Business model innovators, such as Amazon, Skype, and Uber have revolutionized their industries by overcoming the dominant industry logic. Amazon became the biggest bookseller in the world without owning a single brick-and-mortar store; Skype is the largest telecommunications provider worldwide without having any network infrastructure at its disposal; Uber revolutionized the taxi business and reached to a market capitalization of more than 50 billion dollars within a few years without employing a single taxi driver and without owning any taxi cars. However, Business Model Innovation (BMI) is not only restricted to the innovative Silicon Valley companies. By contrast, it has become an important management issue for all companies under margin and competitive pressures. Companies like BASF, Bosch, IBM, PepsiCo, Sennheiser, Siemens, and Toshiba are actively developing new business models for building up sustainable competitive advantages. Whole industries like the energy and health sector are undergoing a radical transformation, and their companies have to rethink the way they do business. During the late 1990s especially, BMI has raised significant attention from both practitioners and scholars, considering that it forms a distinct feature in multiple research streams nowadays.
The burgeoning literature stream of business models offers several new fields for management and innovation scholars. Early research was heavily triggered by public attention and the dot-com bubble. Chesbrough and Rosenbloom (2002) are among the first scholars to advance the field by presenting a tangible classification of a business model. They define six functions of a business model, namely value proposition, market segment, value chain, cost structure and profit potential, value network, and competitive strategy. Influenced by the new economy phenomenon and e-business, a further influential attempt to root the topic of business models in research has been made by Amit and Zott (2001).
Significant advancement in this research field is due to a Long Range Planning Special Issue in 2010. 1 A central debate on how to theoretically anchor the business model concept was initiated. Demil and Lecocq (2010), for instance, enquire to what extent the business model is a static or dynamic construct by introducing the RCOV framework of business models, which stands for the key components they define, namely resources and competencies, the organization, and value proposition. They find that these elements are in permanent disequilibrium. A firm must possess the capability of dynamic consistency to sustain performance while changing its business model. In a different manner, Baden-Fuller and Morgan (2010) explore the detailed meaning of the term model in the context of business models by interlinking their research with theories in economics, biology, and philosophy. As a result, the authors regard business models as recipes that have ingredients, such as resources, capabilities, products, customers, technologies, and markets. Zott and Amit (2010) in turn adopt the notion that a business model is an activity system. Activity systems comprise activity content, activity system structure, and activity system governance.
Due to the variety of different concepts, an overall theory to explain the phenomenon of business models is still missing. According to Teece (2010), the reason for this might be that the business model has not been thoroughly anchored in traditional management theory and, vice versa—meaning research on business models often lacks a profound theoretical basis. He highlights the need to adopt the business model concept in traditional economic theories, as they too often assume perfect competition, transparent markets, strong property rights, the costless transfer of information, perfect arbitrage, and no innovation. The incorporation of business models into economic theories may radically transform them.
Despite all variation and confusion, business model research has settled on some shared notions on the topic.
First, scholars have come to see that a central advantage of the business model is to draw a holistic picture of the business (Zott, Amit, & Massa, 2010) and explain how the focal firm creates and captures value for itself and its various stakeholders within this ecosystem. In this regard, business models can be referred to boundary-breaking concepts that describe how the focal firm is embedded in and interacts with its surrounding environment (Shafer, Smith, & Linder, 2005; Teece, 2010; Zott & Amit, 2008, 2009). They tell the story of a business by taking into account different components and putting them together as a whole (Chesbrough & Rosenbloom, 2002; Magretta, 2002; Demil & Lecocq, 2010; McGrath, 2010; Morris, Schindehutte, & Allen, 2005; Osterwalder, Pigneur, & Clark, 2010). When it comes to defining these specific key components of a business model, the literature departs (Wirtz, Pistoia, Ullrich & Göttel, 2015). However, many scholars agree on three central themes, namely the value proposition, value creation, and value capture (Doganova & Eyquem-Renault, 2009; Teece, 2010; Tongur & Engwall, 2014).
Second, scholars have widely acknowledged that the business model is a key source of competitive advantage (Baden-Fuller & Morgan, 2010; Björkdahl, 2009; Chesbrough, 2007; Comes & Berniker, 2008; Hamel, 2000; Mitchell & Coles, 2003; Venkatraman & Henderson, 2008), facilitates first-mover advantages (Markides & Sosa, 2013), and may affect firm performance (Afuah, 2004; Afuah & Tucci, 2001).
This, unmistakeably, makes the business model a burgeoning unit of analysis in management research albeit the lacking unifying perspective (Foss & Saebi, 2015). Moreover, the concept of business models is not exclusive to one single functional research discipline, such as organizational behaviour, strategy, innovation management, and marketing, and it has to be accepted that it will probably remain a boundary-spanning element in research. However, this theoretical heterogeneity and diversity might even be fruitful to open up the full debate on business models and shed light from different angles. Thus, it would be h...