The business model: An organization or network perspective

Whether the business model applies to an organization and/or an organizational network is often left open. I had a look at some definitions to get some clarity about this for myself. (Note that the definitions do not always cover the full conceptualization of the business model concept by the authors.)

Some definitions refer explicitly to a specific organization while others refer to the business network. Examples referring to the network level are the definitions of Timmers (1998), Mahadevan (2000), Gordijn and Akkermans (2001), Weill and Vitale ((2001) and Tapscott (2001). Examples of referring to the organizational level are Rappa (2000), Afuah and Tucci (2001) and Osterwalder, Pigneur and Tucci (2005). Rarely a definitions refers to both explicitly (see, for an example of an exception, the definition of Shafer, Smith, & Linder, 2005) and some leave out in the definition itself whether they refer to organizations or networks (see, for example, the definitions of Chesbrough & Rosenbloom, 2002; Morris, Schindehutte, & Allen, 2005).

While the explicit inclusion of (and the implicit focus on) organization and network in the business model definitions differ, most of them do include both levels in their conceptualization based on their further discussion, operationalization and application of the business model concept (see also some of the related business frameworks and elements of these authors). A focus on a specific organization does seem to make more sense when the emphasis in the definition is on sustainable revenues, profitability and competitive advantage, as discussed above.

Those that refer to organizations (or firms) in their definition are not explicit about the organizational level, whether they refer to the corporate or business unit level. Most seem to imply the business unit level, for example, Chesbrough and Rosenbloom (2002) refer to the relation with business unit strategy. In addition, it is left open whetter a business unit has one business model or can have multiple business models sequentially and/or simultaneously.

In related work on value innovation, Kim and Mauborgne (2005) take the strategic move as unit of analysis instead of the organization, which they define as ‘the set of managerial actions and decisions involved in making a major market-creating business offering.’ This unit of analysis may be a fruitful approach for business models. In addition, there are some definitions that have a different unit of analysis than the organization or network, for example, a specific service (Bouwman, De Vos, & Haaker, 2008).

References

Afuah, A., & Tucci, C. L. (2001). Internet business models and strategies: Text and cases. New York, NY: McGraw-Hill/Irwin.
Bouwman, H., De Vos, H., & Haaker, T. (2008). Mobile service innovation and business models. Heidelberg, Germany: Springer.
Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation's technology spin-off companies. Industrial and Corporate Change, 11(3), 529-555.
Gordijn, J., & Akkermans, H. (2001). Designing and evaluating e-business models. IEEE Intelligent Systems, 16(4), 11-17.
Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Boston, MA: Harvard Business School Publishing.
Mahadevan, B. (2000). Business models for Internet-based e-commerce: An anatomy. California Management Review, 42(4), 55-69.
Morris, M., Schindehutte, M., & Allen, J. (2005). The entrepreneur's business model: Toward a unified perspective. Journal of Business Research, 58(6), 726-735.
Osterwalder, A., Pigneur, Y., & Tucci, C. L. (2005). Clarifying business models: Origins, present, and future of the concept. Communications of AIS, 16(1).
Rappa, M. (2000). Managing the digital enterprise: Business models on the Web. Retrieved 2000, February 18, from http://ecommerce.ncsu.edu/business_models.html
Shafer, S. M., Smith, H. J., & Linder, J. C. (2005). The power of business models. Business Horizons, 48(3), 199-207.
Tapscott, D. (2001). Rethinking strategy in a networked world: Or why Michael Porter is wrong about the Internet. Strategy + Business, 24, 1-8.
Timmers, P. (1998). Business models for electronic markets. Electronic Markets, 8(2), 3-8.
Weill, P., & Vitale, M. R. (2001). Place to space: Migrating to eBusiness models. Boston, MA: Harvard Business School Press.