The Business Model – Formation, description and definition

Abstract

The business model is a new analytical concept in the field of strategy research that is frequently used when trying to explain the creation and capture of value by firms. This compilation thesis consists of three papers that examine different aspects of the formation of business models and one paper that examines the business model concept per se. The first paper explores the potential impact of two market based environmental policy instruments (MBIs) upon the business models of seven Swedish cleantech ventures. The results show that the MBIs have a mainly negative influence on the business models and fail to raise the marginal abatement costs high enough for the firms to find profitable market niches in Sweden. The second paper explores how managers in the Swedish municipal district heating sector choose between two different approaches to the inclusion of stakeholders when committing to business model renewal. The results show that managers include less salient stakeholders in the strategic goals of the firm than in the processes that shape firm strategy. This result is contrasted by the fact that less tangible value is directed towards the less salient groups. The third paper presents a framework for a narrative analysis of business model formation and examines narratives from interviews with managers working in the Swedish municipal district heating sector. The results suggest that there are certain properties of narrative terms (agent, scene, agency and purpose) that narrators associate with particular outcomes. Successful business model development is associated with malleable or adaptable agents, accessible scenes, visible and easily understood tools and an inclusive purpose. Failure is associated with diametrically opposed properties such as inflexible agents, closed scenes, obscure tools and a purpose that is exclusive to particular agents. The study shows that despite almost three decades of privatization, democratic and communal values dominate the narratives told by the managers. The fourth paper analyzes the business model concept and suggests that a new perspective based on pragmatist and non-structuralist arguments might go some way in solving some of the issues that plague the concept. The business model is redefined as consisting of five areas of concern which should be dealt with in the dialogue between firm representatives and stakeholders.