The Wider Implications of Business Model

Long Range Planning xxx (2017) 1e8
Contents lists available at ScienceDirect
Long Range Planning

journal homepage: http://www.elsevier.com/locate/lrp
The wider implications of business-model research

Thomas Ritter a, *, Christopher Lettl b
a
Department of Strategic Management and Globalization, Copenhagen Business School Kilevej 14a, DK-2000 Frederiksberg, Denmark
b
Department of Strategy, Technology and Organization Vienna University of Economics and Business Welthandelsplatz 1, A-1020 Wien,
Austria
a r t i c l e i n f o a b s t r a c t
Article history: Business-model research has struggled to develop a clear footprint in the strategic man-
Available online xxx agement field. This introduction to the special issue on the wider implications of business-
model research argues that part of this struggle relates to the application of five different
Keywords: perspectives on the term “business model,” which creates ambiguity about the conceptual
Business model boundaries of business models, the applied terminology, and the potential contributions of
Typology
business-model research to strategic management literature. By explicitly distinguishing
Definition
among these five perspectives and by aligning them into one overarching, comprehensive
Archetype
Logics
framework, this paper offers a foundation for consolidating business-model research.
Alignment Furthermore, we explore the connections between business-model research and promi-
nent theories in strategic management. We conclude that business-model research is not
necessarily a “theory on its own” and that it can be more fruitfully understood as a
theoretical mechanism for combining different literature streams. As such, business-model
research is positioned as a central connecting component in the further development of
the strategic management field.
© 2017 Elsevier Ltd. All rights reserved.
Introduction
In recent years, a strong academic interest in business models has emerged. Business models are descriptions of how a firm
or, more generally, a person or an organization does business (Chesbrough and Rosenbloom, 2002; Magretta, 2002). A
business model describes how a given actor “chooses to connect with factor and product markets” (Zott and Amit, 2008, p. 3).
In other words, it is a construct “that mediates between technology development and economic value creation” (Chesbrough
and Rosenbloom, 2002, p. 532). Thus, a business model explains how an actor is positioned within a value network or supply
chain, and how a business turns inputs into outputs while fulfilling its goals.
Contributions to this stream of literature have focused on the theoretical roots of business models (Amit and Zott, 2001);
the general role and idea of business models, especially in relation to value creation (Casadesus-Masanell and Ricart, 2010;
Chesbrough and Rosenbloom, 2002); the components and elements of business models (e.g., Osterwalder and Pigneur,
2010; Johnson et al., 2008); the interconnections among business-model elements (Zott and Amit, 2010; Ritter, 2014); the
logic of businesses (Casadesus-Masanell and Tarzija n, 2012); the nature and implementation of user-centric business models
* Corresponding author.
E-mail addresses: [email protected] (T. Ritter), [email protected] (C. Lettl).
http://dx.doi.org/10.1016/j.lrp.2017.07.005
0024-6301/© 2017 Elsevier Ltd. All rights reserved.
Please cite this article in press as: Ritter, T., Lettl, C., The wider implications of business-model research, Long Range Planning
(2017), http://dx.doi.org/10.1016/j.lrp.2017.07.005
2 T. Ritter, C. Lettl / Long Range Planning xxx (2017) 1e8
(Hienerth et al., 2011); and the emergence of new organizational forms and their implications for business-model innovation
(Fjeldstadt, Snow, Miles and Lettl, 2012; Foss and Saebi, 2015; Snow et al., 2011), as well as numerous other topics. As
documented in a steadily increasing number of publications (DaSilva and Trkman, 2014), this rich stream of literature has
created a detailed but fragmented understanding of business models (for a review, see Massa et al., 2017; Zott et al., 2011). As
several researchers note, “there continues to be little agreement on an operating definition” (Casadesus-Masanell and Ricart,
2011, p. 102) and “the academic literature on this topic is fragmented and confounded by inconsistent definitions and
construct boundaries” (George and Bock, 2011, p. 83). Similarly, all contribution to this special issue highlight the lack of a
common definition and understanding of business models. As such, the business-model concept remains ambiguous and
clarity is needed in order to move the field forward.
While such conceptual ambiguity hinders theoretical development and demands academic attention, the aim of this
special issue is to elaborate on the connections between business-model research and established theories in the strategic
management literature. In other words, this special issue investigates the ways in which business-model research contributes
to the development of theories and the extent to which this stream of research is influenced by theories. This special issue
offers a range of insights into these questions and points out relevant research agendas.
This introduction is organized as follows. First, we outline the five perspectives found in business-model research in order
to provide a foundation for a discussion of wider implications. Second, we offer an overview of relevant “adjacent” theories,
which also serves to position the contributions of this special issue. Third, we suggest a new positioning and understanding of
business-model research in the strategic management literature and outline open research questions.
Perspectives in business-model research
When reviewing the extant business-model literature, we identified five different perspectives on the term “business
model”: business-model activities, business-model logics, business-model archetypes, business-model elements, and
business-model alignment. Each of the five perspectives has a distinct way of defining business models and all of them are
meaningful in their own right. In line with Baden-Fuller and Morgan's (2010) suggestion to interpret business models in
multifaceted ways, we suggest that the five perspectives can co-exist, as they supplement each other. However, they need to
be explicitly applied and distinguished from each other in order to avoid ambiguity and confusion.
Business-model activities
One perspective views a business model as a description of the activities that the firm has put together in order to execute
its strategy (Arend, 2013). Zott and Amit (2010, p. 216) frame business models from “an activity system perspective,” stating
“we conceptualize a firm's business model as a system of interdependent activities that transcends the focal firm and spans its
boundaries.” In a similar vein, Chesbrough (2007, p. 12) defines a business model as “a series of activities, from procuring raw
materials to satisfying the final consumer.” This thought is mirrored in Massa and Tucci's (2013, p. 9) view of business models
as a “systemic and holistic understanding of how an organization orchestrates its system of activities for value creation.” This
perspective is closely related to business processes and business-process reengineering (DaSilva and Trkman, 2014) as well as
Porter's idea of the firm as a value chain of different activities (Porter, 1985).
Business-model logics
Instead of looking at value-chain activities, another stream of business-model research describes the flow of logical ar-
guments that summarizes the logic of the business: “doing more of x raises the returns of doing of y and vice versa”
(Brynjolfsson and Milgrom, 2013). In other words, this stream focuses on why certain activities make sense for a business in
terms of the value-creating logics that those activities introduce. Along these lines, Shafer et al. (2005, p. 202) state that
business models are “a representation of a firm's underlying core logic.”
Casadesus-Masanell and Ricart (2011) define a business model as a set of relationships and logical loops of consequences
that can (and should) create virtuous cycles rather than vicious cycles. They also argue that firms may operate two (or more)
logics that supplement each other. For example, LAN Airlines has both a low-cost logic for its regional routes and a quality
business logic for its long-distance routes (Casadesus-Masarell and Ricart, 2011).
Business-model archetypes
Archetypes describe generic logics of how firms do business, i.e. business-model archetypes are general, well-known
business model logics. Business-model archetypes are typical models of value creation and value capture that transcend
industry boundaries (Baden-Fuller and Morgan, 2010). A classic example is the “razor and blade” business model in which a
firm sells a product at a reasonable price and earns above-average profits by selling consumables that customers need to use
that product. This business model is widespread e examples include Nespresso's sales of coffee machines, which require
Please cite this article in press as: Ritter, T., Lettl, C., The wider implications of business-model research, Long Range Planning
(2017), http://dx.doi.org/10.1016/j.lrp.2017.07.005

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Long Range Planning xxx (2017) 1e8

Contents lists available at ScienceDirect

Long Range Planning

The wider implications of business-model research

Perspectives in business-model research

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