Aom paper presentation_stampfl_v4_pdf_version

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

4

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


6


Computer?


7


Computer?

Music?


8


Computer?

Music?

Telecommunications?


9


Computer?

Music?

Telecommunications?

Media?


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

11

Example for Dynamic Business Models


12



13



14



15

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)

16

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?

19

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


expert interviews


dimensions

2nd Round expert

interviews


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

24



expert interviews


dimensions

2nd Round expert

interviews


layers

~ 110 terms

which were used

to specify

business

environments

25



expert interviews


dimensions

2nd Round expert

interviews


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



expert interviews


dimensions

2nd Round expert

interviews


layers

~ 110 terms

which were used

to specify

business

environments

69 factors

specifically

relevant for the

environment of

business models

27



expert interviews


dimensions

2nd Round expert

interviews


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



expert interviews


dimensions

2nd Round expert

interviews


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



expert interviews


dimensions

2nd Round expert

interviews


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



expert interviews


dimensions

2nd Round expert

interviews


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



expert interviews


dimensions

2nd Round expert

interviews


layers

• Aim: Develop layers which aggregate dimensions that have been assessed as

being on a similar impact level.

• Content analysis

32



expert interviews


dimensions

2nd Round expert

interviews


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

[email protected]

Reinhard Prügl

[email protected]

Aom paper presentation_stampfl_v4_pdf_version

Documents

Transcript of Aom paper presentation_stampfl_v4_pdf_version