A Framework for Business Models in Business Value Networks

Abstract

Business models are oftentimes considered as “the most discussed and least understood aspect of the web” (Rappa 2001). Despite a rough understanding that seems to be widespread – namely an aggregation of essential, relevant aspects from economic branches providing a compressed overview on business activities – dimensions, components, perspectives and core issues are depicted non-uniformly and confusing [PeKT01; Wirt01]. In particular, literature lacks contributions that particularly consider business model frameworks for networked economies, especially newly emerging loosely-coupled configurations as assumed in the business web theory. In order to address these shortcomings, we introduce a business model framework for business value networks as a result from an extensive literature review comprising two areas. Firstly, I conduct a state-of-the-art analysis of existent definitions of the term “business model” with emphasize on the elements that should be included, i.e. the relevant aspects of business activity. The study confirms the statements made by several authors: Some elements are broadly accepted – a description of created and offered value, revenue models, and business actors was included in more than 75% of the literature contributions. However, there are substantial differences in other components, e.g. market consideration, cost structure, or technology. In this connection, I also present a segregation of the concept business model from related concepts. Secondly, I outline the characteristics of business value networks as a newly emerging organizational form of loosely-coupled business networks. As a result, the partner network and the roles of these actors, their core competencies, and the role of the customer are identified as crucial elements that are to be considered in business models of companies acting in business value networks. Resulting from the literature analysis and a brief outlook how the customers are likely to be integrated in value creation processes in future, I propose a business model framework for business value networks comprising the five basic pillars value creation model, partner model, value offering model, customer model, and profit model. These pillars are decomposed into eleven business model components value configuration, core competencies, position in value system, partners and their roles, service/product portfolio, target customer, distribution channel, customer integration, revenue, pricing, and cost structure. Thus, the contribution of this article is twofold. On the one hand an updated understanding of the concept of business models within business value networks shall be established. On the other hand, I provide a framework which shall serve as a basis for further research, be it for the creation of a business model taxonomy in networked economies, the analysis of existent networked business models, or the development of concrete business models in the business value network context.