Business models: An empirical approach to firm structures and organisational change

Abstract

Popular though poorly-defined, the business model construct has generated a fragmented and non-accretive research literature. Despite prominence in the practice community for scholarly research has yet to converge on construct boundaries or establish a research framework in organizational theory. This study develops an integrative approach to business models and identifies business model formation and change processes. Prior studies address business models within the strategy discourse of competitive positioning. The failure to disentangle business models and strategy has limited theoretical and practical research. A quasi-systematic review of the academic literature combined with a discourse analysis of the business model in practice yields an empirical assessment of business model language. Managers use business models to address opportunities rather than position the firm for competitive advantage. This anchors an integrative definition for the business model as the design of organizational structures to enact an opportunity. Building on this framework, an analysis of structured interviews with 556 large firm CEOs establishes the links between organizational structures and strategic flexibility. Working within a capabilities and structural framework, the study extends research on strategic flexibility firms engaged in business model innovation in a global, cross-industry context. Creative culture enables strategic flexibility while partner dependence inhibits it. In addition, firms that focus managerial attention without giving up non-core activities achieve flexible outcomes. Finally, a case-based study of innovative entrepreneurial firms unpacks characteristics of business model formation and change processes. In contrast to theories of outward-facing strategic fit with environment, entrepreneurial firms undergo an internallydriven process towards business model coherence. The case studies reveal a self-evolving narrative process operating at multiple levels within the firm. The application of a narrative framework facilitates a novel sense-making approach to theories of change at entrepreneurial firms.