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Business Models in Context:
Conceptualizing the Environment of Business Models
Georg Stampfl and Reinhard Prügl
Chair for Innovation, Technology & Entrepreneurship | Zeppelin University | Germany
Paper Submission #15272
Academy of Management Annual Meeting
ENT Division – Paper Session
San Antonio, August 15, 2011
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Blurring Industry Boundaries
Catalysts for ongoing transformation processes (e.g., Djelic & Ainamo 1999; Volberda 1998)
globalization of markets,
increased competition,
rapid technological change (e.g., in information technology),
increasing customer sophistication,
changing demographics,
new forms of employment,
increasing rate of accumulation of knowledge
changing societal norms
…
Hypercompetition (Volberda 1998)
companies increasingly converging through partnerships and networks
long-standing industry boundaries are blurring and collapsing
(e.g., Illinitch, D'Aveni, & Lewin, 1996; Smith & Zeihami, 1996)
Industry Re-configuration (Gassmann 2007)
Reorganization of whole industries on a large scale has to be expected
Research puts the paradigm of stable, clearly defined industries under pressure.
Blurring industry boundaries
5
Examples for Blurring Industry Boundaries
Blurring industry boundaries
6
Examples for Blurring Industry Boundaries
Computer?
Blurring industry boundaries
7
Examples for Blurring Industry Boundaries
Computer?
Music?
Blurring industry boundaries
8
Examples for Blurring Industry Boundaries
Computer?
Music?
Telecommunications?
Blurring industry boundaries
9
Examples for Blurring Industry Boundaries
Computer?
Music?
Telecommunications?
Media?
Blurring industry boundaries
10
Former Stable Business Models Become Dynamic
„The fact is, no matter how bulletproof your firm’s current business model, it will be challenged by new
models. […] The new reality is that business models have shelf lives [...]. You must constantly attempt
to discover new business models if your company hopes to survive and grow.” (Tucker 2001, p.23)
• Flexible organizational solutions are necessary in order to adapt to changing environmental conditions.
(e.g., Lewin & Stephens, 1993; March, 1981; Volberda, 1996)
• Dynamic Capabilities (Teece 2007)
• A firm’s survival and growth increasingly depends on organizational issues such as the design of new
and viable business models fitting their environmental conditions (e.g., Markides, 2008; Voelpel, Leibold &
Tekie, 2004)
• In transforming conditions business models are not stable anymore: parts of the business model (or
the whole business model) they might be replaced by new parts (or models), which better fit the altered
external environment. (Shirky 2008)
Instable business models
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Example for Dynamic Business Models
Instable business models
12
Example for Dynamic Business Models
Instable business models
13
Example for Dynamic Business Models
Instable business models
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Example for Dynamic Business Models
Instable business models
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Business Environment & Business Model
Environment influences the design of business models
• Environmental conditions seem to be an important moderator of the relationship between business
model design and the performance of a company. (Zott & Amit 2007)
• The environment has the potential to influence the core components of a business model.
(Demil & Lecocq 2010)
Environmental scanning improves corporate performance
• Firms involved in environmental scanning activities are significantly larger and more profitable than
non-scanning firms. (Murphay, Smith & Daley 1992)
• A strong relationship can be found between the performance of a firm (in terms of profitability and
growth) and the existence of scanning systems. (Subramanian, Fernandes & Harper 1993)
Business models must be assessed against the business model environment
• “A business model cannot be assessed in the abstract; its suitability can only be determined
against a particular business environment or context. Neither business strategies, business
structures nor business models can be properly calibrated absent assessment of the business
environment.” (Teece 2010, p.191)
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Industry
Environments
Organizational
Environments
Business Model
Environments
Focus of inquiry how the industry affects
the organization
how the micro- & macro
environment affects the
organization
how the business
model and its
environment interact
Frame of reference industry ecosystem ecosystem
Assumption regarding
industry boundaries strict strict blurring
Source for economic
rents industry environment stable business models
dynamic business
models
A Need for a New Perspective on Business Environments
Different Perspectives on Business Environments
17
A Need for a New Perspective on Business Environments
Industry
Environments
Organizational
Environments
Business Model
Environments
Focus of inquiry how the industry affects
the organization
how the micro- & macro
environment affects the
organization
how the business
model and its
environment interact
Frame of reference industry ecosystem ecosystem
Assumption regarding
industry boundaries strict strict blurring
Source for economic
rents industry environment stable business models
dynamic business
models
Different Perspectives on Business Environments
18
Research Questions
(1) Which dimensions build the context of a business model ?
(2) Which central environmental factors influence the architecture of a
business model and how (on which dimensions) does the business
model mainly interact with its environment?
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Research on Business Models
Definitions &
Taxonomies
BM
Components
Reference
Models
BM &
Strategy
BM &
Performance
Research
Gap
e.g., Amit &
Zott 2001,
Magretta 2002,
Afuah & Tucci
2003,
Casadesus-
Masanell &
Ricart 2007,
Johnson et al.
2008
e.g., Gordijn
2002, Greiner
2008,
Osterwalder &
Pigneur 2009, Shi
& Manning 2009,
Wirtz 2010
e.g., Timmers
1998, Linder &
Cantrell 2000,
Rappa 2001,
Magretta 2002,
Schweizer
2005,
Osterwalder et
al. 2005,
Baden-Fuller et
al. 2008,
Casadesus-
Masanell &
Ricart 2010
e.g., Chesbrough
& Rosenbloom
2002, Aufah &
Tucci, 2003,
Malone et al.
2005, Lai et al.
2006, Zott & Amit
2009, Chesbrough
2009, Wirtz 2010
e.g., Lehmann-
Ortega &
Schoettel 2005,
Ammar 2006,
Morris &
Schindehutte
2006, Teece
2009,
Casadesus-
Masanell &
Ricart 2009
20
Research on Business Models
Definitions &
Taxonomies
BM
Components
Reference
Models
BM &
Strategy
BM &
Performance
Research
Gap
e.g., Amit &
Zott 2001,
Magretta 2002,
Afuah & Tucci
2003,
Casadesus-
Masanell &
Ricart 2007,
Johnson et al.
2008
e.g., Gordijn
2002, Greiner
2008,
Osterwalder &
Pigneur 2009, Shi
& Manning 2009,
Wirtz 2010
e.g., Timmers
1998, Linder &
Cantrell 2000,
Rappa 2001,
Magretta 2002,
Schweizer
2005,
Osterwalder et
al. 2005,
Baden-Fuller et
al. 2008,
Casadesus-
Masanell &
Ricart 2010
e.g., Chesbrough
& Rosenbloom
2002, Aufah &
Tucci, 2003,
Malone et al.
2005, Lai et al.
2006, Zott & Amit
2009, Chesbrough
2009, Wirtz 2010
e.g., Lehmann-
Ortega &
Schoettel 2005,
Ammar 2006,
Morris &
Schindehutte
2006, Teece
2009,
Casadesus-
Masanell &
Ricart 2009
Most of the studies on business models see
1. business models as isolated constructs, not taking into account external factors which
potentially influence a business model.
2. business models as rather static, not putting emphasis on the importance of re-configuring
business models according to contextual changes.
21
Objectives of This Paper
• A new perspective of business environments
• First step in conceptualizing business model contexts
• Development of a generic framework as basis for further research
• Explorative and inductive
• Qualitative approach
22
A Five-Step Approach – Reducing Complexity
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
23
Developing the BME Framework and the BME Map
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
• Aim: Collect a wide array of terms used to specify business environments (“long list”)
• Database: EBSCO Host Business Source Premier
• Main keywords used: environment, industry analysis, environmental scanning and
organizational environments in title, abstract or keywords within all years of database
• We reviewed articles in leading academic and practitioner-oriented business journals on
subjects such as:
• Strategic Management
• Environmental Scanning
• Industry Analysis
• Organizational Environments
• Strategic Fit
• Strategizing by Analogies
• Cross-Industry Innovation
• Business Models
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A Five-Step Approach – Reducing Complexity
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
~ 110 terms
which were used
to specify
business
environments
25
Developing the BME Framework and the BME Map
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
• Aim: Experts select factors from “long list” and add additional factors that are
seen as specifically relevant in defining business model contexts (“short list”)
• Semi-structured interviews
Interviewee Profession Level Focus
1 Investor Associate consumer goods, e-commerce
2 Consultant Associate Principal chemistry
3 Investor Partner internet based companies
4 Consultant Partner various
5 Consultant Senior Executive telecommunications
6 Investor Senior Executive telecommunications
7 Investor Principal new media
8 Consultant CEO various
9 Consultant Associate Principal telecommunications
10 Investor CEO life science, software
26
A Five-Step Approach – Reducing Complexity
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
~ 110 terms
which were used
to specify
business
environments
69 factors
specifically
relevant for the
environment of
business models
27
Developing the BME Framework and the BME Map
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
• Aim: Generate meaning from the 69 factors by assigning content-wise similar
factors to one dimension (moving to a higher level of abstraction)
• Task conducted by 2 researchers
28
A Five-Step Approach – Reducing Complexity
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
~ 110 terms
which were used
to specify
business
environments
69 factors
specifically
relevant for the
environment of
business models
13 dimensions
based on the 69
factors
29
Developing the BME Framework and the BME Map
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
• Aim: Experts assess the degree of impact of the 13 dimensions (of the business
model environment) on a business model
• Semi-structured interviews
Interviewee Profession Level Focus
1 Investor Associate consumer goods, e-commerce
2 Consultant Associate Principal chemistry
3 Investor Partner internet based companies
4 Consultant Partner various
5 Consultant Senior Executive telecommunications
6 Investor Senior Executive telecommunications
7 Investor Principal new media
8 Consultant CEO various
9 Consultant Associate Principal telecommunications
10 Investor CEO life science, software
30
A Five-Step Approach – Reducing Complexity
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
~ 110 terms
which were used
to specify
business
environments
69 factors
specifically
relevant for the
environment of
business models
13 dimensions
based on the 69
factors
Assessment of
the impact of a
dimension of the
environment on
the business
model
31
Developing the BME Framework and the BME Map
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
• Aim: Develop layers which aggregate dimensions that have been assessed as
being on a similar impact level.
• Content analysis
32
A Five-Step Approach – Reducing Complexity
Literature review1st Round
expert interviews
Synthesis of factors to
dimensions
2nd Round expert
interviews
Aggregation of dimensions to
layers
~ 110 terms
which were used
to specify
business
environments
69 factors
specifically
relevant for the
environment of
business models
13 dimensions
based on the 69
factors
Assessment of
the impact of a
dimension of the
environment on
the business
model
5 layers
BME
FRAMEWORK
&
BME MAP
33
Business Model Environment Framework
34
Business Model Environment Framework - Factors
35
Business Model Environment Framework - Dimensions
36
Business Model Environment Framework - Layers
37
Business Model Environment Framework - Zoomed
medium impact on BMhigh impact on BM
indirect impact on BM
38
Business Model Environment Map
• Closer to BM means higher
interaction
• Permeable boundaries
• Bi-directional impact possible
39
Relevance & Contribution
Relevance to the scientific community
• We suggest a new perspective on business environments that account for the issues related with
blurring industry boundaries and increasingly dynamic business models.
• In identifying relevant dimensions, which must be considered when assessing business models
environments, the BME Framework provides a basis for further studies on business model
contexts.
• The BME Framework might serve as a catalyst for a unified research on the interaction between
business models and their respective environments.
Managerial implications
The BME Framework might help entrepreneurs
• to analyze the links between a business model and its environment in a structured manner
• to identify business model innovation opportunities, as it allows for comparability of trends and
developments beyond the boundaries of industries
• to develop scenarios describing future conditions potentially requiring tremendous shifts in the
current business model of a company
40
Limitations
• Literature on business environments is widely divergent.
• The studies take either an industry or an organization-environment perspective. Consequently, there
is a considerable potential that there are factors influencing business model environment that
have not yet been discussed in the literature.
• The BME framework is generic in nature: the layers indicating the different degrees of
interaction with the business model might differ widely depending on different environments
(e.g., high-tech vs. services).
• The factors attributed to the dimensions must be considered as a non-exhaustive enumeration.
• The method of expert interviews inclined to yield false statements and criticized for its
subjective nature.
• The business model construct itself still remains partly theoretically underdeveloped.
41
Further Research
Let’s go from generic to specific!
Peculiarities of specific business model environments:
Social Entrepreneurship (e.g., pro poor business models)
High-tech-based business models, service-based business models
Reduce complexity of the Business Model Environment Framework
Analogies: why do business models work in different environments?
Comparison of environments beyond industry boundaries
How are environments changing?
Where does the dynamism come from and how could it be transformed in
business opportunities?
42
Thank You!
Thank you!
Looking forward to your feedback, questions, inputs,…
Georg Stampfl
Reinhard Prügl