Developing Theories of Business Models (Susan C. Lambert)

A post by Associate Professor Dr. Susan C. LambertUniversity of South Australia, Business School

Business model research has emerged from management, entrepreneurship, innovation, information systems and more recently sustainability schools of thought, each discipline bringing with it its own context specific perspective. Although there is some evidence of gravitation towards a consensus as to the definition and components of business models (Zott et al., 2011) it is by no means settled. The presence of these varying conceptualisations of business models has implications for other business model research including the ability to make generalisations about business models. The classification of business models is the focus of many academic publications but they are mostly specific, arbitrary classifications designed to meet the immediate needs of the researcher (Mäkinen & Seppänen, 2007; Malone et al., 2006) with little or no potential to generalize beyond the specific industry or venture (Morris et al., 2006).

There is a need for sound descriptive and explanatory research that defines the business model concept and its components (Zott et al., 2011) and classifies business models. On the basis of the concept-focused theoretical foundation, mid-range theorizing can take place to answer questions such as:

  • Do business models vary according to industry and/or geographic location?
  • What are the business model implications of adding electronic commerce to an existing business?
  • Is there an association between business model variables and the size or age of the business?
  • What are the differences between e-business models and traditional business models?
  • What are the resource implications of specific business models?
  • What are the characteristics of socially and ecologically sustainable business models?
  • Are some business models more efficient, or profitable or successful than others?

Mid-range theory is “…moderately abstract, has limited scope and can easily lead to testable hypotheses” (Gregor, 2006, p.616). Generalizations about different classes of business models can be made and tested in specific contexts.  Inductive empirical research that starts with specific observations and then generalizes the findings to a whole class of business model is needed.

The literature reveals that business model research lacks inductive empirical research that can be used as the basis for generalizations. This problem is not unique to business model research but is characteristic of other nascent research fields (Hanks et al., 1993; McMahon, 1998). Furthermore, it is evident that the business model conceptualizations lack the necessary taxonomical criteria that will permit context-bound generalizations to be made (Mäkinen & Seppänen, 2007; Morris et al., 2006).

Taking business model research to the mid-range theory level requires an understanding of the theoretical contributions of existing research along with an appreciation of the types of research that will progress business model theory building.

References

Gregor, S. (2006): The nature of theory in information systems, MIS Quarterly, Vol.30, No. 3, pp. 611-642.

Hanks, H., Watson, C., Jansen, E. & Chandler, G. (1993): Tightening the Life-Cycle Construct: A Taxonomic Study of Growth Stage Configurations in High-Technology Organizations, Entrepreneurship, Theory & Practice, Vol. 18, No. 2, pp. 5-30.

Mäkinen, S. & Seppänen, M. (2007): Assessing business model concepts with taxonomical research criteria, Management Research News, Vol. 30, No. 10, pp. 735-748.

Malone, T., Weill, P., Lai, R., D’Urso, V., Herman, G., Apel, T. & Woerner, S. (2006): Do Some Business Models Perform Better than Others? MIT Sloan Research Paper (4615-06).

McMahon, R. (1998): Business growth and performance and the financial reporting practices of Australian manufacturing SMEs. (PhD), University of New England, Armidale.

Morris, M., Schindehutte, M., Richardson, J. & Allen, J. (2006): Is the business model a useful strategic concept?  Conceptual, theoretical, and empirical insights, Journal of Small Business Strategy, Vol. 17, No. 1, 27-50.

Zott, C., Amit, R. & Massa, L. (2011): The Business Model: Recent Developments and Future Research, Journal of Management, Vol. 37, No. 4, pp. 1019-1042.

Selected publications by Susan C. Lambert

Lambert, S.; Carter, A. & Burritt, R. (2012): Recognising commitment to sustainability through the business model. Centre for Accounting, Governance and Sustainability Occasional Working Papers, No. 6. Adelaide: University of South Australia.

Lambert, S. (2010): Progressing Business Model Research Towards Mid-Range Theory Building. PhD Thesis, University of South Australia, Adelaide.

Lambert, S. (2006): A Business Model Research Schema, 18th Bled eConference, 06-08 June, Bled, Slovenia.

Lambert, S. (2005): Making Sense of Business Models, The Magnus Journal of Management, Vol. 1, No. 1, pp. 47-55.

Lambert, S, (2010): Beyond Definitions, Components and Framework of Business Models, 5th International conference Accounting and Management Information Systems AMIS 2010, 16-18 June, Bucharest, Romania.

Lambert, S. (2008): A Conceptual Framework for Business Model Research, 21st Bled eConference, 15-18 June, Bled, Slovenia.

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