No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
How the concept of the business model can be used to study the role of organizations within transitions
Abstract
We explore how the concept of a business model can inform studies that seek to advance our understanding of the role of organizations in sustainability transitions. We argue that the business model constitutes a promising unit of analysis to connect management and transition research that allows linking organizational and systemic levels. However, the lack of conceptual clarity about what a business model is can hamper its use in transition studies. Thus, we discuss different conceptualizations of the business model and consider how they can contribute to further exploring the role of organizations in transitions. We outline which metatheoretical perspectives on transitions different business model conceptualizations resonate with, which kind of empirical studies they enable and point to future research avenues at the interface of business model and transition research.
Supplementary resource (1)
It has been suggested that business model innovation (BMI) is crucial for incumbent firms to drive and master sustainability transitions. Yet there is not much knowledge about how business models (BMs) and sustainability transitions interrelate and how incumbents (can) innovate BMs in a transition context. BM research typically takes a firm-centric perspective, disregards the mutual influence between firms and the socio-economic system they are embedded in, and fails to address the particularities of BMI in a transition context. To address these shortcomings, I embark on this cumulative dissertation by identifying BM research directions which are particularly relevant in a transition context. The five dissertation papers follow these directions, are theoretically informed by transition and strategic cognition theory and empirically situated in the German energy industry. Methodologically, this dissertation includes conceptual papers, action research and longitudinal case studies. Overall, I find that the BM concept is well suited to link firms and the wider system because it is firm-centric yet context-oriented. To drive and master sustainability transitions, incumbents need to emphasize BMI with a focus on inter-organizational collaboration and support cognitive change within and across organizational boundaries. In this dissertation, insights from the transition and BM literatures are conceptually integrated and a method for collaborative BM design is developed, applied and evaluated. Furthermore, BM implementation is portrayed as a recursive process of cognitive change and alignment at and across organizational levels, and ensuing action. This dissertation primarily contributes to BM research; however, individual papers offer secondary contributions to the transition and strategic cognition literatures.
Ever since the Internet boom of the mid-1990s, firms have been experimenting with new ways of doing business and achieving their goals, which has led to a branching of the scholarly literature on business models. Three interpretations of the meaning and function of “business models” have emerged from the management literature: (1) business models as attributes of real firms, (2) business models as cognitive/linguistic schemas, and (3) business models as formal conceptual representations of how a business functions. Relatedly, a provocative debate about the relationship between business models and strategy has fascinated many scholars. We offer a critical review of this now vast business model literature with the goal of organizing the literature and achieving greater understanding of the larger picture in this increasingly important research area. In addition to complementing and extending prior reviews, we also aim at a second and more important contribution: We aim at identifying the reasons behind the apparent lack of agreement in the interpretation of business models, and the relationship between business models and strategy. Whether strategy scholars consider business model research a new field may be due to the fact that the business model perspective may be challenging the assumptions of traditional theories of value creation and capture by focusing on value creation on the demand side and supply side, rather than focusing on value creation on the supply side only as these theories have done. We conclude by discussing how the business model perspective can contribute to research in different fields, offering future research directions.
Over the last 15 years, business model innovation (BMI) has gained an increasing amount of attention in management research and among practitioners. The emerging BMI literature addresses an important phenomenon but lacks theoretical underpinning, and empirical inquiry is not cumulative. Thus, a concerted research effort seems warranted. Accordingly, we take stock of the extant literature on BMI. We identify and analyze 150 peer-reviewed scholarly articles on BMI published between 2000 and 2015. We provide the first comprehensive systematic review of the BMI literature, include a critical assessment of these research efforts, and offer suggestions for future research. We argue that the literature faces problems with respect to construct clarity and has gaps with respect to the identification of antecedent conditions, contingencies, and outcomes. We identify important avenues for future research and show how the complexity theory, innovation, and other streams of literature can help overcome many of the gaps in the BMI literature.
This paper examines the role of innovative business models in the transformation of socio-technical systems. Focusing on decentralised energy technologies, we explore business model innovation in the context of a transition towards a more sustainable energy system. We conduct an empirical study of two Energy Services Company (ESCo) models for the deployment of combined heat and power with district heating (CHP/DH) infrastructure in the UK. Based on these case studies we illustrate the different ways in which Local Authorities develop business models to create and capture value from more efficient resource use and to deploy sustainable technologies. Drawing from systems theories in the business model and socio-technical literatures, we analyse the interfaces between business models, energy infrastructure and institutions. We propose that a systems based approach to the analysis of business models as embedded in their socio-technical contexts can offer new insights into the dynamics and governance of sustainability transitions.
This paper explores how the regulatory regime for Solar PV, defined as a combination of niche shielding and mainstream regulations, affects niche business models, using the Dutch and Flemish regulatory regimes as examples. The regulatory regime does not influence all components of the business model: only one or two components are usually affected. The level of niche shielding influences the dominant niche empowerment strategy. We also identified substantial heterogeneity in fit-and-conform and stretch-and-transform empowerment strategies for dealing with the regulatory regime. These strategies are reflected in business models, and differ in terms of temporal focus, motivation and shielding characteristics targeted. Finally, we show that business model innovation, sometimes in combination with technological innovation, can be used for stretching the regulatory regime. Organizational components of the business model are usually redesigned for this purpose.
Scholars increasingly recognise that business contributions to sustainable development are founded in new business models. However, most research in this field remains conceptual and offers a rather static view of a complex and dynamic reality. This article contributes to understanding how new business models for sustainability are fashioned through the interactions between individuals and groups inside and outside companies. Based on two case studies, our findings show that three elements contributed to the path of transformation toward business models for sustainability: building networks and collaborative practices for learning and action around a new vision, the deployment of new concepts drawn from outside the company, and elaborating an implementation structure within a reconfigured network. Our findings reveal the complexity of the process, which went through four subprocesses: identifying, translating, embedding, and sharing. Our results also highlight the importance of considering value destruction as well as new ways to create and capture value.
The study of business models involves exploring how firms do business at the system level. It lies at the intersection of strategy and entrepreneurship research and is, therefore, a topic of interest for scholars of strategic entrepreneurship. The purpose of this special issue is to publish work that develops theory on business models, or empirically investigates the phenomenon, and to inspire future research on the topic. In our introduction, we briefly review the main conceptual developments of the past two decades. We highlight three contributions that business model research is poised to make to the domain of strategic entrepreneurship, and, by extension, to its constituent disciplines of strategy and entrepreneurship: (1) reconnecting strategy with entrepreneurship; (2) suggesting a more central place for customers in our frameworks and analyses; and (3) emphasizing the importance of implementation. We subsequently present the articles in this special issue and explain how they relate to these themes. We conclude with suggestions for future research. Copyright © 2015 Strategic Management Society.
The Energy Service Company (ESCo) business model is designed to reward businesses by satisfying consumers' energy needs at less cost and with fewer carbon emissions via energy demand management and/or sustainable supply measures. In contrast, the revenue of the incumbent Energy Utility Company (EUCo) model is coupled with the sale of units of energy, which are predominantly sourced from fossil fuels. The latter is currently dominant in the UK. This paper addresses two questions. First, why has the ESCo model traditionally been confined to niche applications? Second, what role is the ESCo model likely to play in the transition to a low-carbon UK energy system? To answer these, the paper examines the core characteristics of the ESCo model, relative to the EUCo model. The paper then examines how ESCos have co-evolved with the various dimensions of the energy system (i.e. ecosystems, institutions, user practices, technologies and business models) to provide insight into how ESCos might help to shape the future UK energy system. We suggest that institutional and technological changes within the UK energy system could result in a more favourable selection environment for ESCos, consequently enabling the ESCo model to proliferate at the expense of the EUCo model.
There is an emerging consensus that business models are systemic and transcend firm boundaries. Yet, existing research on Business Model Innovation (BMI) challenges focus almost exclusively on intra-firm factors such as capabilities, cognition and leadership. We explore challenges related to BMI by instead drawing on an open systems perspective on organisations. In particular, we argue that the systemic and boundary-spanning nature of business models imply that firms are forced to act under conditions of interdependence and restricted freedom, since they do not have executive control over their surrounding network. Consequently, we propose that suitable managerial solutions include the development of shared knowledge, appropriability regimes based on trust, network stability and the alignment of heterogeneous interests.
According to David Teece, only strong and integrated firms can successfully innovate in a systemic fashion. Looser coalitions consisting of joint ventures, alliances, or virtual partners will not be able to create a systemic innovation, let alone to set standards for it, or to control its further evolution. In this article this position is challenged, in particular, regarding the information industry. It will be argued that in view of the fact that industrial structure is changing from vertical to horizontal, and digital convergence is taking place, systemic innovation today can only be undertaken by alliance networks. Although such networks are vulnerable to opportunism, these are capable of producing systemic innovations, because mutual relations can be stabilized by forms of both substantive and procedural commitment. If standards also have to be pioneered, alliance networks will have to expand. As there are few ways in which these new allies may commit themselves, the network is weakened. It is argued that, nevertheless, the mutual competition between networks will not end in an impasse. Instead, a unique, hybrid standard is likely to emerge in the end, since contending networks are willing to compromise, and since some of the more important parties along the system chain may usefully constitute themselves as arbitrators. This argument is put to the test by examining the case of the development of the Digital Video Disc (DVD). It is shown that a battle between two alliance networks ensued (one led by Toshiba, the other by Philips and Sony), that evolved along the lines conjectured above.
Business model innovation is receiving increased attention in corporate practice and research alike. We propose in this article a role-based approach to categorize the literature and argue that the respective roles of explaining the business, running the business, and developing the business can serve as three interrelated perspectives to present an overview of the current business model innovation field and to accommodate the selected contributions of this special issue. We refer to contributions from entrepreneurship, innovation and technology management, and corporate strategy to explicate the three elaborated perspectives and to summarize the main contents of the special issue articles. We conclude by reflecting on main theoretical challenges for studies on business model innovation which stem from the uncertain boundaries of the phenomenon, and we propose some theoretical stances and analytic levels to develop future avenues for research.
This article introduces a research framework for systematically assessing and comparing the ways social entrepreneurs generate social change. Based on a review of the academic debate, we discuss the requirements for such a framework. We then develop a conceptual framework that focuses on the entrepreneur-environment interaction in two dimensions. The first dimension suggests we think of social space in terms of ideas, structures, and practices. The second dimension captures the dynamic nature of social change. It looks at the interdependencies between entrepreneurs and their environment as they play out at the levels of ideas, structures, and practices over time. We apply this framework to a real-life case and discuss how it may guide case study research.
Eco-innovations, eco-efficiency and corporate social responsibility practices define much of the current industrial sustainability agenda. While important, they are insufficient in themselves to deliver the holistic changes necessary to achieve long-term social and environmental sustainability. How can we encourage corporate innovation that significantly changes the way companies operate to ensure greater sustainability?
Sustainable business models (SBM) incorporate a triple bottom line approach and consider a wide range of stakeholder interests, including environment and society. They are important in driving and implementing corporate innovation for sustainability, can help embed sustainability into business purpose and processes, and serve as a key driver of competitive advantage.
Many innovative approaches may contribute to delivering sustainability through business models, but have not been collated under a unifying theme of business model innovation. The literature and business practice review has identified a wide range of examples of mechanisms and solutions that can contribute to business model innovation for sustainability. The examples were collated and analysed to identify defining patterns and attributes that might facilitate categorisation.
Sustainable business model archetypes are introduced to describe groupings of mechanisms and solutions that may contribute to building up the business model for sustainability. The aim of these archetypes is to develop a common language that can be used to accelerate the development of sustainable business models in research and practice. The archetypes are: Maximise material and energy efficiency; Create value from ‘waste’; Substitute with renewables and natural processes; Deliver functionality rather than ownership; Adopt a stewardship role; Encourage sufficiency; Re-purpose the business for society/environment; and Develop scale-up solutions.
Sustainable technologies challenge prevailing business practices, especially in industries that depend heavily on the use of fossil fuels. Firms are therefore in need of business models that transform the specific characteristics of sustainable technologies into new ways to create economic value and overcome the barriers that stand in the way of their market penetration. A key issue is the respective impact of incumbent and entrepreneurial firms’ path-dependent behaviour on the development of such new business models. Embedded in the literature on business models, this paper explores how incumbent and entrepreneurial firms’ path dependencies have affected the evolution of business models for electric vehicles. Based on a qualitative analysis of electric vehicle projects of key industry players over a five-year period (2006-2010), the paper identifies four business model archetypes and traces their evolution over time. Findings suggest that incumbent and entrepreneurial firms approach business model innovation in distinctive ways. Business model evolution shows a series of incremental changes that introduce service-based components, which were initially developed by entrepreneurial firms, to the product. Over time there seems to be some convergence in the business models of incumbents and entrepreneurs in the direction of delivering economy multi-purpose vehicles.
Technological change is a central feature of modern societies and a powerful source for social change. There is an urgent task to direct these new technologies towards sustainability, but society lacks perspectives, instruments and policies to accomplish this. There is no blueprint for a sustainable future, and it is necessary to experiment with alternative paths that seem promising. Various new transport technologies promise to bring sustainability benefits. But as this book shows, important lessons are often overlooked because the experiments are not designed to challenge the basic assumptions about established patterns of transport choices. Learning how to organise the process of innovation implementation is essential if the maximum impact is to be achieved - it is here that strategic niche management offers new perspectives. The book uses a series of eight recent experiments with electric vehicles, carsharing schemes, bicycle pools and fleet management to illustrate the means by which technological change must be closely linked to social change if successful implementation is to take place. The basic divide between proponents of technological fixes and those in favour of behavioural change needs to be bridged, perhaps indicating a third way. © 2002 Remco Hoogma, René Kemp, Johan Schot and Bernhard Truffer.
The current literature on business models lies mainly in the literature on strategy and competitive advantage and focuses on their role as descriptors of actual phenomenon, often by reference to taxonomic categories. In this essay we explore how business models can be seen as a set of cognitive configurations that can be manipulable in the minds of managers (and academics). By proposing a typology of business models, that emphasises the connecting of traditional value chain descriptors with how customers are identified and satisfied, and how the firm monetizes its value, we explore how business model configurations can extend current work on cognitive categorization and open up new possibilities for organisation research.
This paper explores the co-evolution between societal sustainability transitions and fundamental shifts within individuals businesses. We argue that there is an emergent trend of businesses and industries that move beyond optimizing the organization's individual performance by mitigating negative environmental and social impacts, to fundamentally restructuring and rethinking existing businesses in light of broader societal changes. Arguably, the frontrunner businesses that orient themselves towards sustainable market transitions develop a competitive advantage by co-creating these sustainable markets and on the short term develop renewed ambition and enthusiasm. By means of the transition framework, we argue that the fundamental societal changes emerging lead to a new phase in corporate responsibility, implying fundamental transitions within businesses. Based on this perspective and the transition management approach we explore how businesses might proactively engage with sustainability transitions in their direct context and link these to internal business transitions. We illustrate this framework of business transition management in a number of interlinked activities based on an experimental participatory case study of the transition in the Dutch roof sector.
This paper reports on a field study of strategy making in one organization facing an industry crisis. In a comparison of five strategy projects, we observed that organizational participants struggled with competing interpretations of what might emerge in the future, what was currently at stake, and even what had happened in the past. We develop a model of temporal work in strategy making that articulates how actors resolved differences and linked their interpretations of the past, present, and future so as to construct a strategic account that enabled concrete strategic choice and action. We found that settling on a particular account required it to be coherent, plausible and acceptable, otherwise breakdowns resulted. Such breakdowns could impede progress, but could also be generative in provoking a search for new interpretations and possibilities for action. The more intensely actors engaged in temporal work, the more likely the strategies departed from the status quo. Our model suggests that strategy cannot be understood as the product of more or less accurate forecasting without considering the multiple interpretations of present concerns and historical trajectories that help to constitute those forecasts. Projections of the future are always entangled with views of the past and present, and temporal work is the means by which actors construct and reconstruct the connections among them. These insights into the mechanisms of strategy making help explain the practices and conditions that produce organizational inertia and change.
The aim of this paper is to advance research on sustainable innovation by adopting a business model perspective. Through a confrontation of the literature on both topics we find that research on sustainable innovation has tended to neglect the way in which firms need to combine a value proposition, the organization of the upstream and downstream value chain, and a financial model, in order to bring sustainability innovations to the market. Therefore, we review the current literature on business models in the contexts of technological, organizational, and social sustainability innovations. As the current literature does not offer a general conceptual definition of sustainable business models, we propose examples of normative 'boundary conditions' that business models should meet in order to support sustainable innovations. Finally, we sketch the outline of a research agenda by formulating a number of guiding questions.
Purpose
The purpose of this paper is to introduce this special issue, conceptualized and realized by a group of scholars engaged in the Global Organizational Learning and Development Network (GOLDEN) for Sustainability programme. It aims to adopt the overarching research question of the GOLDEN research programme “How do firms learn to integrate and manage sustainability in their business models, including their organizational purpose, strategy, processes, systems and culture?” as the guiding principle for case selection.
Design/methodology/approach
The paper first presents the key ideas underpinning the previous research question and illustrates the research approach and agenda of GOLDEN for Sustainability. Second, it introduces the eight case studies presented in this special issue.
Findings
The cases offer good illustrations of the ongoing transition by both medium‐sized and multinational corporations dealing with learning and change challenges posed by the identification and management of sustainability issues. The selected cases represent firms operating in diverse contexts and industries, and are developed by scholars specializing in various fields connected to corporate responsibility and sustainability.
Originality/value
The paper presents cases of organizations that have made sense of the sustainability challenge and also the different approaches taken to tackle the challenge, and the results stemming from their efforts..
According to one perspective, organizations will only be sustainable if the dominant neoclassical model of the firm is transformed, rather than supplemented, by social and environmental priorities. This article seeks to develop a "sustainability business model" (SBM)-a model where sustainability concepts shape the driving force of the firm and its decision making. The SBM is drawn from two case studies of organizations considered to be leaders in operationalizing sustainability and is informed by the ecological modernization perspective of sustainability. The analysis reveals that organizations adopting a SBM must develop internal structural and cultural capabilities to achieve firm-level sustainability and collaborate with key stakeholders to achieve sustainability for the system that an organization is part of.
This study examines the construct of strategic conversation in a scenario planning context. After defining key terms and a conceptual framework for the strategic conversation, this study presents data gathered from individual participants in a scenario planning project. Data concerning perceptions of strategic conversation skills were collected pre-and post-scenario planning project, and then compared with a standard t-test. Conclusions are drawn and limitations are presented and discussed in depth. Recommendations for improving this research in future studies are also identified.
Increasing numbers of reports reveal that planet Earth is at significant risk. There are mounting calls to address the damage caused by the unprecedented demand for land, energy and water and environmental destruction, which is attributed to escalating population growth and unparalleled, rising rates of economic growth. Society and its organisations now are expending the Earth’s resources much faster than they can be replenished. Consequently, over the past two decades, sustainability has become an important business issue; growing attention is being paid to organisations’ ecological and environmental performance; and to their impact on the climate and on local and global communities. A number of researchers broadly claim that organisations need to move from Traditional Business Models and adopt Sustainable Business Models, and to deliver a sustainable value proposition aligned with stakeholders’ economic, environmental and social expectations. To achieve this, organisations should expand their perceived stakeholders from customers and shareholders to include all other stakeholders who may be directly or indirectly affected by the organisation’s activities, such as the broader society and the environment. Organisations’ cultures have considerable influence on their attitudes to environmental and social sustainability; their commitment to sustainability; and their environmental and social performance. In order to develop and implement Sustainable Business Models, organisations need to understand their underlying cultural values and develop sustainability-related cultural characteristics. This chapter explains the role of organisational culture and its desired characteristics and discusses actions organisations can take to change their culture. It also discusses steps for embedding sustainability principles across the organisation.
“Grand challenges” are formulations of global problems that can be plausibly addressed through coordinated and collaborative effort. In this Special Research Forum, we showcase management research that examines societal problems that individuals, organizations, communities, and nations face around the world. We develop a framework to guide future research to provide systematic empirical evidence on the formulation, articulation, and implementation of grand challenges. We highlight several factors that likely enhance or suppress the attainment of collective goals, and identify representative research questions for future empirical work. In so doing, we aspire to encourage management scholars to engage in tackling broader societal challenges through their collaborative research and collective insight.
Im Energiesystem der Zukunft wird ein intelligentes Netz (Smart Grid) Angebot und Nachfrage effizient steuern. Dieser Artikel beschreibt (1) die Trends und Herausforderungen heutiger Ener-giesysteme, die die Entwicklung eines Smart Grid auslösen, identifiziert (2) Elemente eines Smart Grid und stellt (3) die mögliche Rolle eines Telekommunkationsunternehmes im entste-henden Smart Grid Markt dar. Der Trend zu einem steigenden Anteil erneuerbarer und dezentraler Energieerzeugungsanlagen bringt zwei große Herausforderungen mit sich: Eine mangelnde Vorhersagbarkeit und eine man-gelnde Regelbarkeit der Erzeugungsleistung. In diesem Artikel werden vier Elemente eines Smart Grid vorgestellt, die diese Herausforderungen adressieren: Virtuelle Kraftwerke, Demand Side Management, Lastflussregelung und Energiespeicherung. Abschließend wird herausgestellt, dass die Elemente systemisch integiert werden müssen um den eigentlichen Wert des Smart Grid zu heben. Es wird erörtert, dass sich Telekommunkiationsan-bieter in einer guten Ausgangsposition befinden um die Herausforderungen dieser Integration zu adressieren, da sie über wesentliche Erfahrungen und Fähigkeiten verfügen: Umfassendes Ver-ständnis großer IP-Netzwerke, Erfahrungen mit Cloud Computing, umfangreiches Wissen zu Service-Plattformen und Kooperationserfahrung. Online-Version im Universitätsverlag der TU Berlin (www.univerlag.tu-berlin.de) erschienen.
This paper focuses on the strategies of incumbents that seek to develop discontinuous innovations within the boundaries of a mature innovation system. Mature innovation systems do not provide support for these discontinuous innovations. This article focuses on exploring why incumbents in these setting engage in discontinuous innovation and what strategies they deploy to become successful. We analyse 10 cases of incumbents developing discontinuous innovations in the mature Dutch greenhouse horticulture sector. The results of our analysis show that the incumbents are primarily triggered by dissatisfaction with the current way of doing business and that the existing institutions are the main barrier to discontinuous innovation. In response, the incumbents try to circumvent the existing innovation system in their innovation process, but when successful also engage in changing the existing innovation system. This paper contributes to the understanding of the role of incumbents as source of discontinuous innovation in mature innovation systems.
Decarbonising the electrical power system holds a critical role in climate change mitigation. Recent developments in technology are helping change the current centralized paradigm into one of integrated distributed clean energy resources. In spite of these developments, radical transformation is not occurring at a speed to effectively meet environmental targets, mostly due to the incumbent carbon lock-in trajectory. We argue that business model (BM) innovation dynamics are key drivers in accelerating the low carbon power system transition, often operating irrespective of the underlying technology. We combine BM theory with the multi-level perspective on sociotechnical transitions to present a useful framework to analyze this potential transition. This paper presents the application of this framework characterizing relevant BM dynamics of niche and regime business actors, and supporting these with illustrative examples. Particularly, we find that new actors in the distributed energy business are achieving market scale by offering financially innovative BMs that do not require upfront costs from customers. Higher penetrations of renewable energy sources in liberalized electricity markets are destabilizing the historical BM of large centralized utilities through erosion of wholesale prices. Furthermore, a shift towards distributed and dynamic energy resources further challenges incumbents and might bring opportunities for BMs focused on active customer participation and social value creation. As these tendencies are expected to accelerate, we find analyses of BMs will have important relevance for future power system transition research.
The relevance of business models for corporate performance in general and corporate sustainability in particular has been widely acknowledged in the literature while sustainable entrepreneurship research has started to explore contributions to the sustainability transformation of markets and society. Particularities of the business models of sustainable niche market pioneers have been identified in earlier research, but little is known about the dynamic role of business models for sustainable entrepreneurship processes aiming at upscaling ecologically and socially beneficial niche models or sustainability upgrading of conventional mass market players. Informed by evolutionary economics, we develop a theoretical framework to analyze co-evolutionary business model development for sustainable niche pioneers and conventional mass market players aiming at the sustainability transformation of markets. Core evolutionary processes of business model variation, selection and retention, and evolutionary pathways are identified to support structured analyses of the dynamics between business model innovation and sustainability transformation of markets.
To achieve sustainability, a firm has to transform its entire business logic. A business model for
sustainability (BMfS) aims at creating value for various stakeholders and the natural environment.
This article advances the current understanding of the basic functioning of BMfS by applying
a systems perspective. Our BMfS understanding incorporates the natural environment as an
essential element, but does not deal with sustainability from a broad perspective. The core logic
of a BMfS is built upon the creation of a reinforcing feedback loop between the created value
to the customers, the value captured by the firm, and the value to the natural environment.
Consequently, we develop a graphical model based on system dynamics notation. First, we
conceptualize the basic feedback loops. Then, we propose partial models for the firm, natural
environment, entrepreneur/manager, and customer, and then integrate these partial models
within a systemic, multilevel model. Finally, we generate propositions that combine insights from
the model and extant literature.
The concept of business models has reached global impact, both for company's competitive success and in management science. Its application by authors from diverse areas has led to a previously very heterogeneous comprehension of the concept. Yet, by means of investigating its origin and theoretical development, we state a recently converging business model view. Further, based on analyzing business model definitions, perspectives and components in the literature, we newly define the concept and portray its essential components in an integrated framework. Finally, the compilation of the current state of business model research yields the article's main findings. In this regard, via database search we quantitatively identify 681 peer-reviewed articles. Further, we qualitatively analyze them according to individual research areas that we adopt from an appropriate heuristic frame of reference. In this way, we identify four essential research foci: innovation, change & evolution, performance & controlling and design. In triangulation with assessing future research perspectives through a survey of twenty-one international experts, they also consider the areas of innovation, change & evolution, and design to be significant for the future development of the business model research field.
We advance a theory of how business models can be innovated proactively in the absence of exogenous changes, through processes of generative cognition. We contribute to the cognitive perspective in strategy by analyzing business models as schemas that organize managerial understandings about the design of firms' value-creating activities and exchanges and by theorizing how they can be innovated through processes for proactive schema change. Drawing on cognitive psychology research on two major cognitive processes through which individuals change their schema to cope with novelty, analogical reasoning and conceptual combination, we theorize firm-level strategic processes for designing innovative business models. Copyright © 2015 Strategic Management Society.
The purpose of this paper is to shed light in the business practices undertaken by the largest retailer of the world: Wal-Mart. Through careful examination of the data available for this company as well as its main rivals, we have assembled a practical dataset for our goals. We seek to understand the variety of business models applied in the retailing sector and why Wal-Mart outperforms them. Data Envelopment Analysis is our chosen method of analysis. The measurement of performance is defined as the value added to the goods sold by each retailer in a year. Given the fact that studying the operations of a multinational company is a daunting task, we concentrate in United States market. We also complement the analytical part by reviewing what has been written about Wal-Mart's business practices and how well these ideas fit with our empirical model.
Changing environments challenge incumbent firms to retain the fit between their product market strategy and their business model as specific instances of a firm's strategy and structure. Yet, as the business model depicts the pattern of a firm's boundary-spanning transactions with customers, vendors and partners, a change in a focal firm's business model necessitates managing its relationship to these three external parties accordingly. A multiple-case study of 16 firms in the Information and Communication Technology (ICT) sector serves to explore how incumbent firms can enable and support the business model changes that complement the changes in a firm's product market strategy during technological convergence. The results show that three behavioural patterns - infringing, orchestrating and riding - enable and support the changes in an incumbent firm's business model that complement those changes in a firm's product market strategy. These patterns are discussed from the perspective of inter-organisational power and dependency.
This research aims to identify the institutional strategies of incumbent firms with regard to sustainable energy innovations that threaten their interests. This exploratory study contributes to the multi-level perspective by providing new insights into niche–regime interaction. The focus on actor behavior in transitions is informed by literature from institutional theory and strategic management. Based on semi-structured interviews with actors and on documents related to LED lighting and biofuels in the Netherlands, this study identified a preliminary set of empirical strategies: providing information and arguments to policy makers and the general public, as well as strategically setting technical standards. Incumbents are in a position to significantly influence the innovation's development by employing these strategies; thus temporarily keeping sustainable innovation on a leash. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment
Purpose
Traditionally, management scholars have conceptualized the business model as a locus of innovation, planning tool, heuristic logic, or market device. However, so far, little is known about how the model is being applied in practice. To address this gap, this study aims to introduce a strategy‐as‐practice perspective and to explore the implications and limitations of applying the business model as a strategizing device.
Design/methodology/approach
A single‐case study design was selected to explore the implications and limitations of using the business model as a strategizing device in a high‐tech firm.
Findings
The business model provides a valuable structural template for mapping the current business model of a firm. However, in developing and discussing strategic options, it acts more as a symbolic artifact stimulating a creative decision‐making process than as an analytic tool with a clear sequence of steps.
Practical implications
When working with the business model concept in practice, its technical and linguistic legitimacy is initially highly limited. In the process of gaining legitimacy, however, a collective lock‐in to the current strategic identity may arise. Managers have to be aware of these limitations and need to achieve an appropriate balance within the organization.
Originality/value
The study introduces a social practice perspective into the business model debate, with a special emphasis on the implications and limitations of applying the business model concept as a strategizing device in a real‐life setting.
The concept of open innovation has recently gained widespread attention. It is particularly relevant now because many firms are required to implement open innovation, despite the difficulties associated with managing these activities. After providing a definition of open innovation delimiting it from open source, an overview of prior research is given, which identifies the following important topics of earlier open innovation research: technology transactions, user innovation, business models, and innovation markets. In light of current controversial debates about the value of the open innovation framework, we evaluate the literature and assess whether open innovation is a sustainable trend rather than a management fashion. On this basis, we present a conceptual framework that provides the foundation for discussing critical open innovation processes and their implications for managing open innovation at the organizational, project, and individual level. Thus, we assess the multilevel determinants of the make-or-buy, integrate-or-relate, and keep-or-sell decisions in opening up the innovation process. Then, we propose a research agenda based on this conceptual framework with particular emphasis on the organizational antecedents and performance consequences of open innovation and on important research design issues. Finally, we discuss implications for management education and practice, and we provide a conclusion and outlook.
This paper provides the first formal model of business model innovation. Our analysis focuses on sponsor-based business model innovations where a firm monetizes its product through sponsors rather than setting prices to its customer base. We analyze strategic interactions between an innovative entrant and an incumbent where the incumbent may imitate the entrant's business model innovation once it is revealed. The results suggest that an entrant needs to strategically choose whether to reveal its innovation by competing through the new business model, or conceal it by adopting a traditional business model. We also show that the value of business model innovation may be so substantial that an incumbent may prefer to compete in a duopoly rather than to remain a monopolist.
Pioneering has both advantages and disadvantages. Which effect will predominate will depend to a large extent on: (i) the business model that the pioneer utilizes to exploit the first-mover advantages (FMAs) associated with early entry: (ii) the business models that late entrants adopt to attack the pioneers; and (iii) the business model that the pioneer uses to respond to these attacks. Studies that do not explicitly control for the business models being used by firms will provide biased estimates of the importance (or sustainability) of first-mover advantages.
This book considers two main questions: how do system innovations or transitions come about and how can they be influenced by different actors, in particular by governments. The authors identify the theories which can be used to conceptualise the dynamics of system innovations and discuss the weaknesses in these theories. They also look at the lessons which can be learned from historical examples of transitions, and highlight the instruments and policy tools which can be used to stimulate future system innovations towards sustainability. The expert contributors address these questions using insights from a variety of different disciplines including innovation studies, evolutionary economics, the sociology of technology, environmental analysis and governance studies. The book concludes with an extensive summary of the results and practical suggestions for future research.
An industry's dominant logic is the general scheme of value creation and capture shared by its actors. In high technology fields, technological discontinuities are not enough to disrupt an industry's dominant logic. Identifying the factors that might trigger change in that logic can help companies develop strategies to enable them to capture greater value from their innovations by disrupting that logic. Based on analyzing the changes that biotechnologies and bioinformatics have brought to the drug industry, we identify and characterize three triggers of change that can create disruptive business models. We suggest that, in mature industries experiencing strong discontinuities and high technological uncertainty, entrants' business models initially tend to fit into the industry's established dominant logic and its value chains remain unchanged. But as new technologies evolve and uncertainty decreases, disruptive business models emerge, challenging dominant industry logics and reshaping established value chains.
What motivates firms to engage in shared innovation activities in complex technologies, where appropriation of value is interdependent on others? Transaction cost economics prescribes that innovations that are complex and systemic in nature should not be distributed among several actors. Here the firm is clearly the locus of innovation. Opposed to this, the network-based view suggests that a distributed organization may be the most efficient way to organize innovative processes under uncertain and rapidly changing conditions and that, because the locus of innovation is the collaborative network, firms are forced to join in order to stay informed. However, these two contrasting views both overlook the complexities of real-life activities. Understanding that firms' motives and propensity to collaborate are contingent on and evolve as industries evolve is the key to understanding their attitude towards sharing and co-developing knowledge.
An overview is given of the application of technology roadmapping (TRM) within Royal Mail's research planning area, in collaboration with the University of Cambridge. Results demonstrate how the technique can be successfully applied within a service-based organization, and highlight the benefits of roadmapping as an effective tool to support strategic technology management.
How does an established organization innovate its business model, which is still contributing revenues and profits, but whose future effectiveness is likely to be undermined by changes in its external environment? We study the antecedents and drivers of business model innovation in a Spanish dietary products business threatened by economic recession and heightened competition resulting from liberalization. We document the evolution of the firm's new retail-market business model in two distinct phases: 1) a five-year phase of experiment and exploration followed by 2) a high-growth exploitation phase when the firm outperformed its competitors by a wide margin and internationalized successfully, in spite of its products and final end customers remaining basically unchanged. The study, which takes a dynamic perspective, is situated in the organizational learning literature, and emphasizes the importance of trial-and-error learning for business model innovation. We also highlight the impact of the different types of learning that take place in these two phases, as well as the knowledge-transfer mechanisms from individuals to the organization and vice-versa.
This paper presents research findings from the application of scenario planning in multinational firms that operate in competitive industries. We use exclusive and not publicly available data to investigate the link between scenario planning and firm performance from a qualitative perspective. The focus was primarily on firms that had real-life experiences with this strategic tool. Our research suggests that scenario planning is interwoven in how strategy is formulated and that it has a major influence on decisions taken by management. We also found that none of the firms reported formal efforts of assessing the success rate of scenario planning. Participants report that this is due to difficulties in measuring qualitative and quantitative outcomes and because standardized assessment tools are not readily available for this kind of strategic intervention. Overall, participants generally regarded scenario planning as an effective intervention with a positive contribution to the firms’ performance. When pressed for more detail, participants revealed that scenario planning techniques were useful in exploring the business environment and future risks, isolating trends, understanding interdependent forces, and considering the implications of strategic decision-making.
There is empirical evidence that established firms often have difficulty adapting to radical technological change. Although prior work in the evolutionary tradition emphasizes the inertial forces associated with the local nature of learning processes, little theoretical attention has been devoted in this tradition to understanding how managerial cognition affects the adaptive intelligence of organizations. Through an in-depth case study of the response of the Polaroid Corporation to the ongoing shift from analog to digital imaging, we expand upon this work by examining the relationship between managers' understanding of the world and the accumu- lation of organizational capabilities. The Polaroid story clearly illustrates the importance of managerial cognitive representations in directing search processes in a new learning environ- ment, the evolutionary trajectory of organizational capabilities, and ultimately processes of organizational adaptation. Copyright © 2000 John Wiley & Sons, Ltd.
Attention is drawn to the dynamic interaction between what different kinds of
actors do and what can be observed at the system level. It aims to provide a closer look at how strategies, resources and capabilities of individuals, firms and other organizations impact the overall system and trigger transformation processes, and how these changes at the system level feed-back into the observed strategies at the actor level. This is important, not in the least because the particularity of sustainability transitions is that they are often purposefully initiated (or supported) and directed in the sense that long-term future visions are supposed to guide these transitions.While guidance of distributed actors is essential, it has been acknowledged that
future visions as well as the means to achieve these visions are contested, with different actor groups claiming and advocating different interests. As we improve our understanding of the dynamic interplay of different actors involved in innovation and transition processes, we will be able to untangle some of the complexities of transitions unfolding at the system level.
To contribute to this general line of reasoning, our special issue calls particular attention to the strategies and resources of actors in sustainability transitions. In this introduction we will concentrate on the following questions knowing that these can only shed light on some of the complex issues at hand: – What strategies do actors adopt to shape sustainability transitions and what resources do they mobilize and deploy in the realization of these strategies? – What kinds of different actors play a role in these transformation processes and how can and do they align their strategies
(and resources) to achieve common goals?