We build on an emerging strategy literature that views the firm as a bundle of resources and capabilities, and examine conditions that contribute to the realization of sustainable economic rents. Because of (1) resource-market imperfections and (2) discretionary managerial decisions about resource development and deployment, we expect firms to differ (in and out of equilibrium) in the resources and capabilities they control. This asymmetry in turn can be a source of sustainable economic rent. The paper focuses on the linkages between the industry analysis framework, the resource-based view of the firm, behavioral decision biases and organizational implementation ksues. It connects the concept of Strategic Industry Factors at the market level with the notion of Strategic Assets at the firm level.Organizational rent is shown to stem from imperfect and discretionary decisions to develop and deploy selected resources and capabilities, made by boundedly rational managers facing high uncertainty, complexity, and intrafirm conflict.
We explore the theoretical foundations of value creation in e‐business by examining how 59 American and European e‐businesses that have recently become publicly traded corporations create value. We observe that in e‐business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the sources of value creation. The model suggests that the value creation potential of e‐businesses hinges on four interdependent dimensions, namely: efficiency, complementarities, lock‐in, and novelty. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e‐business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such an integration, we offer the business model construct as a unit of analysis for future research on value creation in e‐business. A business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. We propose that a firm's business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers. Copyright © 2001 John Wiley & Sons, Ltd.
Using proxy data on all Fortune-500 firms during 1994-2000, we find that family ownership creates value only when the founder serves as CEO of the family firm or as Chairman with a hired CEO. Dual share classes, pyramids, and voting agreements reduce the founder's premium. When descendants serve as CEOs, firm value is destroyed. Our findings suggest that the classic owner-manager conflict in nonfamily firms is more costly than the conflict between family and nonfamily shareholders in founder-CEO firms. However, the conflict between family and nonfamily shareholders in descendant-CEO firms is more costly than the ownermanager conflict in nonfamily firms.
This article provides a broad and multifaceted review of the received literature on business models in which the authors examine the business model concept through multiple subject-matter lenses. The review reveals that scholars do not agree on what a business model is and that the literature is developing largely in silos, according to the phenomena of interest of the respective researchers. However, the authors also found emerging common themes among scholars of business models. Specifically, (1) the business model is emerging as a new unit of analysis; (2) business models emphasize a system-level, holistic approach to explaining how firms "do business"; (3) firm activities play an important role in the various conceptualizations of business models that have been proposed; and (4) business models seek to explain how value is created, not just how it is captured. These emerging themes could serve as catalysts for a more unified study of business models. Disciplines Business Administration, Management, and OperationsThis journal article is available at ScholarlyCommons: http://repository.upenn.edu/mgmt_papers/74Electronic copy available at: http://ssrn.com/abstract=1674384 The authors gratefully acknowledge the very helpful comments and suggestions of the Editor and of two anonymous reviewers on earlier drafts of this paper. Chris Zott and Lorenzo Massa acknowledge the support of IESE in sponsoring this research. Raffi Amit is grateful to the Wharton eBusiness Initiative and to the Robert B. Goergen Chair for financial support of this research.Electronic copy available at: http://ssrn.com/abstract=1674384Business Model/2 THE BUSINESS MODEL: RECENT DEVELOPMENTS AND FUTURE RESEARCH AbstractThe paper provides a broad and multifaceted review of the received literature on business models in which we examine the business model concept through multiple subject-matter lenses. The review reveals that scholars do not agree on what a business model is, and that the literature is developing largely in silos, according to the phenomena of interest to the respective researchers. However, we also found emerging common themes among scholars of business models. Specifically, 1) the business model is emerging as a new unit of analysis; 2) business models emphasize a system-level, holistic approach towards explaining how firms "do business"; 3) firm activities play an important role in the various conceptualizations of business models that have been proposed; and 4) business models seek to explain how value is created, not just how it is captured. These emerging themes could serve as catalysts towards a more unified study of business models.
We focus on the design of an organization's set of boundary-spanning transactions-business model design-and ask how business model design affects the performance of entrepreneurial firms. By extending and integrating theoretical perspectives that inform the study of boundary-spanning organization design, we propose hypotheses about the impact of efficiency-centered and novelty-centered business model design on the performance of entrepreneurial firms. To test these hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial firms that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. Additionally, we find indications of potential diseconomies of scope in design; that is, entrepreneurs' attempts to incorporate both efficiency-and novelty-centered design elements into their business models may be counterproductive. Business Model Design and the Performance of Entrepreneurial Firms AbstractWe focus on a particular organization design issue -namely, the design of an organization's set of boundary-spanning transactions-which we refer to as business model design, and ask how business model design affects the performance of entrepreneurial firms. Specifically, by extending and integrating theoretical perespectives that inform the study of boundary-spanning organization design, we propose hypotheses about the impact of efficiency-centered and novelty-centered business model design on the performance of entrepreneurial firms. To test these hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial fmns that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. As well, we find indications of potential diseconomies of scope in design; that is, entrepreneurs' attempts to incorporate both efficiency-and novelty-centered design elements into their business models may be counterproductive.Keywords: Organization design, new organizational form s, business model, design themes, organization performance, environmental munificence. 2 Business Model Design and the Performance of Entrepreneurial FirmsAn organization is a goal-directed social entity that consists of deliberately structured and coordinated activity systems; it can be conceived of as an open system that interacts with its environment (Thompson 1967). Its subsystems can be classified either "internal" or "boundary- In this paper we identify two critical dimensions of business model design, which we denote as "efficiency-centered" and "novelty-centered" design themes. Anchoring our reasoning in the transac...
We examine the fit between a firm's product market strategy and its business model. We develop a formal model in order to analyze the contingent effects of product market strategy and business model choices on firm performance. We investigate a unique, manually collected dataset, and find that novelty-centered business models-coupled with product market strategies that emphasize differentiation, cost leadership, or early market entry-can enhance firm performance. Our data suggest that business model and product market strategy are complements, not substitutes. ABSTRACTIn this paper, we explore the fit between a firm's product market strategy, and its business model.We develop a formal model in order to analyze and develop theoretical hypotheses on the contingent effects of product market strategy and business model choices on firm performance. By investigating a unique, manually collected data set, we find that novelty-centered business models, coupled with product market strategies that emphasize differentiation, cost leadership, or early market entry, enhance firm performance. KEYWORDS:Product market strategy, business model, performance, contingency theory, competitive strategy.3 Exploring the Fit Between Business Strategy and Business Model: Implications for Firm PerformanceA central objective of strategic management research has been to understand the contingent effects of strategy on firm performance. Contingency theory suggests that there is no optimal strategy for all organizations and posits that the most desirable choice of strategy varies according to certain factors, which are termed contingency factors (Donaldson, 1996). Accordingly, strategic management scholars have examined a wide range of contingency factors, such as aspects of the environment, organization structure (Miller, 1988), technology (Dowling and McGee, 1994), and marketing choices (Claycomb, Germain and Droege, 2000), amongst other things, and explored how these factors interact with strategy variables to determine firm performance.One focus of that literature considers structural forms as contingency factors. An important early contribution to that literature was made by Chandler (1962) who considered the contingency relationship between a firm's strategy and its internal administrative structure (specifically, divisional versus functional form). While this particular pair of strategy/structure variables has been thoroughly addressed (e.g., see Amburgey and Dacin, 1994), the received literature seems to have paid surprisingly "little attention to extending the question of strategy/structure fit issues for other structural forms of organization" (Yin and Zajac, 2004: 365). In this paper, we address this gap in the literature on the contingent effects of strategy on firm performance by introducing the firm's business model as a new contingency factor that captures the structure of firm's boundary-spanning exchanges. We ask the following research question: How do the firm's business model and its product market positioning stra...
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