review of the
research field of business models from 1996 and 2010. Consistent
with the content of Chapter 4, three main themes emerge from their
analysis:

1 business model as a criterion to classify companies;

2 business model as a driver of performance; and
3 business model innovation.

Within the theme of business model innovation, two sub-themes surface:

1 the reasons that push companies to innovate their business model

are basically external factors (de Reuver et al., 2009), such as a hy-
percompetitive environment or industry transformation, and in-
ternal factors (Giesen et al., 2010), such as new product or service
offerings, or open innovation opportunities (Chesbrough, 2006),
to capture the benefits of knowledge sharing;
2 the factors that drive the successful innovation of the business
model, such as the ability to monitor innovations through sophis-
ticated analytics (Giesen et al., 2010) or the ability to continuously
reassess and modify the business model to suit changing condi-
tions (Sosna et al., 2010).

In the attempt to provide a complete overview of the extant literature

and to identify prevalent patterns, Schneider and Spieth (2013) con-
duct a systematic literature review on publications from 1981 and 2012.
The analysis shows three main streams of research within business
model innovation:

1 prerequisites, such as the globalization of the business environ-

ment (Lee et al., 2012) or massive technological changes (Wirtz
et al., 2010);
2 process and elements, where business model innovation has been
conceptualized as a continuous reaction to changes (Demil and
Lecocq, 2010), an ongoing learning process (Sosna et al., 2010),
92  Third stage business model research
an evolutionary process (Dunford et al., 2010), a trial-and-error-based
process (McGrath, 2010); and
3 effects, where three sub-streams have been identified: (i) effects
on the industry logics (e.g. Casadesus-Masanell and Zhu, 2013;
­Sabatier et al., 2012); (ii) effects on individual company perfor-
mance (e.g. Aspara et al., 2010; Hall and Wagner, 2012); (iii) effects
on individual company’s capabilities, such as strategic flexibility
(e.g. Bock et al., 2010).

Foss and Saebi (2017) conduct a literature review on business model

innovation by analyzing 150 peer-reviewed papers published between
2000 and 2015. Consistent with Schneider and Spieth (2013), the
­authors identify four relevant streams of research in business model
innovation:

1 understanding business model innovation, that is, offering defi-

nitions and identifying the dimensions of the business model that
can be innovated;
2 analyzing the process of business model innovation, that is, iden-
tifying stages, organizational capabilities needed, proposing tools
to execute the process;
3 examining the outcome of the business model innovation, that is,
focusing on the features of the new and innovative business model
arising from the process of business model innovation;
4 investigating the effects of business model innovation, that is, fac-
ing the performance implications of business model innovation.

Despite Foss and Saebi (2017) recognizing that these four streams have
helped advance our understanding of the nature, process and effects
of this phenomenon, these authors also acknowledge that research on
business model innovation “does not exhibit the characteristics of a
well-­defined cumulative research stream” (p. 208); contributions are con-
ceptual rather than theoretical or descriptive rather than explanatory.
Moreover, the four research streams have evolved separately and do not
support each other in the process of cumulative growth of knowledge.
To advance business model innovation research, Foss and Saebi (2017)

• define business model innovation as “designed, novel, and non-

trivial changes to the key elements of a firm’s business model and/
or the architecture linking these elements” (p. 216);
• provide a business innovation typology, based on the novelty and
scope of the innovation itself, which leads to the identification
 Third stage business model research  93

Figure 16  E xtension of Foss and Saebi’s (2017) business model innovation
­research framework.

of four types of business model innovation with well-defined

­features – evolutionary, focused, adaptive, complex; and
• create a research framework that clarifies where business model
innovation is situated in terms of antecedent, moderating, medi-
ating and outcome variables.

Figure 16 shows our elaboration from the research framework pro-

posed by Foss and Saebi (2017):

Transformative redefinition: relevant third stage business

model research paths
The relevant third stage business model research paths are as follows:

• From Critique 2 – extending the educational implications of busi-

ness models to undiscovered contexts, such as public sector or-
ganizations and emerging markets, is an important research path
to pursue.
• Following from this, and in accordance with Groth and Nielsen
(2015), Lambert (2015) and Lambert and Montemari (2017), future
94  Third stage business model research
research should aim at empirically building taxonomies of busi-
ness models and from these build business model archetypes as
this would enable business model theory-building in the years to
come.
• In accordance with Schneider and Spieth (2013) and Foss and
Saebi (2017), we acknowledge that future research should inves-
tigate research questions like what are the levers and the barriers
to the innovation of a business model? Under which conditions
can business model innovation create a sustained competitive ad-
vantage? How can business model innovation surface? Exclusively
from the top management or also from the lower levels of organ-
ization? It is worth noting that, given the nature of these research
questions, it would be fruitful to investigate them from a perform-
ative perspective; and
• Future research should continue to investigate the theoretical
foundations of the business model concept, so that research can
progress in a cumulative manner. In particular, we find the per-
spective proposed by Foss and Saebi (2017), who conceptualize
the business model as a complex system, very promising.

Note
1 It is worth noting that the origin of the ecosystem approach to business
models can be traced back to the concepts of open innovation and open
business models (Chesbrough, 2003, 2006).
8 Fourth stage business
model research
The performative phase

Using ‘heat maps’ of the studies across topics and research questions,
it is evident that the significant impact of Osterwalder and Pigneur’s
(2010) design-oriented Business Model Canvas marks the begin-
nings of research into entrepreneurship and start-ups (­Doganova
and Eyquem-Renault, 2009; George and Bock, 2011). Both Zott et al.
(2011) and Wirtz et al. (2016b) argue that future business model
­research should focus on the financial aspects of the business model.
Our analyses indicate that the performance of business models has
been a stable theme in the field across all four stages depicted here;
however, tests of how business model elements predict financial value
are still lacking. Recently published research has started to address
these notions (Nielsen et al., 2017; Taran et al., 2016), but it is too
early yet to assess its impact. In this performative phase we would
expect to see more dominant research addressing barriers to business
model innovation, business model implementation, decision-support
systems for business modelling processes and varying uses of the
business model.
A business model is a way of doing business, perhaps closest under-
stood as a concept for making money. A sustainable business would
be a firm with the ambition to survive over time and create a success-
ful, perhaps even profitable, entity in the long run. The reason for this
apparent ambiguity around the concept of profitability is, of course,
that business models apply to many different settings, not just the
profit-oriented company. The application of business models is much
broader and is a meaningful concept both in relation to public sector
administration, NGOs, schools and universities and individuals. A re-
cent contribution to this latter concept is the book Business Model You
by Clark et al. (2012; see also Svejenova et al., 2012), which translates
the ideas of Osterwalder and Pigneur’s (2010) Business Model Canvas
into a personal setting for career enhancement purposes.
96  Fourth stage business model research
Whether profits are retained by shareholders or distributed in some
degree to a broader mass of stakeholders, as in the case of the privately
owned company, is not the focus here. Rather, it is the point of this
book to illustrate how one may go about conceptualizing, analyzing
or communicating the business model of a company, organization or
person.
Verstraete and Jouison-Laffitte (2011) define the business model as a
convention for value generation, value remuneration and the division
of this remuneration among involved stakeholders in an entrepreneur-
ial project. They argue that the business model is not a ‘total’ concept
integrating all the aspects of firm foundation. Rather, it should pro-
pose a synthesis of the relations of value exchange by questioning their
nature, their methods and their remuneration.
From a slightly different perspective, Fiet and Patel (2008) consider
how the entrepreneurship that drives business model adaptation in-
volves financial risk; a perspective also alluded to by Shi and Manning
(2009). They argue that knowledge of the dependency of other partners
within the business model could help to redistribute risk. The authors
note that business model adaptations driven by entrepreneurs need to
map out the possibility of risk displacement allowing “entrepreneurs
to notice that resource providers have high market interaction costs
and few outside options for negotiating a better deal with others” (Fiet
and Patel, 2008, p. 759). Doganova and Eyquem-Renault (2009) study
the role of business models in a start-up context and examine business
models as market-oriented tools that entrepreneurs can apply to get
from invention to customer needs and thus to innovation. They find
that business models take varying forms, for example, from corpo-
rate presentations to business plans, and show that the business model
plays a major role, not only as a narrative about value creation but also
as a calculative device that allows entrepreneurs to explore a market
and plays a performative role by contributing to the construction of
the techno-economic network of an innovation. In the latter stream of
literature relating to born global companies, there are also interesting
contributions to understanding the internationalization of business
models (Dunford et al., 2010; Onetti et al., 2012).
In his paper “Explicating dynamic capabilities: The nature and micro-
foundations of (sustainable) enterprise performance” Teece (2007) takes
the vantage point of corporate sustainability from a ­resource-based
perspective. It might be argued that sustainability, or should we say
viability, would be equivalent to the ability to create sustainable profits
and survive over time. Teece (2007) attempts to unveil the nature and
microfoundations of the capabilities necessary to do this. In Teece’s
 Fourth stage business model research  97
words, dynamic capabilities “enable business enterprises to create, de-
ploy, and protect the intangible assets that support superior long-run
business performance” (Teece, 2007, p. 1319). Teece proposes a frame-
work that may assist academics in understanding the foundations of
long-run enterprise success while helping managers delineate relevant
strategic considerations and the priorities they must adopt to enhance
enterprise performance and evade ever more competitive global mar-
kets warranting competition solely on price.
In their study of the medical technology industry, Bukh and Nielsen
(2010) focus on how financial analysts understand the strategy of a
healthcare company and which elements, from such a strategy per-
spective, they perceive as constituting the cornerstone of a healthcare
company’s business model. The authors analyze whether the charac-
teristics emerging from a comprehensive literature review of the types
of information concerning strategy, business models and intellectual
capital are reflected in the financial analysts’ perceptions of which in-
formation is decision relevant and important to communicate to their
institutional investor clients. The study illustrates that the analysts
and professional investors already have deep insight into a lot of the
details of the company, and the most important information is likely to
be related to specific strategies and hence difficult to compare across
companies and to interpret unless it is disclosed as an integral part
of a framework that explains how value is created. Since understand-
ing value configurations and customer value creation is intimately
connected with the business model perspective, a possible reconcilia-
tion of the reporting–understanding gap could be for the company to
communicate about its business model, that is, the story that explains
how the enterprise works, who the customer is, and what the customer
­values – and based on this – determine how the company is supposed
to make money. Among Bukh and Nielsen’s (2010) conclusions is the
importance of distinguishing between the often rather complicated
revenue model of the healthcare company and its strategy-oriented
business model.
Sustainability might also be interpreted as the propensity to sur-
vive and thus also the ability to stay competitive. As such, a business
model cannot be a static way of doing business. It must be developed,
nursed and optimized continuously in order for the company to meet
changing competitive demands. Precisely how the company differenti-
ates itself is the competitive strategy, while it is the business model that
defines on which basis this is to be achieved; that is, how it combines
its know-how and resources to deliver the value proposition (which
will secure profits and thus make the company sustainable).
98  Fourth stage business model research
Once the creative folks have left a business model design process,
few people would argue against the necessity of testing and implement-
ing new ideas for business model configurations. By implicitly suggest-
ing that the Strategy Map framework of Kaplan and Norton (2001) is
the same as a business model framework (which, according to Nielsen
and Roslender (2014), is not an unreasonable assumption), Huelsbeck
et al. (2011) suggest that firms’ business models should be statistically
­validated to ensure the company is not following a performance meas-
urement system based on erroneous causal assumptions. Huelsbeck
et al. (2011) are proponents of an analytical approach, and this probably
reflects their research perspective. McGrath (2010) takes a somewhat
opposing stance to this testing approach in arguing that it is in using
the notion of business models to redesign or innovate companies that
the contribution lies, because this is a ‘discovery driven’ rather than an
analytical approach to understanding new venture possibilities.
Zott and Amit (2010) stress the importance of locating a focal firm’s
value creating initiatives within an activity network where the business
model describes both intra- and extra-firm relations (i.e. what can be
labelled a broad definition of business models). This introduces the
notion of an architecture that involves partners in the delivery pro-
cess of products and services. This framing of business models, in es-
sence, draws up a resource-based approach to the firm but combines
this with a transaction costs approach. According to Zott and Amit
(2010, p. 218):

A business model is geared toward total value creation for all

parties involved. It lays the foundations for the focal firm’s value
capture by co-defining (along with the firm’s products and ser-
vices) the overall ‘size of the value pie’, or the total value created
in transactions, which can be considered the upper limit of the
firm’s value capture potential.

It can be argued that a focal firm’s business model is driven by value

creating initiatives that involve the deployment and articulation of re-
sources, technologies and capabilities to generate products and ser-
vices. In a seminal piece from 2001, Alt and Zimmermann link the
business model to value creation, by stating that the business model
is the logic that lies behind the actual processes of a ‘business system’.
The speed of change in the business landscape has continuously
accelerated. With rising globalization and developments in the BRIC
economies ensuring that momentum will continue in the years to come,
new forms of value configurations emerge, and with them, probably,
 Fourth stage business model research  99
so will new types of business models and ways of configuring a com-
pany’s internal and external architecture. Accordingly, managers as
well as industrial and financial analysts must recognize that business
models are made up of portfolios of different resources and assets and
not merely traditional physical and financial assets, as every company
will have created its own specific business model that links its unique
combination of assets and activities to value creation.
The rising interest in understanding and evaluating business models
can to some extent be traced to the fact that new value configurations
outcompete existing ways of doing business. There exist cases where
some businesses are more profitable than others in the same industry,
even though they apply the same strategy. This would indicate that a
business model might well be different from a competitive strategy and
a value chain, the latter defined as a set of serially performed activities
for a firm in a specific industry, best exemplified by Porter’s generic
value chain (Porter, 1985) in Figure 17.
According to Sahut et al. (2012), business models explain firms’ per-
formance as resulting from their heterogeneity, which broadly paves
the way for implementing the business model as an explanatory frame-
work for performance. This flow of research intends to clarify how
business models facilitate the firm to create and capture value (Amit
and Zott, 2001; Chesbrough and Rosenbloom, 2002; Malone et al.,
2006; Osterwalder and Pigneur, 2003).

Figure 17  P
 orter’s generic value chain (adapted from Porter, 1985).
100  Fourth stage business model research
Scholars and practitioners have always provided strong implicit
assumptions about the nature of performance through divergent in-
terpretations of performance. This is reflected in a tension in busi-
ness model research between static and dynamic understandings of
performance (Demil and Lecocq, 2010). Static performance focuses
on value creation and capture (Chesbrough and Rosenbloom, 2002;
Teece, 2010). Value creation can be considered the overall value cre-
ated by a specific firm, while value capture focuses on the economic
wealth a firm is able to retain for itself. However, value creation is
less debated among scholars. In some contexts, value creation can be
assessed by using non-financial metrics such as ratings by critics, or
the points obtained by a team in a sports championship (McNamara
et al., 2013).
Value capture, in contrast, is much more developed in the litera-
ture. Value capture at firm level is based on financial values and ra-
tios. Net income (McNamara et al., 2013; Zott et al., 2011), return on
sales (ROS), return on total assets (ROA), compound annual growth
rates (CAGRs), inventory turnover (Morris et al., 2013), real profits
(Brea-Solís et al., 2015) and market value of equity have been analyzed
to measure expected future firm-level value capture (Zott and Amit,
2007, 2008).
According to Demil and Lecocq (2010), the dynamic perspective
links business model performance to long-term firm survival, focus-
ing on firms’ sustainability, flexibility, adaptability and resilience over
time. The existing literature points out that business models can have a
strong and positive impact on sustainable competitive advantage and
superior financial performance (Amit and Zott, 2001). Several inves-
tigations are based on qualitative methodologies, generally involving
case studies that sometimes fail to generalize results (Malone et al.,
2006; Zott and Amit, 2007).

Transformative redefinition: relevant fourth stage business

model research paths
• Research should focus on establishing relationships between
business model elements and existing core metrics of financial
value and value creation in financial terms, such as suggested by
Nielsen and Roslender (2015) who look at return on investment
and ­Economic Value AddedTM as such potential frameworks.
• Establishing links between business model performance and a
broader understanding of performance measure identification will
support the connection to managerial issues raised in Chapter 4.
 Fourth stage business model research  101
• There is an urgent need to focus better on interrelationships among
components of business models, where combinations of resource
and activities, instead of features of single components, determine
firm performance. The explanation of differences discovered be-
tween clusters will facilitate the determination of primary areas in
which a firm’s key competencies should be developed.
• When analyzing the business model of a firm, there is a need to
expand and detail the characteristics of each model component.
This would allow the discovery of additional distinctions in firm
performance depending on the company business models within a
relatively homogeneous cluster of companies.
9 Concluding remarks

The business model field is a field of followers. New themes and top-
ics seem to be driven largely by practitioner insights and ‘gurus’ from
adjacent fields who enter the field with pre-existing perspectives. Our
SLR finds that the core academic business model community is not
the proactive driver of themes and theorizing; rather, it is the practi-
tioner community. Our analyses depict the contours of a field that has
reached maturity and where dominant authors are not critiqued; or if
so, then at least the critique has limited impact.
According to Zott et al. (2011, p. 1038), there are “at least three con-
cepts that might warrant distinct consideration: (1) e-business model
archetypes, (2) business model as activity system, and (3) business
model as cost/revenue architecture”. Our insights suggest a counter-
argument to this view. First, e-business is shown to be an outdated
research topic; second, activity systems have already been widely
addressed in the second and third research stages of business model
research; and third, the value capture perspective of cost/revenue ar-
chitectures are only a fragmented attempt at understanding the per-
formative notions of business models (Nielsen et al., 2017), which, in
following the definition by Osterwalder and Pigneur (2010), must en-
compass the notions of value creation and value delivery in addition
to this value capture perspective. This same line of reasoning is argued
by Wirtz et al. (2016b).
Our study here provokes a new set of research questions, based on the
four identified stages of business model research, which are e­ xpected
to add to the knowledge base of this vibrant research field. These
­questions are addressed in the concluding passages of ­Chapters 5–8,
and our hope is that scholars and practitioners of business models will
use these as points of departure for seeking out new knowledge and
­building new perspectives.
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Index

Aalborg University 75 bottom of the pyramid (BoP)

Academy of Management markets 64
conference 38 Boulton, R. E. S. 58
Afuah, A. 55 Bray, M. 58
Airbnb 1 Breene, T. 9
Al-Debei, M. M. 32, 36 BRIC economies 98
Al-Qaeda 10 Brousseau, E. 69, 76
Alt, R. 6, 74, 98 Bukh, P. N. 97
Alvesson, M. 16, 38 business, defined 1
Amazon 1, 11 Business Design Center, Aalborg
Amit, R. 6, 32, 35–6, 43, 53, 59, 72, University 75
80–4, 88, 98 Business Model Canvas 12, 23–4,
Andersson, T. 65 73–4, 81, 89, 95
Andrews, K. R. 3 Business Model Community 12
Apple 1, 11 business model configurations see
applied research methodology 16–21; business model patterns
defining analytical framework business model ecosystems 84–5;
17–18; developing reliability 21; elements of 84; interactive business
publication coding 21; publication models 84; isolated business
impact 17; testing literature review models 84
validity 21 business model foundations 80–4
Arend, R. J. 43 Business Model Generation
author: demographics 23–4; origins (Osterwalder and Pigneur)
and publication outlets 24–7 12, 79n1
Avison, D. 32, 36 business model innovation 9;
imporance of 69–71; relevant
Baden-Fuller, C. 75 streams of research in 92; towards
Bailey, K. D. 85–6 consistent perspective on 91–3
Bambury, P. 67 Business Model Navigator 90
Bell, T. 56, 58 business model patterns: value
Bellman, R. 3 capture 90; value configuration
Bettis, R. A. 4 90; value network 90; value
Blank, Steve 74 proposition 90; value segment 90
Bock, A. 81 business model research: first stage
Bonaccorsi, A. 64 48–62; fourth stage 95–101; recent
124 Index
developments in 11–15; second Deetz, S. 16, 38
stage 63–78; third stage 80–94 Dell 66, 70
business models: archetypes Demil, B. 34, 82–3, 88, 100
and patterns 74–8; author direct to consumer firms 68
demographics 23–4; author origins Doganova, L. 59, 96
and publication outlets 24–7; brief Doz, Y. L. 56
history of 2–11; conceptualized Drucker, Peter 89
as building blocks 71–4; defined Dubosson-Torbay, M. 34
2; definition and research themes Dutton, J. M. 4
28–30; designing frameworks dynamic-capabilities perspective, on
for describing, designing and business model research 83
innovating 88–90; interactive 84;
isolated 84; paper evolution over EBSCO database 21
time 22–3; popularity drivers e-business 5–6; innovation 66–9;
across time 2–11; practical and models 68–9
research implications 33–7; recent Evans, P. B. 5
developments in research 11–15; “Explicating dynamic capabilities:
research questions and research The nature and microfoundations
methods 30–3; rising relevance of of (sustainable) enterprise
understanding 1–15; taxonomies performance” (Teece) 96
of 85–8 Eyquem-Renault, M. 59, 96
Business Model You (Clark) 95 Eyring, M. J. 89
business plans 39
Facebook 11
Cantrell, S. 35, 58, 77 Fenigstein, T. 9
Casadesus-Masanell, R. 88 Fiet, J. O. 96
Chandler, A. D., Jr. 3 ‘financialized biopharma business
Chapman, R. L. 82 model’ 65
Chesbrough, H. 7, 23–5, 34, 48, 53, first stage business model research
55, 60, 65, 71–2, 74 48–62; business models and
Child, J. 4 strategy 59–61; existing ‘business
citation index (CI) 23 model’ definitions 48–59;
citations per year (CPY) 17, 23 overview 48; relevant paths 61–2;
compound annual growth rates transformative redefinition 61–2
(CAGRs) 100 Fjeldstad, Ø. D. 37, 60
content providers 68 Ford 70
Cooper, R. 75 Foss, N. J. 12, 83, 92–4
Cracking the Value Code (Boulton) 58 Four Steps to the Epiphany
critique and transformative (Blank) 74
redefinition 38–47; author fourth stage business model research
and outlet specialization and 95–101; overview 95–100; relevant
practitioners’ involvement 38–9; paths 100–1; transformative
sustainable value and stakeholder redefinition 100–1
involvement 40–1; transformative full service providers 68
redefinitions 41–7; what business
model, and for whom 39–40 Gallaugher, J. M. 6
Garten, J.E. 7
DaSilva, C. M. 8 Gassmann, Oliver 43, 74, 90
Davidson, R. A. 86, 91 George, G. 81
De Carolis, D. M. 66 Giaglis, G. M. 63
 Index  125
Google Scholar 4–5, 17, 21 lean management technologies 70
Google Scholar Citations (GSC) 17 Lecocq, X. 34, 82–3, 88, 100
Groth, P. 93 Linder, J. 35, 52, 58, 77
literature review validity 21
Hamel, Gary 7 Long Range Planning 12, 23, 27, 80, 82
Hart, C. 16, 35, 40
Harvard Business Review 12, 27 McGrath, R. G. 98
Haslam, Colin 65, 75 Magretta, Joan 7, 48, 57, 60
Hedman, J. 6, 72, 74 Mahadevan, B. 36
Hodgkinson, G. P. 38 Mair, J. 40, 64
Huelsbeck, D. P. 98 Manning, T. 96
March, James G. 38–9
industrial restructuring 5 Marrs, F. O. 56
Industry 4.0 45 Massaro, M. 16–17, 30, 40
information and communication Milstein, M. 40
technologies 1 model, defined 1–2
innovation: second stage business Montemari, M. 93
model research 64–6; and Morgan, M. S. 75
technology 64–6 Morris, L. 57
interactive business models 84 Morris, M. 81, 88
intermediaries 68 Mundt, B. M. 56
International Integrated Reporting
Council’s (IIRC) framework 8 Nielsen, Christian 7, 49–50, 75, 93, 97
Internet-based business models 6, 67 Nishino, K. 49
Internet of Things 45 Norton, D. P. 98
Internet Service Providers (ISPs) 68 Nunes, P. 9
isolated business models 84
Itami, H. 49 OneWorld Health 40
Open Journal of Business Model
Jacobides, M. G. 36 Innovation 12
Johnson, M. 64, 77 O’Reilly, T. 23, 63
Jones, G. M. 3 Organizations in Action (Thompson)
Jouison-Laffitte, E. 96 3, 82
Journal of Business Models 12 Osterwalder, Alexander 2, 12, 13,
Jung, Carl 76 24, 49, 53, 73–4, 77, 81, 84–5, 89,
Just In Time (JIT) 70 95, 102

Kalling, T. 6, 72, 74 Palenzuela, D. R. 5

Kaplan, R. S. 98 Patel, Pankaj C. 96
Kaplan, S. 39 Pateli, A. G. 63
Kind, H. J. 63–4 Penard, T. 69, 76
Kosonen, M. 56 Perkmann, M. 57
KPMG 55; Business Measurement Petrovic, O. 48, 52, 57
Process 58 Pigneur, Yves 12, 23–4, 73–4, 77, 81,
Krippendorff, K. 21 84, 89, 95, 102
Porter, M. E. 6, 48, 52, 59; generic
Labour Party, UK 10 value chain 99
Lambert, S. 86, 91, 93 Prahalad, C. K. 4, 24, 35
Latour, B. 75 “prior ideology” 4
Leading the Revolution (Hamel) 7 publication coding 21
126 Index
Queen Mary University 75 Starbuck 4
Strategic Business Unit (SBU) 61
Ramirez, R. 60 strategic entrepreneurship
Rappa, M. 6, 55, 66, 68, 76 perspective, of business model
reliability: applied research research 83
methodology 21; developing 21 Strategic Management Journal 27
resource-based view, of business ‘Strategic-Systems Auditing’
model research 83 framework 56–7
return on sales (ROS) 100 strategy, defined 3
return on total assets (ROA) 100 Strategy and Structure (Chandler) 3
Ricart, J. E. 84 Strategy Map framework, of Kaplan
Richardson, J. 10 and Norton 98
Rosenbloom, R. S. 7, 23, 55, 60, structured literature review (SLR) 16;
71–2, 74 developing 17–18; dimensions of
Ryanair 69–70 18–20; methodology 16; research
method and 46
Saebi, T. 12, 83, 92–4 sustainability 13, 29, 40–1, 45, 78,
Sahut, J. M. 99 81, 96–7; corporate 96; defined 55;
St. Gallen University 75 long-term 81; money creation and
Sanchez, P. 84 54; value creation and 54
Sandberg, K. D. 59 Sveiby, K. E. 41
Schmid, B. F. 5 Sweet, P. 60
Schneider, S. 44, 82, 88, 94 “synoptic literature analysis” 14
second stage business model research
63–78; business model archetypes Tapscott, D. 39
and patterns 74–8; business model Taran, Y. 43, 76, 90
innovation, imporance of 69–71; taxonomies: of business models 85–8;
conceptualized as building blocks features and functions of 87
71–4; e-business innovation technology: innovation and 64–6;
66–9; innovation and technology second stage business model
64–6; moving towards a dynamic research 64–6
perspective 71–4; overview 63–4; Teece, David 9, 14, 24, 48
relevant paths 78; transformative testing literature review validity 21
redefinition 78 third stage business model research
Seddon, P. B. 60–1 80–94; business model ecosystems
Seelos, C. 40, 64 84–5; clarifying business model
Serenko, A. 38 foundations 80–4; consistent
Shafer, S. M. 13 perspective on business model
shared infrastructure 68 innovation 91–3; designing
Shi, Y. 96 frameworks for describing, designing
Skype 1 and innovating 88–90; dynamic-
Smart City developments 45 capabilities perspective 83; need for
SMEs 40, 45, 78 taxonomies of business models 85–8;
Solomon, I. 58 overview 80; relevant paths 93–4;
Sosna, M. 65 resource-based view 83; strategic
Spicer, A. 57 entrepreneurship perspective 83;
Spieth, P. 44, 82, 88, 91–2, 94 theoretical perspective on 82–4;
Spotify 1 transformative redefinition 93–4
Stabell, C. B. 37, 55, 60 Thompson, J. D. 3, 82
Stähler, P. 73 Tikkanen, H. 35
 Index  127
Timmers, P. 13, 48, 51, 54, 67, 76 value proposition, as business model
Toyota 70 pattern 90
transformative redefinition 41–7; value segment, as business model
fourth stage business model pattern 90
research 100–1; second stage Velocci, A. L. 66
business model research 78; third Verstraete, T. 96
stage business model research 93–4 virtual communities 68
transplanted real-world business Vitale, M. R. 54, 68
models 67
Trkman, P. 8 Web 2.0 23
Tucci, C. L. 55 Website hosting 68
Twitter 11 Weill, P. 52, 54, 68
whole-of-enterprise atomic business
Uber 1 model 69
Wirtz, B. W. 11–14, 16, 33, 35, 39, 63,
value capture 10, 72, 100, 102; as 78, 95, 102
business model pattern 90 Wurster, T. S. 5
value configuration 55; as business
model pattern 90 Yunus, M. 36, 64
value creation 100; drivers of 8; in
e-businesses 6; non-financial metrics Zhu, F. 88
and 100; sustainability and 54 Zimmermann, H.-D. 6, 74, 98
value net integrators 68 Zott 6, 32, 35–6, 43, 53, 59, 72, 80–4,
value network, as business model 88, 98
pattern 90 Zuboff, S. 75