Definition of business model
The term ‘business model’ is used ambiguously in the corporate strategy literature (Calia, Guerrini & Moura, 2007), without clear differentiation from other closely related concepts such as business strategy,
organizational structure or value chain, and may even be used interchangeably with these concepts (Morris et al., 2005). The number of
studies that have focused on refining its boundaries and theoretical
support (i.e., Morris et al., 2005, 2006; Schweizer, 2005; Tikkanen,
Lamberg, Parvinen & Kallunki, 2005) and in developing typologies/
taxonomies (i.e., Bigliardi et al., 2005; Mahadevan, 2000) continues
to grow. However, a consensus has still not been reached (Schweizer,
2005), as illustrated in Table 1 which sets out some of the definitions
that have had the greatest impact in the literature.
Table 1 - Definitions of business model Based on an analysis of 30 business model definitions, Morris et al.
Architecture of product, service and information flow, including a description of various
business players and their roles, a description of the potential benefits of the different
types of players, and a description of the sources of revenue.
Venkatraman & Henderson (1998)
The coordinated strategic design planning from three angles: client interaction, asset
configuration and knowledge.
Steward and Zhao (2000) [cited by
Calia et al. (2007)]
The determination of the means by which a corporation will earn money and maintain
income over time.
Amit & Zott (2001)
The structure, content and governance of the transaction between the headquarters and
its exchange partners.
Chesbrough and Rosenbaum (2002)
A business model is composed of the value generation, objective markets, the internal
structure of the value chain, the cost structure and the revenue model.
A collection of assets and activities, and the governance structure of the assets.
Morris et al. (2005)
The concise representation of how corporate decisions are managed with respect to strategy, architecture and economy to create competitive advantages in defined markets.
Zott and Amit (2008)
The structural pattern, describing how the negotiations between a corporation’s headquarters and all the external agents in the product and process markets are organized.
(2005) classify the conceptualizations into three categories, progressively increasing in breadth (Figure 1). The lowest level includes definitions that approach the concept from an economic viewpoint, considering the business model as a revenue-generating agent (i.e., Ghaziani
& Ventresca, 2005). These studies are mostly based on e-commerce
and are dedicated to the investigation of corporate revenue models that
operate within this sector (i.e., Mahadevan, 2000; Timmers, 1998). The
second hierarchical level includes definitions (i.e., Venkatraman & Henderson, 1998) in which the business model is correlated with internal
processes and the design of the production infrastructure, administrative processes, resource flow, knowledge management and logistics
issues. The last stage is composed of the strategic estimates of the
concept (i.e., Hamel, 2000). These definitions view the business model
as the result of the corporation’s market positioning, and the interactions between an organization’s limits and growth opportunities.
Figure 1 - Hierarchy of business model definitions
Business model as
placement in the market
interactions between the
corporation’s limits and
Business model as
configuration of productive
Business model as the
economic model of a
self-generated based on Morris et al. (2005).
Despite the value of this classification, many of the conceptualizations
cannot be placed in a single category due to the multidimensional nature of the business model. Hamel (2000: 73-99) anticipated the complexity of the content of this construct by distinguishing four key business model components: the centralized strategy, the connection with
the customer, strategic resources and the value chain. In addition, he
differentiates three components that bridge the concept: activity configuration, benefits to the customer, and the corporation’s limits. Although prior reports have attempted to define the domain of the construct,
the lack of consensus impacts on efforts to identify its dimensions. As
seen in Table 2, the dimensions identified vary from strategic aspects
such as the configuration of the value chain (Camisón, 2001; Chesbrough & Rosenbaum, 2002; Schweizer, 2005) or the product/market
sector (Camisón, 2001; Morris et al., 2005, 2006), to economic aspects
such as the revenue model (Chesbrough & Rosenbaum, 2002), and
also context-dependent factors such as age or organizational size (Bigliardi et al., 2005).
Our concept of business model combines the operational and strategic
approximations but excludes the economic perspective. 
The business model conceptualization developed considers... A business
model can be considered as the standard generated by the corporation
to organize its processes and tasks with a specific internal configuration of its value chain, manage its assets, realize transactions with
external agents, and determine the market in which it intends to compete. On the other hand, a revenue model refers to the specific means
by which a business model facilitates the generation of revenue (Zott
& Amit, 2008: 3). Taking this concept as a basis, in addition to studies
by Camisón (2001), Morris et al. (2005, 2006) and Schweizer (2005),
the business model concept can be defined by three basic dimensions:
(1) organizational structure, (2) degree of diversification (product/market sector), and (3) management of the value chain activities (vertical
integration vs. cooperation).
Organizational structure is the first key dimension in the definition of
a business model (Camisón, 2001; Alt & Zimmerman, 2001). The hierarchical structure of a corporation, the degree of formality in workers’
behaviour, the degree of centralization in decision making, the configuration of the productive process and the mechanisms of work coordination are all essential aspects of the definition of a business model.
Table 2 - Dimensions of the business model construct
Dimensions or components of the business model
Alt and Zimmerman (2001)
[cited by Morris et al. (2005)]
Mission, structure, processes, revenue, technology and legal aspects.
Organizational structure; product/market sector; degree of integration vs. cooperation.
Chesbrough and Rosenbaum (2002)
Value generation; objective/s market/s; cost structure; revenue model.
Group of tangible and intangible assets; value chain; asset management.
Morris et al. (2005, 2006)
Product/services offer; market characteristics; source of competitive advantage; competitive strategy; economic factors; growth opportunities.
Bigliardi et al. (2005)
Age; size; degree of novelty of the biotechnology used; level of integration of the I+D;
level of industrialization of the sector.
Level of integration/externalization of the value chain activities; relations between different companies (licences, strategic alliances or joint corporations); revenue generation
The second dimension considered is the degree of diversification of
the corporation (Camisón, 2001; Chesbrough & Rosenbaum, 2002;
Morris et al., 2005, 2006). The business model includes the delimitation of the products/markets that the company aims to achieve in order
to create a position in which it can exploit and maintain its competitive
The last dimension in the business model refers to the management of
the value chain activities (Camisón, 2001; Chesbrough & Rosenbaum,
2002; Schweizer, 2005). This is a key dimension in that the continuous
emergence of new business models is motivated by organizational innovation based on inter-organizational cooperation. A precise definition of
the business model must therefore determine which value chain activities
will remain integrated in the company and which ones will be developed
through cooperation. This issue is closely related to the company’s competitive advantage (Schweizer, 2005). Management must think about the
activities that give rise to a corporation’s competitive advantages in order
to establish inter-organizational cooperation for decentralized activities.
The business model conceptualization developed in this study distinguishes between this concept and other more traditional ones such as
competitive strategy, organizational structure and value chain. The business model is not a strategy, but includes a series of strategic decisions (Morris et al., 2005; Pazlet, Knyphausen-Ause? & Nikol, 2008). It
is neither the organizational structure nor the value chain, but both are
integral components of the business model definition (Camisón, 2001;
Schweizer, 2005). The business model encompasses these concepts,
but is considered superior to the sum of the parts, reflecting how the
business will be approached with regard to these features (Morris et al.,
Configuration of business models and effect on organi zational performance
The existence of alternative business models raises an interesting second issue: the competitiveness of business models that encompass an
industrial outlook (Schweizer, 2005; Zott & Amit, 2007, 2008). There are
several extensive reports that independently study the properties and
economic effects of integrated models (Afuah, 2001; Cacciatori & Jacobides, 2003), multidivisional models (Armour & Teece, 1978; Galunic &
Eisenhardt, 1996) and network-based models (Cravens, Piercy & Shipp,
1996; Edwards & Samimi 1997; Hanssen-Bauer & Snow, 1996). However, as yet there is no consensus as to which business model results in
Integrated models have been widely considered as adequate models for
the end of the 19th century and a large part of the 20th century. However,
the new, flexible, cooperation-based business models are now considered as better adjusted to the present chaotic environment. Their superiority is based on their enhanced flexibility, which allows faster adaptation
to changes in the environment, at the same time allowing improvements
in the competitive positioning with regard to cost, quality and flexibility,
and greater capacity to manage intra- and inter-organizational conflicts
(Aoki, 1990; Chesbrough & Schwartz, 2007; Morris, Hassard & McCann,
2006; Schweizer, 2005; Volberda, 1996). However, certain authors argue that the new network-based business models reduce organizational
coherence and weaken viability over time (i.e., Arrazola, 2007; Cappelli,
Bassi, Katz, Knoke, Osterman & Useem, 1997; Ichnioswki, Kochan, Levine, Olson & Strauss, 1996). In this regard, Schweizer (2005) points to
the success of integrated companies such as Procter & Gamble in the
domestic product industry and Nestle in the food industry.
Results from the few empirical studies that compare efficacy in the different business models have been inconsistent regarding the relationship
between business model design and organizational performance. For
example, Zott and Amit (2007) provide inconclusive results in a comparison between innovative business models and those aimed at efficacy,
without determining the superiority of either. In a later study, Zott and
Amit (2008) appear to come up with a solution regarding the prior results, concluding that an innovative business model definition shows increased corporate performance when it is defined with strategies aimed
at differentiation, cost leadership or prompt entry into a market. However,
after analyzing business models with different sources of competitive
advantage, Volle et al. (2008) conclude that no single model ensuring
competitive success exists.
The lack of consistency in empirical evidence regrading the effect of
business model selection on organizational performance could be due
to the absence of a solid theoretical basis for the predictions, or to the
multitude of different theoretical approaches to its analysis (Amit & Zott,
2001; Morris et al., 2005, 2006). A contingent approach is the traditional one in the field (i.e., Chandler, 1962; Zott & Amit, 2008), together
with transaction cost theory (Williamson, 1993). However, these theories
have recognised limitations in arguments regarding the competitive superiority of a business model. On the other hand, the Resource Based
View offers an interesting theoretical framework for analysing a business
model’s capacity to determine the development of competitive advantage. Schweizer (2005) identifies two contributions made by the Resource
Based View to the study of business models. Firstly, the strategic value
of a business model can be supported if its resources and capabilities
are more difficult to imitate, less transferable and more complementary.
Secondly, the centralized capabilities of a company define not only the
value of the business model but also help decide which business model
is more appropriate with respect to each competitive situation and based
on the need to reconsider the present transaction
The business model can become a primary element in the mobilization
and coordinated work of a company’s assets, and a determinant factor
in the company’s capacity to generate competitive advantage (Morris,
Schindehutte, Richardson & Allen, 2006). Therefore, a company’s definition of each of the three dimensions included in its concept must be
directed towards the development and maintenance of competitive advantages.
Based on the Resource Based View theory, the development of competitive advantage depends on the characteristics of each business model.
For example, the I-models and the M-models tend to develop advantages based on cost or quality, while the N-models can generate valuable
competitive advantages based on intangible assets, such as their increased capacity to change and adapt or their organizational flexibility.
The strength of each business model to develop distinct differential capabilities leads us to consider the possible co-existence of all of them
(Camisón, 2003, 1996; Volle et al., 2008). Subscribing to a specific business model is therefore not expected to have a direct positive effect
on corporate results in itself, meaning that no model is predicted to provide the competitive advantages that will justify superior performance.
This reasoning is reflected in the following working hypothesis:
Hypothesis 1 (H1). The selection of an organizational model per se does
not result in significant differences in organizational performance.