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The Business Model in Practice and its Implications for Entrepreneurship Research<br />George, G. & Bock A. J.<br />Entrep...
Agenda<br />Introduction<br />Literature Review<br />Discourse Analysis<br />The Data<br />Discussion<br />Implications fo...
Introduction<br />Question:<br />What are business models and how do practitioners use them?<br />Business models definiti...
Literature Review<br />Review process:<br />Searched EBSCO and ISI Web of Science databases for “business model”<br />EBSC...
Literature Review<br />Theme 1: Business model as Organizational Design<br />Idea: Agent-driven or emergent configuration ...
Literature Review<br />Theme 2: Business model and the RBV<br />Idea: Organizational structure codeterminant and coevolvin...
Literature Review<br />Theme 3: Business Model as Organizational Narrative<br />Idea: Subjective, descriptive, emergent st...
Literature Review<br />Theme 4: Business Models as Innovation Form<br />Idea: Processual configuration linked to evolution...
Literature Review<br />Theme 5: Business Models as Opportunity Facilitator<br />Idea: Enactment and implementation tied to...
Literature Review<br />Theme 6: Business Models as Transactive Structure<br />Idea: Configuration of boundary-spanning tra...
Discourse Analysis<br />Objective is to compare practitioner perspectives and construct definitions in the literature.<br ...
The Data<br />Emergence of 25 subcategories, covering 80% of (word) usage across all analyses.<br />Coding at two levels p...
Discussion<br />Absence of support in practitioners language for narrative perspectives of the business model.<br />Not ma...
Discussion<br />Business Models, Strategy and Entrepreneurship<br />Strategy is a dynamic set of initiatives, activities a...
Implication for Theory<br />Framing of the business model: “opportunity-centric”<br /><ul><li>Introduction of the idea of ...
Implication for Theory<br />Resource-Structure Dominance:<br />Firm evolution as a function of product development “techno...
Implication for Theory<br />Transactive-Structure Dominance<br />Focus on structure systems that determine and execute bou...
Directions for future research<br />Discourse analysis of Entrepreneurial Activity.<br />Identify broad patterns in entrep...
Conclusions<br />Fragmentation of definition has precluded integrative research on business models<br />Reconceptualizatio...
Annex<br />27/05/2011<br />20<br />
Annex<br />27/05/2011<br />21<br />
The Business Model: Theoretical roots, recent developments, and future research<br />Zott, C., Amit, R., Massa, L.<br />IE...
Review Key Points<br />Business model definitional lack of consistency and clarity.<br />Identification of most prevalent ...
Review Key Points<br />E-business and the use of IT in organizations:<br />Description of generic e-business models and ty...
Review Key Points<br />Business Models and Strategy<br />Value creation in networked markets<br />Four potential sources o...
Review Key Points<br />Business Models, Innovation and Technology Management.<br />Companies commercialize ideas and techn...
Discussion & Conclusion<br />Business model is a new unit of analysis<br />Bridges the firm and the network<br />Business ...
Annex<br />27/05/2011<br />28<br />
Annex<br />27/05/2011<br />29<br />
Ideas for discussion on Business Models<br />Do business models need to be sensitive to competitive environment?<br />If s...
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Academic review on Business Models

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Academic review on Business Models

  1. 1. The Business Model in Practice and its Implications for Entrepreneurship Research<br />George, G. & Bock A. J.<br />Entrepreneurship Theory & Practice, January 2011<br />27/05/2011<br />Article Review<br />FerranGiones<br />Supervisor: Dr. FrancescMiralles<br />1<br />
  2. 2. Agenda<br />Introduction<br />Literature Review<br />Discourse Analysis<br />The Data<br />Discussion<br />Implications for Theory<br />Directions for Future Research<br />Conclusions<br />27/05/2011<br />2<br />
  3. 3. Introduction<br />Question:<br />What are business models and how do practitioners use them?<br />Business models definition vary widely<br />Used as termed of convenience by press and practice community<br />Business models relevant for entrepreneurship<br />Need for a convergent construct<br />27/05/2011<br />3<br />
  4. 4. Literature Review<br />Review process:<br />Searched EBSCO and ISI Web of Science databases for “business model”<br />EBSCO: 929 title hits, 822 from articles published after 2000, 288 in management field.<br />ISI: 194 citations.<br />Outcomes:<br />Discussion on business models emerging from six main themes:<br />Organizational design<br />The resource-base-view (RBV)<br />Narrative and sense-making<br />Nature of innovation<br />Nature of opportunity<br />Transactive structures<br />27/05/2011<br />4<br />
  5. 5. Literature Review<br />Theme 1: Business model as Organizational Design<br />Idea: Agent-driven or emergent configuration of firm characteristics.<br />Managers rationally assess existing and potential business models to ensure firm survival.<br />Business model fit with strategy favors firm performance (Zott & Amit 2008).<br />But:<br />Does not explain business model evolution.<br />Research has not yet converged on the components of the business model.<br />27/05/2011<br />5<br />
  6. 6. Literature Review<br />Theme 2: Business model and the RBV<br />Idea: Organizational structure codeterminant and coevolving with firm’s asset stock or core activity set.<br />Links business models to resource acquisition and allocation.<br />Business model as the dynamic capability that links firm’s distinctive competnencies to organizational aspirations and outcomes.<br />But:<br />Easily confused with product-market positioning strategy<br />27/05/2011<br />6<br />
  7. 7. Literature Review<br />Theme 3: Business Model as Organizational Narrative<br />Idea: Subjective, descriptive, emergent story or logic of key drivers of organizational outcomes.<br />Powerful tool for understanding and interpreting organizational behavior.<br />Generation of narrative sensemaking dynamics driven by the firm’s social order, rules, organizational structure…<br />But:<br />Limited scope of research: story formation and cataloging of narratives.<br />No process to mediate between narrative models and firm behavior or outcomes.<br />27/05/2011<br />7<br />
  8. 8. Literature Review<br />Theme 4: Business Models as Innovation Form<br />Idea: Processual configuration linked to evolution or application of firm technology.<br />Business model as focusing device between technology development and economic value creation.<br />Idea that business models adjust in parallel to firm’s life-cycle evolution.<br />But:<br />Unclear linkages between business model and organizational structure innovation.<br />What precedes what and how it is influenced.<br />27/05/2011<br />8<br />
  9. 9. Literature Review<br />Theme 5: Business Models as Opportunity Facilitator<br />Idea: Enactment and implementation tied to an opportunity landscape.<br />Business model as the link between the entrepreneurial appraisal of the opportunity and its exploitation.<br />If opportunity is uncertain, business model are equated to “business idea” or firm’s value creation mechanism.<br />But:<br />Need to explain better the mechanisms that connect the underlying opportunity with the business model.<br />27/05/2011<br />9<br />
  10. 10. Literature Review<br />Theme 6: Business Models as Transactive Structure<br />Idea: Configuration of boundary-spanning transactions.<br />Business model as unifying mechanism describing the “content, structure, and governance of transactions” (Amit & Zott 2001).<br />Firm performance as a function of:<br />Specific business model characteristics.<br />Fit between business models and strategy.<br />But:<br />Lacks theory building and empirical research outside of the e-business sector.<br />27/05/2011<br />10<br />
  11. 11. Discourse Analysis<br />Objective is to compare practitioner perspectives and construct definitions in the literature.<br />Method:<br />Pilot interviews (12).<br />Survey administration (182 Indian managers – 13 UK managers).<br />Question: What is a business model?<br />Discourse Analysis (O’Connor 1995):<br />Identification of discourse content.<br />Selection of a unit of analysis.<br />Analysis of the text using an a priori set of categories.<br />27/05/2011<br />11<br />
  12. 12. The Data<br />Emergence of 25 subcategories, covering 80% of (word) usage across all analyses.<br />Coding at two levels providing insights on the construct:<br />Response-level coding<br />Higher-level perspective business model language of design and value.<br />Word unit-coding<br />Usage in practice demonstrate importance of resource and transactive elements at the organizational level.<br />27/05/2011<br />12<br />
  13. 13. Discussion<br />Absence of support in practitioners language for narrative perspectives of the business model.<br />Not matching with narrative legitimating efforts.<br />Discourse analysis supports research streams that link business models to resources and transactive structures (Amit & Zott 2001).<br />Business models as Opportunity-Centric Design<br />Business models are not the activities, but the structure that bound and connect the firm’s core activity set in service to a specific set of goals (Winder & Szulanski 2001), for example to enact a commercial opportunity.<br />27/05/2011<br />13<br />
  14. 14. Discussion<br />Business Models, Strategy and Entrepreneurship<br />Strategy is a dynamic set of initiatives, activities and processes<br />Linked to reflexive change.<br />Competitor or environment centric.<br />Business model is a static configuration of organizational elements and activity characteristics.<br />They are not a recipe for change.<br />Opportunity-centric.<br />Firm viability requires a value structure to replenish or augment the firm’s resource base.<br />Business model as a core building block of the entrepreneurial enactment process.<br />27/05/2011<br />14<br />
  15. 15. Implication for Theory<br />Framing of the business model: “opportunity-centric”<br /><ul><li>Introduction of the idea of dimensional dominance in the business model definition:</li></ul>Dominant dimensions obtain more resources or importance within the firm configuration activities or efforts.<br />Resources structure dimension<br />Transactive structure dimension<br />Value structure dimension<br />27/05/2011<br />15<br />
  16. 16. Implication for Theory<br />Resource-Structure Dominance:<br />Firm evolution as a function of product development “technologies in search of a market”<br />Accommodate change by altering resource allocations, acquiring and deploying novel resources and reassessing busines model viability.<br />Example: “Consulting model where a team of consultants execute projects and bring in improvements required/designed by the customer”.<br />27/05/2011<br />16<br />
  17. 17. Implication for Theory<br />Transactive-Structure Dominance<br />Focus on structure systems that determine and execute boundary-spanning and intrafirm transactions.<br />Resilent when scale economics in transactions show learning and tacit knowledge effects, only impacted by radical changes in the nature of boundary-spanning transactions.<br />Example: “Catering to a niche market, we sell our products directly to customers through interior decorators and fashion houses”<br />Value-Structure Dominance<br />Take value structure for granted focuses on the mechanisms to generate profits and reinvest.<br />Example: “Create high value product and service relevant to customer perception with changing difficult times and enhance all stakeholder values continuously.<br />27/05/2011<br />17<br />
  18. 18. Directions for future research<br />Discourse analysis of Entrepreneurial Activity.<br />Identify broad patterns in entrepreneurial psychology and decision-making processes, and isolate particular characteristics and actions unique to entrepreneurial circumstances.<br />Interactions of Business Model Dimensions.<br />Business model change to describe dimensional dynamics interactions with underlying changes in the opportunity landscape.<br />Business Models in Opportunity Creation.<br />Business model characteristics and the opportunity landscape, comparing characteristics across organizations.<br />Business Models and Entrepreneurial Outcomes.<br />Study the impact of business model structure on organizational growth. <br />27/05/2011<br />18<br />
  19. 19. Conclusions<br />Fragmentation of definition has precluded integrative research on business models<br />Reconceptualization of the construct through and inductive study:<br />Opportunity-centric perspective based on resource, transactive and value structure underlying dimensions.<br />Insight:<br />Same opportunity may look different through a specific dominance lens.<br />Opportunity to unlock entrepreneurial processes, evaluate firm configuration effects, explain and predict entrepreneurial outcomes.<br />27/05/2011<br />19<br />
  20. 20. Annex<br />27/05/2011<br />20<br />
  21. 21. Annex<br />27/05/2011<br />21<br />
  22. 22. The Business Model: Theoretical roots, recent developments, and future research<br />Zott, C., Amit, R., Massa, L.<br />IESE Working Paper, WP-862, June 2010<br />27/05/2011<br />Update: The Business Model: Recent Developments and Future ResearchChristophZott, Raphael Amit and Lorenzo Massa<br />DOI: 10.1177/0149206311406265<br />Journal of Management published online 2 May 2011<br />Paper Review<br />FerranGiones<br />Supervisor: Dr. FrancescMiralles<br />22<br />
  23. 23. Review Key Points<br />Business model definitional lack of consistency and clarity.<br />Identification of most prevalent definitions employed to explain three main phenomena:<br />E-business and the use of IT in organizations.<br />Strategic issues: value creation, competitive advantage and firm performance.<br />Innovation and Technology management.<br />27/05/2011<br />23<br />
  24. 24. Review Key Points<br />E-business and the use of IT in organizations:<br />Description of generic e-business models and typologies:<br />Direct to customer, Intermediary…(Weill & Vitale 2001)<br />Agora, aggregation, Distributive Network… (Tapscott et al. 2000)<br />Components of e-business models<br />Value stream, revenue stream, logistical stream (Mahadevan 2000)<br />System of linkages between components, customer value, revenue sources (Afuah & Tucci 2001).<br />Business model representation<br />Business model ontology (Osterwalder 2004)<br />Strategic marketing in e-business<br />Monetization of e-business: fee and free business models (Pauwels &Weiss 2008)<br />27/05/2011<br />24<br />
  25. 25. Review Key Points<br />Business Models and Strategy<br />Value creation in networked markets<br />Four potential sources of value creation in e-business (Amit& Zott2001)<br />Novelty, Lock-in, Complementarities, and Efficiency (NICE)<br />Business model and firm performance<br />Firms compete with business models (Casadesus-Masanell & Ricart 2009).<br />Novelty models can result in superior performance (Morris et al. 2005, Zott & Amit 2008).<br />Strategy and the business model<br />Strategy emphasis is on competition and value capture, business model focuses on value creation.<br />Business model has more focus on the value proposition and on the customer role.<br />Business model as a reflection of firm’s realized strategy (Casadesus-Masanell & Ricart 2009)<br />27/05/2011<br />25<br />
  26. 26. Review Key Points<br />Business Models, Innovation and Technology Management.<br />Companies commercialize ideas and technologies through their business models<br />Business models following a discovery-driven process (McGrath 2009)<br />Theory of business model innovation in incumbent firms, focusing on relational dynamics on the informal organization (Santos et al. 2009).<br />Linked to strategic flexibility (Bock et al. 2011) through different levers (Giesen et al. 2007):<br />Industry model innovation (in value chain)<br />Revenue model innovation (in revenue generation, pricing models…)<br />Enterprise model innovation (changing role in value chain, reconfigurations).<br />Business models represents a new dimension of innovation<br />Involves new forms of cooperation and collaboration.<br />Business model innovation through collaborative entrpreneurship<br />Idea of Open Business Models (Chesbrough 2007).<br />27/05/2011<br />26<br />
  27. 27. Discussion & Conclusion<br />Business model is a new unit of analysis<br />Bridges the firm and the network<br />Business model researchers adopt a holistic and system perspective<br />Looking at the content and the process.<br />Organizational activities (processes, functionalities or transactions) are dominant elements of business model definition.<br />Business model literature has shifted emphasis from value capture to value creation<br />Centrality of the concept of value in the business model literature.<br />27/05/2011<br />27<br />
  28. 28. Annex<br />27/05/2011<br />28<br />
  29. 29. Annex<br />27/05/2011<br />29<br />
  30. 30. Ideas for discussion on Business Models<br />Do business models need to be sensitive to competitive environment?<br />If so, what is strategy and what are business models?<br />Academics VS Practitioners??<br />Business Model as resources, transactions & value creation<br />Or Business Models as simplified entrepreneur’s business plans.<br />Business Model fit in entrepreneurship?<br />Needed to give shape to your incipient idea?<br />Build your Business Model Canvas (Alex Osterwalder)<br />Part of the idea validation and exploitation process?<br />Use it to pivot (experiment) around your initial hypotheses (Eric Ries & Steve Blank) and learn from it.<br />In Entrepreneurship research:<br />Are we ready to build research around Business Models?<br />BM designs as explanatory variables for entrepreneurship performance?<br />BM definition as an under researched process, influence of entrepreneurs cognitive elements, past experiences/knowledge…<br />27/05/2011<br />30<br />

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