=Paper=
{{Paper
|id=None
|storemode=property
|title=Towards an Integrative Component Framework for Business Models: Identifying the Common Elements Between the Current Business Model Views
|pdfUrl=https://ceur-ws.org/Vol-998/Paper15.pdf
|volume=Vol-998
|dblpUrl=https://dblp.org/rec/conf/caise/RoelensP13
}}
==Towards an Integrative Component Framework for Business Models: Identifying the Common Elements Between the Current Business Model Views==
https://ceur-ws.org/Vol-998/Paper15.pdf
Towards an Integrative Component Framework for
Business Models: Identifying the Common Elements
Between the Current Business Model Views.
Ben Roelens and Geert Poels
Ghent University, Faculty of Economics and Business Administration
Tweekerkenstraat 2, B-9000 Gent, Belgium
{Ben.Roelens, Geert.Poels}@UGent.be
Abstract. The business model literature has surged since the beginning of this
millennium, but is currently characterized by a lack of shared understanding of the
concept. This lack of consensus inhibits the effective use of business models for
achieving business-IT alignment, which includes both formulating the appropriate
information system (IS) requirements and using information systems as strategic
resources to differentiate business models. To overcome this, the paper proposes
an integrative framework, which builds on existing integration efforts in the field.
This will allow the initiation of a convergent thinking phase about the business
model concept. The research will make use of the Systematic Literature Review
(SLR) methodology to rigorously select the relevant research papers.
Keywords: Business Model Concept, Integrative Framework, Systematic
Literature Review, Business Model Components
1 Introduction
The business model concept became popular in the late 1990s with the emergence of
internet-based enterprises, who used business models as instruments to convince
investors of the vast potential of electronic business [1]. Despite of the burst of the
internet bubble, the business model concept is still relevant as its underlying economic
concepts are not restricted to e-business, but date back to the early conduct of economic
trade [2]. Indeed business models reflect the way in which a company implements its
strategy, which aims at value co-creation for both the enterprise and its customers. This
broad applicability proves that academic study of this concept is still relevant.
The articulation of a business model will determine the kind of information that is
needed by the company for the implementation of its strategy. As such, the business
model is a major determinant of the functional and non-functional requirements of an
information system [3]. Furthermore, the correspondence between the goals of the
information system and the business model is crucial to obtain business-IT alignment,
which ensures that value is returned on investments in information technology (IT).
The development of the business model concept is a creative problem-solving
process, which aims at improving the existing insights. Early thinkers have applied
divergent thinking to produce distinct ideas about business models, which has led to an
increase in the existing knowledge, but also to the coexistence of several literature
streams [4]. Ideally this variety of new knowledge is used in a subsequent phase of
convergent thinking, which aims at developing more rigorous frameworks [5]. A
convergent wave of academic research has not yet been initiated for the existing business
model literature. Integration efforts were already made in the past (e.g. [1, 6-13]), but
there is a lack of shared opinions between these efforts. Although the diversity in
thinking can be partly explained by the multi-disciplinary nature of the business model
concept [4], there is still no agreement on a common conceptual basis. Consequently, the
current business model research is the result of a second wave of divergent thinking,
based on the results of the first wave. The development of an integrative framework for
business models is an important challenge, since the existing fragmented view often
hinders the mutual understanding about the relation between the business and the IS
domain [14]. As information systems facilitate the creation of a competitive advantage
[9], this lack of mutual understanding inhibits the identification of both the right IS
requirements and potential resulting business model opportunities.
The goal of our research is to create a common basis for the business model concept
through an integrative framework. We aim at (1) defining the constituting elements of a
business model and (2) defining the interrelationships between these elements, which
provides a basis for the development of conceptual models. The development of the
framework was informed by a literature review as specified by Kitchenham et al. [15,
16], which enabled us to discover and analyze the relevant business model research. In
particular, we used papers of the second wave of divergent thinking to develop the
integrative component framework for business models. This choice is important as our
research aims at the real start of a convergent thinking phase, while not just providing
another integration effort.
The structure of the paper is as follows. Section 2 gives an overview of related work
within the IS field. Next the SLR will be discussed as the appropriate methodology for
the research of this paper. The actual search and analysis of the second-generation
business model literature and the resulting framework will be discussed in section 4.
Section 5 discusses the conclusions of this paper and directions for future research.
2 Related Work
The IS Engineering discipline has investigated the business model concept in the context
of the Value-Based Requirements Engineering approach [17], in which value models
offer representations of business models in terms of elementary constructs (e.g., actors,
objects, resources, etc.). For instance, e3-value models [17] show the flow of value
objects through a business network of actors. Net cash flow analysis and sensitivity
analysis within e3-value allow evaluating alternative designs for actor constellations,
such that each actor derives utility or profit from its participation. The REA ontology
[18] is another value model that provides concepts, relationships and axioms to model
the exchange of valuable products and the effect of this exchange on the value of the
involved parties. The Value Delivery Modeling Language (VDML) [19] is currently
trying to integrate REA, e3-value, and some other value modeling approaches, which
also include the organizational capabilities in the business model representation.
An alternative to value modeling is goal modeling (e.g., i* [20], GRL [21], Business
Motivation Model (BMM) [22]), which results in representations that facilitate the
elicitation, specification, and analysis/validation of business requirements, from which to
derive IS requirements. As goal models are expressed in terms of which objectives a
company wants to achieve (i.e. a formulation of the intended strategy), they operate at a
higher level of abstraction than business models. Indeed business models are meant to
implement the intended strategy and are more expressive with respect to the overall
value chain of business activities. Consequently, it is important for companies to align
goal models and business models, as this alignment determines whether a company can
successfully implement its strategy according to the goals it wants to achieve.
Our review of related work indicates that the research on business model
representations is also divergent, as approaches focus on different aspects of the intended
strategy (i.e. value, capabilities, and goals). Overall, there is little grounding of the
business model representation research on the business model concept research as found
in the management literature. As a result, it is hard to evaluate whether representations
really capture the business model concept, as its elements often remain explicit. The
proposed integrative framework is based on the business model concept research in
management, which bridges the different representations of the strategy of a firm.
Consequently it can help to further develop visualizations of business models in order to
align them with the conceptual models of business processes and information systems.
3 Methodology
The purpose of the SLR methodology is the integration of the existing body of
knowledge of a certain research topic [15]. The main advantage of using SLR for
literature study is the use of a systematic approach that employs an a priori defined
review protocol to select papers when searching the literature. This review protocol
consists of three elements: the identification of research questions, the definition of the
study selection criteria, and the definition of the study quality assessment criteria.
3.1 Identification of Research Questions
The following research question, which is driven by the research problem and research
objectives, needed to be answered to deliver the content of an integrative framework for
the business model concept: ‘What are the common business model components (i.e.
model elements and their relationships) which underlie the integrative second-generation
papers on the business model concept?’
3.2 Study Selection Criteria
As the business model concept is originating from the research fields of e-business,
strategic management, and IS [1], the search process was not restricted to certain e-
libraries, but Google Scholar was chosen as the electronic source to search the scientific
literature. Indeed it is better not to exclude certain publication sources (i.e. journal, book,
or conference proceedings) upfront, but to perform an ex-post evaluation of the
publication data to exclude outliers. This evaluation was executed by analyzing the
number of citations and the impact factors of the journals of the selected papers. Papers
were excluded if their total number of citations is significantly lower (i.e. lower than 5%)
than the citation count of the most-cited article and the current impact factor (i.e. 5-year
impact factor 2011) of the publication source is lower than 2 or is not applicable.
The second decision to be taken in the selection of studies is the definition of the
search terms, which is informed by the formulation of the research question. Since the
ever-growing use of the term business model, both inside and outside the academic
literature since the beginning of the millennium, we decided not to expand the search
terms to any other alternatives of both business AND model. This allows for a broad
search on the existing literature of the business model concept.
Three inclusion criteria are imposed to further refine the set of relevant research. A
first criterion (i.e. the business model components criterion) is that only literature about
the definition of the business model concept is included. Literature that adopts an
existing definition, but in which other aspects related to the business model concept are
the object of study (e.g., business model evaluation models, business model change
methodologies, business model adoption factors) is excluded from the analysis. The
second criterion (i.e. the normative research criterion) is that only papers that develop a
normative view [23] on the constituting elements of a business model are included.
Many papers take a descriptive view by discussing the business model concept as it is
applied by a particular enterprise (e.g. the business model of McDonalds) or by a group
of similar enterprises (e.g. the McDonalds business model for fast-food companies). If
such papers do not analyze the constituting elements in terms of which business model
information is expressed, they are excluded from the analysis. However, purely defining
the constituting elements is also not sufficient as the aim of this research is the review of
the second-generation papers on business models. Hence the last criterion (i.e. the
integration effort criterion) imposes relevant papers to build on existing views in the
literature. This criterion was operationalized by investigating the research motive of the
selected papers and only including those articles that explicitly claimed to provide an
integration effort of the existing business model literature. The selection criteria were
assessed following the two-stage process suggested by Brereton et al. [16]. In a first step
the title, abstract, introduction, and conclusion were analyzed by two researchers. If they
both concluded that a paper was irrelevant, this paper was definitively rejected. For the
other papers, the full version was revised and a final unanimous decision (i.e.
disagreements were discussed and resolved) on the selection criteria was taken.
3.3 Study Quality Assessment Criteria
The quality of the papers that satisfy the three selection criteria was assessed by using
two further criteria, which are specified in the quality assessment questions: (QA1) ‘Did
the paper develop an own integrative framework, either textual or graphical, which
extends the review of previous research?’, and (QA2) ‘Did the paper perform a thorough
search for the available literature at that point of time?’. QA1 can be assessed on an
ordinal scale including: Y(es) ‘An own integrative framework, either textual or
graphical, is presented in the paper’, and N(o) ‘The integration is limited to a review of
previous research’. QA2 can be scored depending on the references (i.e. Y(es) at least
50%, P(artly) between 25% and 50%, and N(o) less than 25%) to the aggregated first-
generation articles at the moment the paper was written. An article was considered as
being of the first generation if at least two papers of the set, which results from applying
the study selection criteria, referred to it. Papers, which are written by the same authors
and dealing with the same research topic, were aggregated. Also here, any differences in
opinion were discussed and resolved to reach consensus. As the purpose of this
assessment is the further refinement of the criteria that were already imposed on the
selected literature, only those papers that score at least Y for QA1 and P for QA2 will be
used for the final integrative framework.
4 Results
4.1 Selection Results
The execution of the search process resulted in the identification of 55 papers, which met
the business model components criterion. By applying the normative research criterion,
6 papers were excluded from the analysis. The integration effort criterion was used as a
last selection mechanism and resulted in the identification of 15 papers, which were
considered to be relevant for our research.
The publication data of the 15 selected papers were evaluated afterwards (table 1),
based on the last available impact factors of the journals (i.e. 5-year impact factor 2011)
and the total number of citations of the individual paper (according to the data given by
Google Scholar). This resulted in the exclusion of two conference papers, as the
respective number of citations (i.e. 0.8% [24] and 3.2% [25]) were less than 5% of the
citations of the most-cited research [8] and the impact factor was not applicable.
Table 1. Ex-post evaluation of the publication data
Reference Publication source 5-year impact factor 2011 Number of citations
Al-Debei and Avison 2010 [6] Journal 2.218 49
Hedman and Kalling 2003 [9] Journal 2.218 331
Morris et al. 2005 [12] Journal 2.473 536
Osterwalder 2004 [8] PhD dissertation - 594
Pateli and Giaglis 2003 [4] Conference proceedings - 127
Pateli and Giaglis 2004 [13] Journal 2.218 160
Shafer et al. 2005 [1] Journal 0.900 420
Teece 2010 [26] Journal 2.372 330
Tikkanen et al. 2005 [10] Journal 1.302 142
Verstraete and Jouison 2007 [24] Conference proceedings - 5
Warnier et al. 2004 [25] Conference proceedings - 19
Lecocq et al. 2006 [27] Jounal - 36
Demil and Lecocq 2010 [7] Journal 2.372 97
Zott and Amit 2008 [28] Journal 3.783 257
Zott and Amit 2010 [11] Journal 2.372 159
4.2 Study Quality Assessment
The last step in the execution of the search protocol was the assessment of the quality of
the 13 remaining papers. The conclusion of the first quality assessment question is that
all these articles provide an integrative framework in their research, which results in a
score of Y for these articles. The assessment of QA2 was based on the identification of
24 aggregated first-generation articles (i.e. articles to which the resulting set of articles
referred at least twice). By calculating the ratio between the number of references to
these first-generation papers (by papers of the resulting set) and the total set of 24
articles, the following scores are obtained: Osterwalder [8] – Y (20/24 = 83.3%), Pateli
and Giaglis 2003 [4, 13] - Y (16/24 = 66.7%), Morris et al. [12] - Y (13/24 = 54.2%),
Shafer et al. [1] - P (10/24 = 41.7%), Al-Debei and Avison [6] - P (9/24 = 37.5%),
Hedman and Kalling [9] - P (9/24 = 37.5%), Lecocq et al. [27] and Demil and Lecocq
[7] - P (8/24 = 33.3%), Tikkanen et al. [10] - P (7/24 = 29.2%), Zott and Amit [11, 28] -
P (6/24 = 25.0%), Teece 2010 [26] - N (3/24 = 12.5%). Consequently the work of Teece
[26] will not be further used for the development of the integrative framework.
4.3 Integrative business model framework
To identify the common business model components, an extensive analysis of the final
set of papers was performed. Although a component can be considered as common if it
is proposed by at least two papers, only those elements that appeared in the majority of
frameworks were included in the integrative framework (figure 1). The definition of
these elements can be found in table 2, in which the definitions of customer segment,
supplier, competitor and partner are aggregated by the definition of value network.
Furthermore, figure 1 also shows the relationships that exist between the elements,
which are justified by the relevant references in the following description.
Fig. 1. Proposed integrative business model framework based on the existing literature
Companies can obtain their resources either by paying suppliers for the provision of
resources (i.e. a bought resource: an employee who is paid for providing labor, financial
institutions for providing capital, etc.) [1, 7-11] or by entering into a partnership with an
outside actor (i.e.: a licensed resource: acquiring money from an investor for increasing
the equity of the firm, acquiring governmental authorizations for performing certain
activities, etc.) [1, 8-11]. Resources can appear as three different types: human skills [7-
10], tangible resources (e.g. capital) [6-10], and intangible resources (e.g. goodwill) [6,
8, 10]. The acquisition of resources implies a cost that affects the financial structure of
the firm [7, 8]. Within the internal value chain, which reflects the overall business
process infrastructure, these resources are combined [6-10] to create competences [7, 9,
10, 12], which realize the value proposition [1, 9-12]. This value proposition is offered
[7-10, 12] to the target customer segment through one or more distributions channels to
create value for the client [1, 6, 8-12]. Furthermore the value proposition also creates
revenues [1, 7, 8, 10, 11], which will influence the financial structure of the firm. As
companies operate within a value network of actors, the rivalry with the competitors [1,
6, 7, 9-11] and the value creation for other partners [1, 6, 7, 10, 11] are also included.
Table 2. Definitions of the constituting elements of the integrative business model framework
Concept Definition
Resources Human skills, tangible means, and intangible means under control of an organization by being
bought or licensed, which are combined within the value chain of activities [8, 18].
Value chain Overall business process architecture which describes the structured set of activities that combine
resources to create the necessary competences [7, 10].
Competence Ability to coordinate flows of resources through the value chain to realize the intended value
proposition [29].
Distribution channel The way in which the offering is made available to the customers [12].
Value proposition Offered set of products and/or services that provides value to the customers and other partners
and competes in the overall value network [6, 8, 10].
Value network Web of relations created with external stakeholders, including suppliers, customers, competitors
and partners [1, 7].
Financial structure Representation of the costs resulting from acquiring resources and of the revenues in return for
the offered value proposition [8].
4 Discussion
The research objective of this paper was the identification of the constituting elements of
the business model concept and their relationships, as described in the current literature.
By applying the SLR methodology, 10 components were identified that are common to
the majority of the integrative frameworks, which resulted from the literature review.
The relationships were derived from the existing component definitions, as most
frameworks only implicitly incorporate them.
The proposed integrative framework is only a first step to achieve a convergent view
on the business model concept, as it needs to be evaluated by future research.
Furthermore it can inform existing value models to represent the business rationale of
the firm. Future research includes the analysis to which extent value models are able to
incorporate this rationale and which adaptations are needed to achieve this. The
integrative framework can also be applied to integrate business models with goal
models, which reflect the formulated strategy of the company. This will ensure that a
company aligns its strategy with the goals it wants to achieve. These opportunities will
enable a full integration between the representation of the formulated strategy and the IS
requirements that can be derived from value models.
References
1. Shafer, S., Smith, J., Linder, J.: The Power of Business Models. Business Horizons 48,
199-207 (2005)
2. Baden-Fuller, C., Morgan, M.: Business Models as Models. Long Range Planning 43, 156-
171 (2010)
3. Eriksson, H., Penker, M.: Business Modeling with UML – Business Patterns at Work.
John-Wiley & Sons, New York (2000)
4. Pateli, A., Giagl , G.: A Framework for Understanding and Analysing E-Business Models.
In: Proceedings of the 16th Bled Electronic Commerce Conference: eTransformation,
Bled, Slovenia (2003)
5. Cropley, A.: In Praise of Convergent Thinking. Creativity Research Journal 18(3), 391-404
(2006)
6. Al-Debei, M., Avison, D.: Developing a Unified Framework of the Business Model
Concept. European Journal of Information Systems 19, 359-376 (2010)
7. Demil, B., Lecocq, X.: Business Model Evolution: In Search of Dynamic Consistency.
Long Range Planning 43, 227-246 (2010)
8. Osterwalder, A.: The Business Model Ontology: A Proposition in a Design Science
Approach. l’Université de Lausanne, Lausanne (2004)
9. Hedman, J., Kalling, T.: The Business Concept: Theoretical Underpinnings and Empirical
Illustrations. European Journal of Information Systems 12(1), 49-59 (2003)
10. Tikkanen, H., Lamberg, J., Parvinen, P., Kallunki, J.: Managerial Cognition, Action and
the Business Model of the Firm. Management Decision 43(6), 789-809 (2005)
11. Zott, C., Amit, R.: Business Model Design: An Activity System Perspective. Long Range
Planning 43, 216-226 (2010)
12. Morris, M., Schindehutte, M., Allen, J.: The Entrepreneur’s Business Model: Toward a
Unified Perspective. Journal of Business Research 58, 726-735 (2005)
13. Pateli, A., Giaglis, G.: A Research Framework for Analysing E-Business Models.
European Journal of Information Systems 13, 302-314 (2004)
14. Osterwalder, A., Pigneur, Y., Tucci, C.: Clarifying Business Models: Origins, Present, and
Future of the Concept. Communications of the AIS 16, 1-25 (2005)
15. Kitchenham, B., Pearl Brereton, O., Budgen, D., Turner, M., Bailey, J., Linkman, S.:
Systematic Literature Reviews in Software Engineering - a Systematic Literature Review.
Information and Software Technology 51(1), 7-15 (2009)
16. Brereton, P., Kitchenham, B. A., Budgen, D., Turner, M., Khalil, M.: Lessons from
Applying the Systematic Literature Review Process within the Software Engineering
Domain. Journal of Systems and Software 80(4), 571-583 (2007)
17. Gordijn, J., Akkermans, H.: Value Based Requirements Engineering: Exploring Innovative
E-Commerce Ideas. Requirements Engineering Journal 8(2), 114-134 (2003)
18. Geerts, G., McCarthy, W.: An Ontological Analysis of the Economic Primitives of the
Extended-REA Enterprise Information Architecture. International Journal of Accounting
Information Systems 3, 1-16 (2002)
19. OMG: Value Delivery Modeling Language (VDML), Version 0.2 (2012)
20. Yu, E., Giorgini, P., Maiden, N., Mylopoulos, J.: Social Modeling for Requirements
Engineering. MIT Press, Boston (2011)
21. Amyot, D., Ghanavati, S., Horkoff, J., Mussbacher, G., Peyton, L.,Yu, E.: Evaluating Goal
Models within the Goal-Oriented Requirements Language. International Journal of
Intelligent Systems 25(8), 841-877 (2010)
22. OMG: Business Motivation Model (BMM), Version 1.1 (2010)
23. Casadesus-Masanell, R., Ricart, J.: From Strategy to Business Models and onto Tactics.
Long Range Planning 43, 195-215 (2010)
24. Verstraete, T., Jouison, E.: Trois Théories Pour Conceptualiser La Notion De Business
Model En Contexte De Création D’entreprise. In: 16th conference of the International
Associaton of Strategic Management (AIMS), Montreal, Canada (2007)
25. Warnier, V., Lecocq, X., Demil, B.: Le Business Model : L’oublié De La Stratégie In: 13th
conference of the International Association of Strategic Management (AIMS), Le Havre,
France (2004)
26. Teece, D.: Business Models, Business Strategy and Innovation. Long Range Planning 43,
172-194 (2010)
27. Lecocq, X., Demil, B., Warnier, V.: Le Business Model, Un Outil D’analyse Stratégique.
Expansion Management Review 123, 96-109 (2006)
28. Zott, C., Amit, R.: The Fit between Product Market Strategy and Business Model:
Implications for Firm Performance. Strategic Management Journal 29, 1-26 (2008)
29. Sanchez, R.: Strategic Product Creation: Managing New Interactions of Technology,
Markets, and Organizations. European Management Journal 14(2), 121-138 (1996)