Showing papers on "Business model published in 2003"

Platform competition in two‐sided markets

Abstract: Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides of the market on board.” Accordingly, platforms devote much attention to their business model, that is, to how they court each side while making money overall. This paper builds a model of platform competition with two-sided markets. It unveils the determinants of price allocation and end-user surplus for different governance structures (profit-maximizing platforms and not-for-profit joint undertakings), and compares the outcomes with those under an integrated monopolist and a Ramsey planner. (JEL: L5, L82, L86, L96)

Creating sustainable value

Abstract: Executive Overview Just as the creation of shareholder value requires performance on multiple dimensions, the global challenges associated with sustainable development are also multifaceted, involving economic, social, and environmental concerns. Indeed, these challenges have implications for virtually every aspect of a firm's strategy and business model. Yet, most managers frame sustainable development not as a multidimensional opportunity, but rather as a one-dimensional nuisance, involving regulations, added cost, and liability. This approach leaves firms ill-equipped to deal with the issue in a strategic manner. Accordingly, we develop a sustainable-value framework that links the challenges of global sustainability to the creation of shareholder value by the firm. Specifically, we show how the global challenges associated with sustainable development, viewed through the appropriate set of business lenses, can help to identify strategies and practices that contribute to a more sustainable world while s...

Electronic business adoption by European firms: a cross-country assessment of the facilitators and inhibitors

Abstract: In this study, we developed a conceptual model for studying the adoption of electronic business (e-business or EB) at the firm level, incorporating six adoption facilitators and inhibitors, based on the technology-organization-environment theoretical framework. Survey data from 3100 businesses and 7500 consumers in eight European countries were used to test the proposed adoption model. We conducted confirmatory factor analysis to assess the reliability and validity of constructs. To examine whether adoption patterns differ across different e-business environments, we divided the full sample into high EB-intensity and low EB-intensity countries. After controlling for variations of industry and country effects, the fitted Iogit models demonstrated four findings: (1) Technology competence, firm scope and size, consumer readiness, and competitive pressure are significant adoption drivers, while lack of trading partner readiness is a significant adoption inhibitor. (2) As EB-intensity increases, two environmental factors - consumer readiness and lack of trading partner readiness - become less important, while competitive pressure remains significant. (3) In high EB-intensity countries, e-business is no longer a phenomenon dominated by large firms; as more and more firms engage in e-business, network effect works to the advantage of small firms. (4) Firms are more cautious in adopting e-business in high EB-intensity countries - it seems to suggest that the more informed firms are less aggressive in adopting e-business, a somehow surprising result. Explanations and implications are offered.

The business model concept: theoretical underpinnings and empirical illustrations

Abstract: The business model concept is becoming increasingly popular within IS, management and strategy literature. It is used within many fields of research, including both traditional strategy theory and in the emergent body of literature on e-business. However, the concept is often used independently from theory, meaning model components and their interrelations are relatively obscure. Nonetheless, we believe that the business model concept is useful in explaining the relation between IS and strategy. This paper offers an outline for a conceptual business model, and proposes that it should include customers and competitors, the offering, activities and organisation, resources and factor market interactions. The causal inter-relations and the longitudinal processes by which business models evolve should also be included. The model criticises yet draws on traditional strategy theory and on the literature that addresses business models directly. The business model is illustrated by an ERP implementation in a European multi-national company.

The quest for resilience.

Abstract: In less turbulent times, executives had the luxury of assuming that business models were more or less immortal. Companies always had to work to get better, but they seldom had to get different--not at their core, not in their essence. Today, getting different is the imperative. It's the challenge facing Coca-Cola as it struggles to raise its "share of throat" in noncarbonated beverages. It's the task that bedevils McDonald's as it tries to restart its growth in a burger-weary world. It's the hurdle for Sun Microsystems as it searches for ways to protect its high-margin server business from the Linux onslaught. Continued success no longer hinges on momentum. Rather, it rides on resilience-on the ability to dynamically reinvent business models and strategies as circumstances change. Strategic resilience is not about responding to a onetime crisis or rebounding from a setback. It's about continually anticipating and adjusting to deep, secular trends that can permanently impair the earning power of a core business. It's about having the capacity to change even before the case for change becomes obvious. To thrive in turbulent times, companies must become as efficient at renewal as they are at producing today's products and services. To achieve strategic resilience, companies will have to overcome the cognitive challenge of eliminating denial, nostalgia, and arrogance; the strategic challenge of learning how to create a wealth of small tactical experiments; the political challenge of reallocating financial and human resources to where they can earn the best returns; and the ideological challenge of learning that strategic renewal is as important as optimization.

Performance implications of strategic performance measurement in financial services firms

Abstract: This study examines the relation between measurement system satisfaction, economic performance, and two general approaches to strategic performance measurement: greater measurement diversity and improved alignment with firm strategy and value drivers. We find consistent evidence that firms making more extensive use of a broad set of financial and (particularly) non-financial measures than firms with similar strategies or value drivers have higher measurement system satisfaction and stock market returns. However, we find little support for the alignment hypothesis that more or less extensive measurement than predicted by the firm's strategy or value drivers adversely affect performance. Instead, our results indicate that greater measurement emphasis and diversity than predicted by our benchmark model is associated with higher satisfaction and stock market performance. Our results also suggest that greater measurement diversity relative to firms with similar value drivers has a stronger relationship with stock market performance than greater measurement on an absolute scale. Finally, the balanced scorecard process, economic value measurement, and causal business modeling are associated with higher measurement system satisfaction, but exhibit almost no association with economic performance.

Innovation in logistic services and the new business model: A conceptual framework

Abstract: Service industries hold an increasingly dynamic and pivotal role in today's knowledge‐based economies. The logistics industry is a classic example of the birth and development of a vital new service‐based industry, transformed from the business concept of transportation to that of serving the entire logistical needs of customers. Quantum advances in science, technology, and communication in the new millennium have compelled firms to consider the potential of the so‐called new “resources” (technology, knowledge and relationship networks) that are essential if firms are to operate effectively within the emerging business model, and to utilise the opportunities to innovate and gain market leadership. Through an extensive literature review, this paper examines the factors that nurture innovation in logistics services, identifies the contributions of the new “resources” and, using industry examples, examines the application of these resources to logistics firms as they assume an extended role within the new business model.

The Challenge of Closed-Loop Supply Chains

Abstract: Closed-loop supply chains differ significantly from forward supply chains in many aspects. These differences are not well understood in many contexts, and the situation is complicated by many types of product returns. Progress is slow since closed-loop supply chains are rarely considered as value-creating systems, and much of the focus is on the operational aspects, rather than the larger strategic issues. Interest is growing in the US because of the potential profitability and in the European Union because of legislation. New business models need to be developed by joint cooperation between industry and academia that take a life-cycle approach to products.

Business Models: A Strategic Management Approach

Abstract: Business Models: A Strategic Management Approach by Allan Afuah represents a new kind of book. Business models are about making money and most firms are in business to make money (a profit). It is therefore no surprise that the phrase "business model" is increasingly finding its way into CEO speech after speech and in business school functional areas from accounting to finance to marketing to strategy. Because strategic management is inherently integrative in nature and increasingly more focused on firm performance, strategy textbooks have come closest to addressing the subject of business models, but only implicitly and partially so. Business Models: A Strategic Management Approach draws on the latest research in strategic management to explicitly and fully explore business models. It draws on the latest research on to explore which activities a firm performs, how it performs them, and when it performs them to make a profit. It offers an integrated framework for understanding the relationship between the set of activities that a firm chooses to perform, its revenue model, its cost structure, its resources and capabilities, the competitive forces in the firm's industry, and its ability to sustain a competitive advantage even in the face of change. It provides the link between resources, product-market positions and profits--how resources and product-market positions are translated into profits. (Existing strategy texts demonstrate correlation between resources or product-market positions and profits, not their translation into profits). Additionally, it explores the relationship between business models and corporate social responsibility as well as the international component to business models. It offers a definition of business models that is deeply rooted in the resource-based and product-market theories of strategy.

The ultimate competitive advantage of continuing business model innovation

Abstract: Discusses the idea that continuing business model innovation provides a parallel way to outperform the competition. Improving a company’s business model by redirecting its focus will mean that competitors will be left out of position and unable to respond effectively.

All research is interpretive

Abstract: This article advocates recognition of interpretive elements in business research and the need for improvement of the researcher’s interpretive skills. The scientific tradition specifically concerned with interpretation is called hermeneutics. However, interpretation exists in all types of scientific studies, be they quantitative or qualitative. The article presents lessons from hermeneutics and spells out the interpretive content of research in general and with specific focus on business‐to‐business marketing. Interpretive methods, when applied to business, are characterized by efforts to understand the complexity of the business world and its products, services and markets, and to add meaning to strategies, actions and events. A set of methods designated interactive research is discussed. These are more inspired by the humanities, sociology, anthropology and modern natural sciences than by the social sciences research paradigm as it is currently applied in most mainstream research in marketing.

Responses to disruptive strategic innovation

Abstract: When upstarts overthrow an industry's business model with disruptive strategic innovations (not the same as disruptive technological innovations), many established companies hurry to imitate. But others worry about playing two games at once. They contend that adopting the new way may damage the existing business because attackers utilize strategies that are not only different from but also in conflict with the industry leaders'. Two London Business School authors explain when to use which option or one of several new ones. Research into established companies' responses suggests five current approaches: focusing on one's own game and investing in it; ignoring the new strategy when it is not a threat; disrupting the disruptive innovation; playing two games; and scaling up the disruption. How a company responds depends on two main factors: motivation and ability. The company's motivation is determined by the rate at which the innovation is growing, how threatening it is to the main business and how strategically the new business is related to the existing one. The ability of an established company to respond is determined by its skills, resources, time, and the nature and size of the conflicts between the traditional and the new business. But, the authors say, just appreciating that the new ways of competing are not inherently superior is half the battle.

Do Academic Spin-Outs Differ and Does it Matter?

Abstract: Questioning the widespread tendency to view academic spin-outs as a homogenous category, the paper explores typologies of these companies using a Penrosean conceptualisation of entrepreneurial activity. We initially identify five main types of business activities pursued by academic entrepreneurs, which we revise after analysing a database of Cambridge University spin-outs and real-time exemplars of emerging ventures. The refined typology takes into account the dynamic of the entrepreneurial process. As the business models of ventures evolve they may enter a different category of business activity. We conclude by discussing the academic and practical needs for a better understanding of the heterogeneity of spin-outs, the diversity of which has theoretical and policy implications.

The Fall of Enron

Abstract: We will assess how governance and incentive problems contributed to Enron's rise and fall. A well-functioning capital market creates appropriate linkages of information, incentives, and governance between managers and investors. This process is supposed to be carried out through a network of intermediaries. We show that despite this elaborate corporate governance and intermediation network, Enron was able to attract large sums of capital to fund a questionable business model, conceal its true performance through a series of accounting and financing maneuvers, and hype its stock to unsustainable levels. While Enron presents an extreme example, it is also a useful test case for potential weaknesses in the U.S. capital market system. We believe that the problems of governance and incentives that emerged at Enron can also surface at many other firms, and may potentially affect the entire capital market. We will begin by discussing the evolution of Enron's business model in the late 1990s, the stresses that this business model created for Enron's financial reporting, and how key capital market intermediaries played a role in the company's rise and fall.

A contingency perspective on internet adoption and competitive advantage

Abstract: Firms adopt the Internet for different purposes, ranging from simple Internet presence to using the Internet to transform business operations. This paper examines the contingency factors that affect levels of Internet adoption and their impact on competitive advantage. A questionnaire was used to gather data for this study; 159 usable responses were obtained from a sample of 566 firms in Singapore. Results indicate that most firms are still exploring the business use of the Internet. A proactive business technology strategy was found to be positively associated with the level of Internet adoption. Technology compatibility and top management support were found to have no significant relationships with the level of Internet adoption. Further, the level of Internet adoption had a significant positive relationship with competitive advantage. These results provide a better understanding of the contingency factors affecting the level of Internet adoption, as well as providing some evidence of the positive impact of Internet adoption on competitive advantage.

Translating strategy into effective implementation: dispelling the myths and highlighting what works

Abstract: Several reasons are frequently offered to explain (or to justify) failure to implement strategy. Some are valid but many have merely gained credibility from being repeated often. By discrediting the myths, we can more clearly look at a number of approaches that can greatly enhance the effectiveness of strategy implementation. There are seven key reasons for strategy failure. Unanticipated market changes – strategies can fail because the market conditions change before the strategy can take hold. Three preventative actions are cited: (1) effective competitor responses to strategy – to out‐perform the competition, competitive intelligence is a must; (2) too little investment – if insufficient resources are applied, the strategy will fail. Modeling will aid the executive to make smarter deployment of limited resources; and (3) failure of buy‐in – insufficient buy‐in to or understanding of the strategy among those who need to implement it will cause failure. Good strategic management is a function of people actively considering the strategy as they make day‐to‐day decisions in an ever‐changing world. Lack of focus – resources are wastefully dissipated if priorities are unclear. Put the strategy on one page: focus to execute. Poorly conceived business models – sometimes strategies are simply bad.

A descriptive model of online shopping process: some empirical results

Abstract: Since early 1990s, tremendous growth of e‐commerce has transformed the world retail infrastructure rapidly. Although the Internet burst between 2000 and 2002 which slowed down the rage in the financial market, the Internet infrastructure continues to grow and becomes an integral part of market strategic portfolio for many organizations. In order to be successful in the Internet niche, many retailers engage in business model reengineering to keep up with changes in how customers acquire goods and services. Based on in‐depth interviews and a follow‐up survey, the present study depicts a common online shopping process and identifies three common online shopping components: interactivity, transaction, and fulfillment. These components and their respective factors form one's online shopping experience. Managerial implications and future research directions are offered.

Accounting knowledge and skills and the challenges of a global business environment

Abstract: The rapid spread and acceptance of globalization and the enormous developments in information technology, has led to dramatic changes in the business environment. These changes have brought new challenges not only to business but also to business education. Business schools that prepare future managers in different disciplines are responsible for closing the gap between the skills acquired by its graduates and the required skills by the global markets. This paper identifies the challenges facing accounting education in providing students with the knowledge and skills that raise their competency level to meet that required by the market. These challenges warrant that the competency level of accountants should be improved. Current accounting education and the skill levels of accountants are not in line with what is required in the dynamic environments of global business. A strategic plan for closing the gap between the acquired and required skills is presented to help prepare students for facing and dealing with the challenges of the new global business environment.

Local Government Broadband Initiatives

Abstract: The future for Internet access is broadband. Federal and state policymakers are exploring initiatives to promote the deployment and adoption of broadband services, and in recent years, an increasing number of local governments have joined them. While the first generation of narrowband dial-up access was able to piggyback on the near universal availability of the mature telephone network, broadband relies on communications infrastructure that is both more heterogeneous and less evenly distributed. These local infrastructure differences suggest a greater role for local communities in affecting how next generation access will evolve. A few case studies of local government broadband initiatives exist, but there is little systematic data or research categorizing the range of activity or assessing the effectiveness of these efforts. This paper represents a first step in an ongoing research effort to better understand the factors that influence a community’s decision to act, its choice of what to do, and the effectiveness of its actions. In recognition of the diversity of initiatives observed, the paper presents a taxonomy to classify the range of policies that local governments are adopting, according to four roles of government vis a vis broadband: as user, rule-maker, financier, and infrastructure provider. After discussing examples of each type of initiative within the taxonomy, the paper analyzes a sample of communities with municipal electric utilities (M.E.U.s). From a match of the sample of M.E.U. communities to demographic data from the 2000 Census, we find that on average, these M.E.U.s are more often found in mid-sized communities that are more likely to be in rural counties. Those that offer communications are in the vanguard: although they represent only about a quarter of all M.E.U.s, their number has grown more than 10% annually for the past two years. Within the subset of our sample of M.E.U.s that offer communication services, our analysis finds two distinct segments. While the average U.S. community has a population of around 8,000 people and the average M.E.U community around 42,000, the average population is around 6,000 in M.E.U communities that offer only consumer services, and around 158,000 in those that offer only wholesale commercial services. This size-based split suggests two separate rationales for public-sector interventions in different local contexts. Smaller communities may be less well-served by the private sector, as commercial carriers perceive them to be too costly to serve economically given the current state of broadband technology and demand. Larger communities, on the other hand, may experience an abundance of competitive entry that suggests a coordinating or facilitating role for the local government (for example, to encourage competition but minimize street cuts by bringing fiber installation under city management, while leaving the actual use of the fiber to the commercial sector). The paper also provides a preliminary econometric exploration of the factors that lead M.E.U.s to provide communications infrastructure and services, based on demographic and cost-related data available from the Census. It concludes with a discussion of issues to consider for further research. These include the addition of regressors such as the extent of competitive alternatives and the local political environment; a deeper understanding of M.E.U.’s choices with regard to wholesale-only vs. retail business models, especially in providing consumer services; and extension of the data set beyond municipal electric utilities.

Managing e-transformation in the public sector: an e-government study of the inland revenue authority of Singapore (IRAS)

Abstract: Continuous organizational transformation is becoming a common phenomenon as public agencies rapidly embrace new information technologies (IT) to streamline and re-invent their obsolete operations. However, due to the overwhelming extent of the necessary changes as well as the sheer diversity of stakeholders involved in transforming corporate functions practitioners are finding it difficult to manage the level of dynamism required in the effort. In an attempt to shed some light on the phenomenon of managing e-transformation, this paper examines in-depth an e-government initiative. Through the study of how one organization in the public sector adapts to the dynamic customer relations brought about by e-transformation, the case serves to identify the governing factors for successful organization-stakeholder relations, and how these may have a bearing on the development of effective e-transformation strategies. An important contribution of this study is the proposal of a development model of relationships in organizations for an understanding into how organization-stakeholder relationships can be efficiently managed to bring about an effective overhaul of business processes.

Business Model Analysis Applied To Mobile Business

Abstract: Mobile business is a young promising industry created by the emergence of wireless data networks.. Similar to other emerging industries, it is characterized by a large number of uncertainties at different levels concerning technology, demand and strategy. This paper focuses on the strategic uncertainties, where a large number of actors are trying a number of strategic approaches to position themselves in the most favourable position in the value system. As a consequence, they are experimenting with a number of innovating business models. We argue that successful business models are likely to be the ones that best address the economic peculiarities underlying this industry, like mobility, network effects and natural monopolies. The paper presents the principal classes of actors that will participate in the mobile business industry and give an overview of their business models based on a formalized ontology.

Electronic Commerce Customer Relationship Management: A Research Agenda

Abstract: In this paper, we approach electronic commerce Customer Relationship Management (e-CRM) from the perspective of five research areas. Our purpose is to define a conceptual framework to examine the relationships among and between these five research areas within e-CRM and to propose how they might be integrated to further research this area. We begin with a discussion of each of the research areas through brief reviews of relevant literature for each and a discussion of the theoretical and strategic implications associated with some CRM technologies and research areas. Next we present our framework, which focuses on e-CRM from the five research perspectives. We then present a theoretical framework for e-CRM in terms of the five research areas and how they affect one another, as well as e-CRM processes and both performance and non-performance outcomes.

Performance Implications of Strategic Performance Measurement in Financial Services Firms

Abstract: This study examines the relation between measurement system satisfaction, economic performance, and two general approaches to strategic performance measurement: greater measurement diversity and improved alignment with firm strategy and value drivers. We find consistent evidence that firms making more extensive use of a broad set of financial and (particularly) non-financial measures than firms with similar strategies or value drivers have higher measurement system satisfaction and stock market returns. However, we find little support for the alignment hypothesis that more or less extensive measurement than predicted by the firm's strategy or value drivers adversely affect performance. Instead, our results indicate that greater measurement emphasis and diversity than predicted by our benchmark model is associated with higher satisfaction and stock market performance. Our results also suggest that greater measurement diversity relative to firms with similar value drivers has a stronger relationship with stock market performance than greater measurement on an absolute scale. Finally, the balanced scorecard process, economic value measurement, and causal business modeling are associated with higher measurement system satisfaction, but exhibit almost no association with economic performance.

Strategic innovation: the construct, its drivers and its strategic outcomes

Abstract: Strategic innovation has been described as the fundamental reconceptualization of business models and the reshaping of existing markets by breaking the rules and changing the nature of competition. This paper traces the notion of strategic innovation in the literature, offers corporate examples from Amazon.com and Swatch to illustrate key drivers and outcomes of strategic innovation, and synthesizes the insights gained in a Multiple Indicator–MultIple Causes (MIMIC) model. The model offers a formal specification of the strategic innovation construct and provides conceptual guidance for its operationalization in the context of empirical research.

Designing business models for mobile ICT services

Abstract: Introduction The provisioning of mobile ICT services often requires firms with different resources (e.g. financial support and consumer base) and capabilities (e.g. telecommunication, payment, and security) that co-operate to create value for end users. Given the low success rate of inter-firm co operations (see e.g. Levine & Byrne, 1986; Harrigan, 1988; and Bleeke & Ernst, 1993) and the risks and cost involved introducing new technological innovations, it is not surprisingly that there is much attention of practitioners and academia for the concept of business models. We see a business model as the way a network of companies intends to create and capture value from the employment of technological opportunities. Designing business models is a complex undertaking because different requirements (e.g. technical, user, organisational and financial requirements) need to be accommodated and balanced. Design choices in one domain (e.g. technical domain) may effect those of the other domains (e.g. user domain). This interrelatedness of design choices complicates the design of viable business models for mobile services.

Payday Lending: A Business Model that Encourages Chronic Borrowing

Abstract: The tremendous growth in the demand for very small, short-term loans by credit constrained households is being largely filled by companies offering payday loans. This article explores the explosive growth of payday lending as a source of short-term consumer credit in low- and moderate-income communities, with a special emphasis on the relationship between industry business practices and the high incidence of perpetual indebtedness in which an increasing number of payday borrowers find themselves. Empirical analysis confirms two related truths about payday lending. First, there is no denying the large and growing demand for this consumer credit and the rapidly expanding network of companies willing to supply it. Second, despite its expanding customer base and notwithstanding industry denials, the financial performance of the payday loan industry, at least in North Carolina, is significantly enhanced by the successful conversion of more and more occasional users into chronic borrowers.