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The airline industry and its behavior Airlines display heterogeneity in their business models, which affects their financial success 1
The airline industry and its behavior Airlines display heterogeneity in their business models, which affects their financial success Business model heterogeneity is based on innovative and imitative behavior displayed by airlines 1 2
The airline industry and its behavior Airlines display heterogeneity in their business models, which affects their financial success Business model heterogeneity is based on innovative and imitative behavior displayed by airlines If airlines are innovative and imitative, what business model elements should be changed 1 3 2
Airlines and their business models are merely puzzles Airline business models are comprised of elements  … and have an outcome $
Airlines and their business models are merely puzzles Airline business models are comprised of elements  Airlines are imitative and innovative  … and have an outcome $
Airlines and their business models are merely puzzles Airline business models are comprised of elements  Airlines are imitative and innovative  Algebra can determine the unique combinations of business model elements … and have an outcome $
Airlines and their business models are merely puzzles Airline business models are comprised of elements  Airlines are innovative and imitative  Algebra can determine the unique combinations of business model elements … and have an outcome $ … that leads to a predetermined outcome $
A British mathematician from 1830 helps to analyze the airline industry Boolean algebra Boolean algebra is  the algebra of logic  or  the algebra of sets Principle is the identification of patterns of causation
A British mathematician from 1830 helps to analyze the airline industry Boolean algebra Qualitative comparative approach Boolean algebra is  the algebra of logic  or  the algebra of sets Principle is the identification of patterns of causation QCA is a method that identifies commonalities across cases that share a similar outcome using Boolean algebra
A British mathematician from 1830 helps to analyze the airline industry Boolean algebra Qualitative comparative approach Multi-value QCA Boolean algebra is  the algebra of logic  or  the algebra of sets Principle is the identification of patterns of causation QCA is a method that identifies commonalities across cases that share a similar outcome using Boolean algebra Multi-value QCA allows a researcher to incorporate more richness in sets
QCA: An example Arranged a party for a class of 11 students 8 students were not invited (0) 3 students were invited (1) Both invited and non-invited students were described using 3 conditions (smart, athletic, and wears glasses)
QCA: An example Arranged a party for a class of 11 students 8 students were not invited (0) 3 students were invited (1) Both invited and non-invited students were described using 3 conditions (smart, athletic, and wears glasses) Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Those invited are smart and do not wear glasses, or are smart and athletic 1 = Ac + AB Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Those invited are smart and do not wear glasses, or are smart and athletic 1 = Ac + AB These conditions were dichotomous Multi-value QCA allows a researcher to introduce fuzziness into the conditions Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
MVQCA incorporates fuzziness Binary;  dichotomous Multi-value;  trichotomous, etc. 0 0 1 1 2
MVQCA incorporates fuzziness Binary;  dichotomous Multi-value;  trichotomous, etc. 0 (not smart) 0 (not smart) 1 (smart) 1 (somewhat smart) 2 (smart)
MVQCA and the airline business model Operational Offering Distribution Network Service ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Revenue & costs ,[object Object]
A number of analyses are performed to describe the airline industry FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:
A number of analyses are performed to describe the airline industry FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:
An LCC innovation truth table Each letter represents a business model element (e.g. FFP or fleet composition) This is the outcome, or dependent variable.  In this case it is operating margin. 2’s are high margin, 1’s are low, and 0’s are negative
An LCC innovation truth table Here are the unique combinations of business model elements for LCCs that consistently result in a high operating margin
Pure LCCs may innovate their business models in the following ways ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Pure LCCs should innovate their business model in one of the six ways suggested above These combinations consistently result in a high operating margin
A number of analyses are performed to describe the airline industry FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:
As FSCs and LCCs converge the following business models may appear ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],As non-pure LCCs and non-pure FSCs converge their business models should be imitated in one of the six ways suggested above These combinations consistently result in a positive operating margin
The remaining analyses follow a similar pattern FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:

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Future Airline Business Models

  • 1. The airline industry and its behavior Airlines display heterogeneity in their business models, which affects their financial success 1
  • 2. The airline industry and its behavior Airlines display heterogeneity in their business models, which affects their financial success Business model heterogeneity is based on innovative and imitative behavior displayed by airlines 1 2
  • 3. The airline industry and its behavior Airlines display heterogeneity in their business models, which affects their financial success Business model heterogeneity is based on innovative and imitative behavior displayed by airlines If airlines are innovative and imitative, what business model elements should be changed 1 3 2
  • 4. Airlines and their business models are merely puzzles Airline business models are comprised of elements … and have an outcome $
  • 5. Airlines and their business models are merely puzzles Airline business models are comprised of elements Airlines are imitative and innovative … and have an outcome $
  • 6. Airlines and their business models are merely puzzles Airline business models are comprised of elements Airlines are imitative and innovative Algebra can determine the unique combinations of business model elements … and have an outcome $
  • 7. Airlines and their business models are merely puzzles Airline business models are comprised of elements Airlines are innovative and imitative Algebra can determine the unique combinations of business model elements … and have an outcome $ … that leads to a predetermined outcome $
  • 8. A British mathematician from 1830 helps to analyze the airline industry Boolean algebra Boolean algebra is the algebra of logic or the algebra of sets Principle is the identification of patterns of causation
  • 9. A British mathematician from 1830 helps to analyze the airline industry Boolean algebra Qualitative comparative approach Boolean algebra is the algebra of logic or the algebra of sets Principle is the identification of patterns of causation QCA is a method that identifies commonalities across cases that share a similar outcome using Boolean algebra
  • 10. A British mathematician from 1830 helps to analyze the airline industry Boolean algebra Qualitative comparative approach Multi-value QCA Boolean algebra is the algebra of logic or the algebra of sets Principle is the identification of patterns of causation QCA is a method that identifies commonalities across cases that share a similar outcome using Boolean algebra Multi-value QCA allows a researcher to incorporate more richness in sets
  • 11. QCA: An example Arranged a party for a class of 11 students 8 students were not invited (0) 3 students were invited (1) Both invited and non-invited students were described using 3 conditions (smart, athletic, and wears glasses)
  • 12. QCA: An example Arranged a party for a class of 11 students 8 students were not invited (0) 3 students were invited (1) Both invited and non-invited students were described using 3 conditions (smart, athletic, and wears glasses) Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
  • 13. QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
  • 14. QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
  • 15. QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
  • 16. QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Those invited are smart and do not wear glasses, or are smart and athletic 1 = Ac + AB Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
  • 17. QCA: An example The combinations of independent variables that leads to not being invited is: 0 = a + bC In other words Those not invited are either not smart, or not athletic and wear glasses Those invited are smart and do not wear glasses, or are smart and athletic 1 = Ac + AB These conditions were dichotomous Multi-value QCA allows a researcher to introduce fuzziness into the conditions Cases Smart Athletic Wears glasses Invited A B C 1 0 0 0 0 2 0 0 1 0 3 0 1 0 0 4 0 1 1 0 5 0 1 0 0 6 1 0 0 1 7 1 0 1 0 8 1 1 0 1 9 1 1 1 1 10 1 0 1 0 11 0 1 1 0
  • 18. MVQCA incorporates fuzziness Binary; dichotomous Multi-value; trichotomous, etc. 0 0 1 1 2
  • 19. MVQCA incorporates fuzziness Binary; dichotomous Multi-value; trichotomous, etc. 0 (not smart) 0 (not smart) 1 (smart) 1 (somewhat smart) 2 (smart)
  • 20.
  • 21. A number of analyses are performed to describe the airline industry FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:
  • 22. A number of analyses are performed to describe the airline industry FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:
  • 23. An LCC innovation truth table Each letter represents a business model element (e.g. FFP or fleet composition) This is the outcome, or dependent variable. In this case it is operating margin. 2’s are high margin, 1’s are low, and 0’s are negative
  • 24. An LCC innovation truth table Here are the unique combinations of business model elements for LCCs that consistently result in a high operating margin
  • 25.
  • 26. A number of analyses are performed to describe the airline industry FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses:
  • 27.
  • 28. The remaining analyses follow a similar pattern FSC LCC REGIONAL 4 1 5 2 3 6 10 7 8 13 9 11 12 Strategic group Leading firms Innovation analyses Imitation analyses: