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Internet Business Models and Strategies
Abstract
The phrase “business model” has found its way into the vocabulary of just about everyone who must manage or work in businesses with an Internet content, from venture capitalists to CEOs. Despite the enormous importance of the Internet and business models to firms, and the explosive interest in both subjects, there are no business school texts that address the impact of the Internet on firm performance.
In Internet Business Models and Strategies: Text and Cases, we draw on research in strategic management and the management of technology to develop an integrative framework that allows readers to put their minds around what determines firm performance and the central role that business models play in the face of the Internet. We offer concepts and tools that students of management need to analyze and synthesize business models, especially Internet business models. The framework developed in the book allows its users to make more informed concept- and theory-grounded arguments about Internet start-ups, bricks-and-mortar firms that must face challengers, the relative merits of formulating and implementing Internet business models and strategies, and how much ventures might be worth.
In the first part of the book, we explore the concepts on which Internet business models rest and the tools that can be used to analyze and appraise them. In addition to building a conceptual framework, the chapters include discussion questions and key terms to engage readers further with the subject matter. The second part of the book offers cases of both pure-play Internet firms as well as bricks-and-mortar firms that must formulate and execute successful business models and strategies in order to gain, defend, or reinforce a competitive advantage in the face of the Internet.
To the best of our knowledge, no other book addresses the central issues of the impact of the Internet on business performance. This is not to say that there are no books on e-commerce or the impact of the Internet from a functional perspective, simply that they do not centrally address business issues, particularly the impact of the Internet on business models and firm performance.
... Ritter and Lettl (2018), in their work, highlight five meta-theoretical perspectives on business models. The first is concerned with describing the activities of organizations (Zairi and Sinclair, 1995;Johnson et al., 2008;Demil and Lecocq, 2010;Cyfert, 2011;Fjeldstad and Snow 2018), while the second is concerned with the logic of business models (including the creation, delivery and capture of value) (Magretta, 2002;Chesbrough and Rosenbloom, 2002;Afuah and Tucci, 2001;Afuah, 2014;Amit and Zott, 2017;Baldassarre et al, 2017;Evans et al., 2017;Freudenreich et al., 2019;Otola et al., 2020;Brzóska et al., 2022). In these first two perspectives, the predominant definition of a business model is where the central element of business models is their value creation logic, which describes how value is generated by specific processes within the company (Amit and Zott 2001). ...
... Original approaches to business model configuration are available in the literature. Many researchers have proposed original concepts in this area (Slywotzky et al., 2007;Afuah and Tucci, 2001;Johnson et al., 2008;Osterwalder and Pigneur, 2010;Amit, 2007, 2010;Prahalad and Krishnan, 2008;Gassmann et al., 2020). The last platform is about adapting the business model, giving it a specific character or type, e.g., innovative business model (Massa and Tucci, 2021;Ibarra et al., 2018;Schaller and Vatanan-Thesenvitz, 2019;Filser et al., 2021), sustainable business model (Schaltegger et al., 2016;Evans et al, 2017;Geissdoerfer et al.;Bilan et al., 2020;Minatogawa et al., 2022;Pan et al., 2023), business models and Industry 4.0 (Ibarra et al., 2018;Dobrowolska and Knop, 2020;Agostini and Nosella, 2021;Grabowska and Saniuk, 2022), business models and digitalisation (Caputo, 2021;Del Giudice et al., 2021;Mostaghel et al., 2022). ...
... BMC as a business model (BM) could be defined as a rationale for the enterprise that is broader than the attempt to generate profits (Sparviero 2019, p. 234) or as the rationale and infrastructure of how an organisation creates, delivers and captures value (Osterwalder and Pigneur, 2010), and descriptions of the use of resources (Upward and Jones, 2016, pp. 97-123;Afuah and Tucci, 2001), capabilities (Seelos and Mair, 2007, pp. 49-63.) ...
... The system provided by Internet technology can increase the competitive advantage of the business. In the modern economy, technological improvements and flexibility in response to rapid shifts in industrial competitiveness are necessary to take advantage of Afuah and Tucci (2003). Additionally, Chi and Sun assert that data technology investments might help businesses obtain a competitive edge Chi and Sun (2015). ...
Small and Medium Enterprises (SMEs) play a vital role in the economic development of many countries, contributing significantly to employment, innovation, and GDP growth. However, a large percentage of SMEs fail within a few years of their incorporation, highlighting the need to understand the factors that drive their success and sustainability. One key factor that has gained increasing attention in the literature is the implementation of e-commerce (ECI) by SMEs. While there is a growing literature on the impact of e-commerce implementation (ECI) on the business performance of SMEs (BPSMEs), there is a scarcity of empirical research on mediating role of organizational sustainability (OS) and competitive advantage (CA) between ECI and BPSMEs. To address this gap, the present study aims to examine the impact of e-commerce implementation (ECI) on the business performance of SMEs (BPSMEs), and the mediating role of organizational sustainability (OS) and competitive advantage (CA) in this relationship. The study employs a sample size of 453 units and utilizes normality test to check frequency distribution is normally distributed. Exploratory factor analysis (EFA) was conducted to identify the key factors influencing ECI in SMEs, and Cronbach's alpha was used to assess the reliability of the measures. Multiple linear regression analysis was used to assess the impact of ECI on BPSME, with OS and CA as mediating variables. The results indicate that E-Commerce Implementation (ECI) has a significant direct impact (coefficient = 0.817) on Business Performance of SMEs (BPSMEs), with Organisational Sustainability (OS), and Competitive Advantage (CA) serving as crucial mediators. Specifically, Organisational Sustainability (OS) acts as a mediator, with Competitive Advantage (CA), emphasizing their substantial indirect impacts on Business Performance of SMEs (BPSMEs). The findings suggest that SMEs can significantly improve their growth by incorporating e-commerce as a core part of their marketing initiatives. By elucidating the mechanisms through which E-Commerce Implementation (ECI) influences Business Performance of SMEs (BPSMEs), this study offers practical insights for organizational leaders seeking to capitalize on the strategic advantages of e-commerce to drive long-term, sustainable growth and performance improvements within their firms. This research contributes to a more comprehensive understanding of the downstream impact of E-Commerce Implementation on overall Business Performance within the SME context and validating the mediation model - offering important implications for managers to consider as they navigate the complexities of digital transformation.
... The system provided by Internet technology can increase the competitive advantage of the business. In the modern economy, technological improvements and flexibility in response to rapid shifts in industrial competitiveness are necessary to take advantage of Afuah and Tucci (2003). Additionally, Chi and Sun assert that data technology investments might help businesses obtain a competitive edge Chi and Sun (2015). ...
Small and Medium Enterprises (SMEs) play a vital role in the economic development of many countries, contributing significantly to employment, innovation, and GDP growth. However, a large percentage of SMEs fail within a few years of their incorporation, highlighting the need to understand the factors that drive their success and sustainability. One key factor that has gained increasing attention in the literature is the implementation of e-commerce (ECI) by SMEs. While there is a growing literature on the impact of e-commerce implementation (ECI) on the business performance of SMEs (BPSMEs), there is a scarcity of empirical research on mediating role of organizational sustainability (OS) and competitive advantage (CA) between ECI and BPSMEs. To address this gap, the present study aims to examine the impact of e-commerce implementation (ECI) on the business performance of SMEs (BPSMEs), and the mediating role of organizational sustainability (OS) and competitive advantage (CA) in this relationship. The study employs a sample size of 453 units and utilizes normality test to check frequency distribution is normally distributed. Exploratory factor analysis (EFA) was conducted to identify the key factors influencing ECI in SMEs, and Cronbach's alpha was used to assess the reliability of the measures. Multiple linear regression analysis was used to assess the impact of ECI on BPSME, with OS and CA as mediating variables.
... In the design Iield, participatory approaches are being explored in the development of new business model ideas resulting in novel generative tools and techniques (Gudiksen et al., 2014). These frameworks are compatible with the concept of a business model that is centred around a main business/Iirm, identiIies its components, the relations between them and the organisational activities carried out through them (Afuah & Tucci, 2001;Zott & Amit, 2010). However, such a business model concept is not compatible with the networked value creation distributed at global, regional, local, and individual settings, which facilitates numerous businesses and individuals to build value on top of each other. ...
Open design challenges the traditional notions of design, innovation, and business by enabling and facilitating collaborative and distributed value creation. However, simply making designs open cannot enable their adoption by others and facilitate distributed production or local circular economies. In pursuit of a novel understanding of how open design can be adopted and utilised to manage distributed value creation, this paper presents the results of eight co-creation workshops conducted with Networked Business Model Canvas for exploring alternative business models and practices in distributed value creation networks. A total of 127 value creation nodes in 11 alternative open design-led distributed value creation networks were conceptualised during the workshops. Their analysis revealed various implications and challenges of open design for managing distributed value creation, which led to the development of a novel layered approach to designing open products that can accommodate varying capabilities and levels of engagement of different stakeholders, from end-users to producers.
Purpose: This study aimed to design an e-business model in Iranian sports tourism with an emphasis on organizational factors Methods: The research method was derived from grounded theory for explaining and analyzing findings from exploratory interviews. The study population was the Professors, top startup managers in the field of tourism, and managers of the Iran sports tourism association, touring & Automobile Club of Iran, IFTGA (Iran Federation of Tourist Guide Associations), and electronic business expert ministry of Cultural heritage, handicrafts , and tourism. The sampling method was a combination of purposeful sampling and snowballing. The research tool included an open-source interview. In the data analysis phase, the content analysis and counts of the themes were employed in open, axial, and selective coding stages. Results: The findings included 187 open codes and 38 selective codes. The causal conditions included 9 categories, the causal conditions included 9 categories, Intervention or mediation conditions including 9 categories, Background conditions or platforms include 9 categories, the categories included in the strategy dimension included 6 strategies Conclusion: According to the study, e-business Sports tourism is a multi-sectoral structure that is affected by a set of underlying factors, intervening conditions, causal conditions, strategies, and consequences, and in the world at present, e-business tourism sports will not succeed if they are not equipped with these organizational skills. Therefore, the integration of organizational factors in the field of sports tourism can help in the development of e-business in sports tourism.
In today's rapidly evolving business landscape, technological advancements, shifting consumer behaviours, and global economic fluctuations increasingly challenge traditional business models. Organisations must reinvent their business models to remain competitive, embracing innovation, agility, and sustainability. This chapter explores the critical components of reinventing business models, including leveraging digital transformation, adopting customer-centric approaches, and integrating sustainable practices through a comprehensive view of their development. This study thoroughly understands the existing literature on business models, focusing on the features. Integrating sustainability into a business model is also a challenge for many practitioners. The business model innovation agenda is the topic of discussion among most companies. This chapter will explore adopting a business model towards sustainability by integrating environmental, social, and governance factors. The findings underscore the necessity for continuous adaptation and strategic foresight to drive long-term success.
W książce została poruszona tematyka SPL w odniesieniu do nauk o zarządzaniu. W poszczególnych rozdziałach zaprezentowano różne spojrzenia na
przeglądy literaturowe odnoszące się do takich obszarów jak: rynek odzieży używanej, komunikacja marketingowa w kształtowaniu wizerunku muzeów, aktywność społeczna osób starszych w miastach, rynek żywności czy elementy składowe modeli biznesowych przedsiębiorstw. Różnorodność poruszanych tematów może stanowić inspirację dla czytelników do przeprowadzenia SPL w swoich
obszarach badawczych.
The thirteenth chapter presents the B2C business models in digital business. First, the basics of the performance system in digital business are explained and assigned to four partial models with the help of the 4C-Net Business Model. The partial models Content, Commerce, Context, and Connection are then listed and explained on the basis of their value chains, core competencies, and service offerings. Chapter 13 concludes with a description of hybrid business models, which are illustrated using Google as a case study.
We build on an emerging strategy literature that views the firm as a bundle of resources and capabilities, and examine conditions that contribute to the realization of sustainable economic rents. Because of (1) resource-market imperfections and (2) discretionary managerial decisions about resource development and deployment, we expect firms to differ (in and out of equilibrium) in the resources and capabilities they control. This asymmetry in turn can be a source of sustainable economic rent. The paper focuses on the linkages between the industry analysis framework, the resource-based view of the firm, behavioral decision biases and organizational implementation issues. It connects the concept of Strategic Industry Factors at the market level with the notion of Strategic Assets at the firm level. Organizational rent is shown to stem from imperfect and discretionary decisions to develop and deploy selected resources and capabilities, made by boundedly rational managers facing high uncertainty, complexity, and intrafirm conflict.
The resource-based approach is an emerging framework that has stimulated discussion between scholars from three research perspectives. First, the resource-based theory incorporates traditional strategy insights concerning a firm's distinctive competencies and heterogeneous capabilities. The resource-based approach also provides value-added theoretical propositions that are testable within the diversification strategy literature. Second, the resource-based view fits comfortably within the organizational economics paradigm. Third, the resource-based view is complementary to industrial organization research. The resource-based view provides a framework for increasing dialogue between scholars from these important research areas within the conversation of strategic management. Resource-based studies that give simultaneous attention to each of these research programs are suggested.
This comparative study of the evolution of Intel Corporation's strategic position in two semiconductor memory businesses and in the microprocessor business provides insight into the forces that drive strategic business exit in dynamic environments. Inertial forces caused Intel's distinctive competence to diverge from the evolving basis of competitive advantage in the memory business. Inertial forces also caused Intel's corporate strategy to diverge from strategic actions taken by middle-level managers. Intel's internal selection environment played a key role in the strategic business exit process by causing it to shift the allocation of scarce manufacturing resources from the memory business to the emerging microprocessor business before corporate strategy was officially changed. The paper contributes to the development of theory about the role of strategy in firm evolution by offering insight into how the internal selection environment mediates the coevolution of industry-level sources of competitive advantage and firm-level sources of distinctive competence and into the link between corporate strategy and strategic action.
Why might firms be regarded as astutely managed at one point, yet subsequently lose their positions of industry leadership when faced with technological change? We present a model, grounded in a study of the world disk drive industry, that charts the process through which the demands of a firm's customers shape the allocation of resources in technological innovation—a model that links theories of resource dependence and resource allocation. We show that established firms led the industry in developing technologies of every sort—even radical ones—whenever the technologies addressed existing customers' needs. The same firms failed to develop simpler technologies that initially were only useful in emerging markets, because impetus coalesces behind, and resources are allocated to, programs targeting powerful customers. Projects targeted at technologies for which no customers yet exist languish for lack of impetus and resources. Because the rate of technical progress can exceed the performance demanded in a market, technologies which initially can only be used in emerging markets later can invade mainstream ones, carrying entrant firms to victory over established companies.
In this paper, we examine the importance of year, industry, corporate-parent, and business- specific effects on the profitability of U.S. public corporations within specific 4-digit SIC categories. Our results indicate that year, industry, corporate-parent, and business-specific effects account for 2 percent, 19 percent, 4 percent, and 32 percent, respectively, of the aggregate variance in profitability. We also find that the importance of the effects differs substantially across broad economic sectors. Industry effects account for a smaller portion of profit variance in manufacturing but a larger portion in lodging/entertainment, services, wholesale/retail trade, and transportation. Across all sectors we find a negative covariance between corporate-parent and industry effects. A detailed analysis suggests that industry, corporate-parent, and business-specific effects are related in complex ways. © 1997 by John Wiley & Sons, Ltd.
Focuses on the economic theory that views the economy based on positive feedback. Theory of choice for understanding modern high-technology companies; Difference from the conventional economic theory; Quantification of economic activity based on individual transactions; Importance of timing when undertaking research initiatives in new industries.
Dynamic capabilities enable firms to create new products and processes and respond to changing market conditions. This empirical investigation of dynamic R&D capabilities deals with the role of complementary know-how and other assets in the context of changing conditions in the U.S. petroleum industry during the 1970s and early 1980s. The analysis suggests that, in response to rising oil prices, firms with larger amounts of complementary technological knowledge and physical assets also undertook larger amounts of R&D on coal conversion (a synthetic fuels process). © 1997 by John Wiley & Sons, Ltd.
This paper reviews the progress of the strategy field towards developing a truly dynamic theory of strategy. It separates the theory of strategy into the causes of superior performance at a given period in time (termed the cross-sectional problem) and the dynamic process by which competitive positions are created (termed the longitudinal problem). The cross-sectional problem is logically prior to a consideration of dynamics, and better understood. The paper then reviews three promising streams of research that address the longitudinal problem. These still fall short of exposing the true origins of competitive success. One important category of these origins, the local environment in which a firm is based, is described. Many questions remain unanswered, however, and the paper concludes with challenges for future research.
Building on Thompson's (1967) typology of long-linked, intensive, and mediating technologies, this paper explores the idea that the value chain, the value shop, and the value network are three distinct generic value configuration models required to understand and analyze firm-level value creation logic across a broad range of industries and firms. While the long-linked technology delivers value by transforming inputs into products, the intensive technology delivers value by resolving unique customer problems, and the mediating technology delivers value by enabling direct and indirect exchanges between customers. With the identification of alternative value creation technologies, value chain analysis is both sharpened and generalized into what we propose as a value configuration analysis approach to the diagnosis of competitive advantage. With the long-linked technology and the corresponding value chain configuration model as benchmark, the paper reviews the distinctive logic and develops models of the value shop and the value network in terms of primary activity categories, drivers of cost and value, and strategic positioning options. © 1998 John Wiley & Sons, Ltd.