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Journal ArticleDOI

Business Models, Business Strategy and Innovation

01 Apr 2010-Long Range Planning (Pergamon)-Vol. 43, Iss: 43, pp 172-194

Abstract: Whenever a business enterprise is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and capture mechanisms it employs. The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit. It thus reflects management's hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a profit. The purpose of this article is to understand the significance of business models and explore their connections with business strategy, innovation management, and economic theory.
Topics: Business architecture (70%), New business development (68%), Business rule (67%), Business value (67%), Business process modeling (66%)
Citations
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Journal ArticleDOI
Christoph Zott1, Raphael Amit2, Lorenzo Massa1Institutions (2)
Abstract: This article provides a broad and multifaceted review of the received literature on business models in which the authors examine the business model concept through multiple subject-matter lenses The review reveals that scholars do not agree on what a business model is and that the literature is developing largely in silos, according to the phenomena of interest of the respective researchers However, the authors also found emerging common themes among scholars of business models Specifically, (1) the business model is emerging as a new unit of analysis; (2) business models emphasize a system-level, holistic approach to explaining how firms “do business”; (3) firm activities play an important role in the various conceptualizations of business models that have been proposed; and (4) business models seek to explain how value is created, not just how it is captured These emerging themes could serve as catalysts for a more unified study of business models

3,373 citations


Cites background from "Business Models, Business Strategy ..."

  • ...Hurt, 2008; Baden-Fuller & Morgan, 2010 Teece, 2010 “A business model articulates the logic, the data and other evidence that support a value proposition for the customer, and a viable structure of revenues and costs for the enterprise delivering that value” (p. 179)....

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  • ...The business model is conceptually placed between a firm’s input resources and market outcomes, and it “embodies nothing less than the organizational and financial ‘architecture’ of the business” (Teece, 2010: 173)....

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  • ...& Amit, 2007, 2008) • Advantageous cost structures (Teece, 2007) • Schumpeterian innovation (Teece, 2010) • Connection of technology with customers (Chesbrough, & Rosenbloom, 2002) • Network plays (Calia et al....

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  • ...Third, many scholars include activities, performed either by a focal firm or by its suppliers, partners, or customers, as part of their conceptualization (McGrath, 2010; Teece, 2010; Zott & Amit, 2010)....

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  • ...Although business models have been integral to trading and economic behavior since pre-classical times (Teece, 2010), the business model concept became prevalent with the advent of the Internet in the mid-1990s, and it has been gathering momentum since then....

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Journal ArticleDOI
TL;DR: This work conceptualizes a firm's business model as a system of interdependent activities that transcends the focal firm and spans its boundaries and suggests two sets of parameters that activity systems designers need to consider: design elements and design themes that describe the architecture of an activity system.
Abstract: Building on existing literature, we conceptualize a firm's business model as a system of interdependent activities that transcends the focal firm and spans its boundaries. The activity system enables the firm, in concert with its partners, to create value and also to appropriate a share of that value. Anchored on theoretical and empirical research, we suggest two sets of parameters that activity systems designers need to consider: design elements - content, structure and governance - that describe the architecture of an activity system; and design themes - novelty, lock-in, complementarities and efficiency - that describe the sources of the activity system's value creation.

2,080 citations


Journal ArticleDOI
TL;DR: This work presents a conceptual framework to separate and relate business model and strategy, and shows that the concepts of strategy and business model differ when there are important contingencies upon which a well-designed strategy must be based.
Abstract: The notion of business model has been used by strategy scholars to refer to “the logic of the firm, the way it operates and how it creates value for its stakeholders.” On the surface, this notion appears to be similar to that of strategy. We present a conceptual framework to separate and relate business model and strategy. Business model, we argue, is a reflection of the firm’s realized strategy. We find that in simple competitive situations there is a one-to-one mapping between strategy and business model, which makes it difficult to separate the two notions. We show that the concepts of strategy and business model differ when there are important contingencies upon which a well-designed strategy must be based. Our framework also delivers a clear separation between tactics and strategy. This distinction is possible because strategy and business model are different constructs.

1,837 citations


Journal ArticleDOI
Abstract: 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.

1,753 citations


Cites background from "Business Models, Business Strategy ..."

  • ...It is nothing less than the organisational and financial ‘architecture’ of a business and includes implicit assumptions about customers, their needs, and the behaviour of revenues, costs and competitors (Teece, 2010)....

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  • ...capture value) from the provision of good, services or information to users and customers (Teece, 2010)....

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  • ...Value capture is about considering how to earn revenues (i.e. capture value) from the provision of good, services or information to users and customers (Teece, 2010)....

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  • ...Value creation is at the heart of any business model; businesses typically capture value by seizing new business opportunities, newmarkets and new revenue streams (Beltramello et al., 2013; Teece, 2010)....

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  • ...…model: Margretta’s (2002), Zott and Amit (2010) and Beattie and Smith (2013) describe business models as a holistic description on ‘how a firm does business’ and Teece (2010) describes that a businessmodel articulates how the companywill convert resources and capabilities into economic value....

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Posted Content
Abstract: 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.

1,233 citations


Cites background from "Business Models, Business Strategy ..."

  • ...First, business models can support the strategic marketing of innovative processes, products and services (e.g., Pateli and Giaglis, 2005; Teece, 2010; Zott and Amit, 2008, 2007)....

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  • ...Common sense amongst strategy-oriented business model scholars is that creating and delivering customer value lies at the heart of any business model (e.g., Afuah, 2004; Chesbrough, 2010; Johnson, 2010; Osterwalder and Pigneur, 2009; Teece, 2010; Zott and Amit, 2010)....

    [...]

  • ...Common sense amongst strategyoriented business model scholars is that creating and delivering customer value lies at the heart of any business model (e.g., Afuah, 2004; Chesbrough, 2010; Johnson, 2010; Osterwalder and Pigneur, 2009; Teece, 2010; Zott and Amit, 2010)....

    [...]

  • ...First, business models can support the strategic marketing of innovative processes, products and services (e.g., Pateli and Giaglis, 2005; Teece, 2010; Zott and Amit, 2008)....

    [...]


References
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Journal ArticleDOI
David J. Teece1, Gary P. Pisano2, Amy Shuen3Institutions (3)
Abstract: The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.

25,469 citations


Book
10 Oct 2016-
Abstract: This paper is concerned with those actions of business firms which have harmful effects on others. The standard example is that of a factory the smoke from which has harmful effects on those occupying neighbouring properties. The economic analysis of such a situation has usually proceeded in terms of a divergence between the private and social product of the factory, in which economists have largely followed the treatment of Pigou in The Economics of Welfare. The conclusions to which this kind of analysis seems to have led most economists is that it would be desirable to make the owner of the factory liable for the damage caused to those injured by the smoke, or alternatively, to place a tax on the factory owner varying with the amount of smoke produced and equivalent in money terms to the damage it would cause, or finally, to exclude the factory from residential districts (and presumably from other areas in which the emission of smoke would have harmful effects on others). It is my contention that the suggested courses of action are inappropriate, in that they lead to results which are not necessarily, or even usually, desirable.

11,439 citations


Journal ArticleDOI
David J. Teece1Institutions (1)
Abstract: This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long- run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise-level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long-run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright  2007 John Wiley & Sons, Ltd.

7,883 citations


Journal ArticleDOI
David J. Teece1Institutions (1)
01 Apr 1993-Research Policy
Abstract: This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants be- nefit. Business strategy particularly as it relates to the firm's decision to integrate and collaborate is shown to be an important factor. The paper demonstrates that when imitation is easy, markets don't work well, and the profits from innova- tion may accrue to the owners of certain complementary assets, rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets. The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so ill positioned in the market that they necessarily will fail. The analysis provides a theoretical foundation for the proposi- tion that manufacturing often matters. particularly to innovat- ing nations. Innovating firms without the requisite ing and related capacities may die, even though they are the best at innovation. Implications for trade policy and domestic economic policy are examined.

7,009 citations


Book
Carl Shapiro1, Hal R. Varian1Institutions (1)
01 Jan 1999-
TL;DR: Information Rules will help business leaders and policy makers - from executives in the entertainment, publishing, hardware, and software industries to lawyers, finance professionals, and writers -- make intelligent decisions about their information assets.
Abstract: From the Publisher: Information Goods -- from movies and music to software code and stock quotes - have supplanted industrial goods as the key drivers of world markets. Confronted by this New Economy, many instinctively react by searching for a corresponding New Economics to guide their business decisions. Executives charged with rolling out cutting-edge software products or on-line versions of their magazines are tempted to abandon the classic lessons of economics, and rely instead on an ever changing roster of trends, buzzwords, and analogies that promise to guide strategy in the information age. Not so fast, say authors Carl Shapiro and Hal R. Varian. In Information Rules they warn managers, "Ignore basic economic principles at your own risk. Technology changes. Economic laws do not." Understanding these laws and their relevance to information goods is critical when fashioning today's successful competitive strategies. Information Rules introduces and explains the economic concepts needed to navigate the evolving network economy. Information Rules will help business leaders and policy makers - from executives in the entertainment, publishing, hardware, and software industries to lawyers, finance professionals, and writers -- make intelligent decisions about their information assets.

4,971 citations


Performance
Metrics
No. of citations received by the Paper in previous years
YearCitations
202215
2021630
2020601
2019641
2018608
2017652