Editorial 24/4: Electronic markets and business models

Abstract

Dear readers of Electronic Markets, Almost 15 years have passed since Electronic Markets published the first special issue on business models in 2001. This was a time where business strategists had difficulties in systematically explaining the essence, logic and ingredients of business models. Compared to the long-term timing that was prevalent in traditional thinking on business strategies, Internet thinkers and practitioners brought a new concept more or less overnight into the business world and caught many strategists by surprise. This does not mean that the new termwas always used precisely and with sufficient “meat”. As described by Magretta (2002, p.86), business models were “one of the great buzzwords of the Internet boom, routinely invoked, [...] to glorify all manner of half-baked plans”. Business model definitions emerged in the late 1990s and we are proud that one of the earliest definitions available was published by Paul Timmers from the European Commission in volume 8 of ElectronicMarkets. He conceived a business model as “an architecture for the product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and description of the sources of revenues.” (Timmers 1998, p.4). It turns out that this definition was used widely and is still referenced today. Remarkably, the article has received the highest number of downloads and citations of all Electronic Markets articles so far. Following Harzing the article has scored a total of 2’283 citations (as per October 2014), which is considerably more than the second ranked article on citizen adoption of eGovernment (Warkentin et al. 2002) with a total of 434 citations. Another contribution on business models ranks third with some 404 citations. This is the preface to Electronic Markets’ first special issue on business models (Alt and Zimmermann 2001), which not only introduced the four research papers of the special issue at that time, but also aimed at summarizing existing knowledge in business model research. The paper started by analyzing the usage of the term “business model” in various databases and revealed only a limited proliferation. This has changed considerably as Table 1 shows with a sample of the same searches today and a total of 600 mentions in Electronic Markets papers in various contexts of business models since. Another analysis on the number of papers published in Web of Science journals even revealed some 4’000 mentions (DaSilva and Trikman 2013). It is astonishing that despite publications including the title term “business model” have attracted many writers, Teece (2010, p.192) concludes that the “paucity of literature (both theoretical and practical) on the topic is remarkable, given the importance of business design, particularly in the context of innovation.” In view of this statement, let us take the opportunity of this editorial to reflect on some aspects of the business model construct. First, business models are accepted as important elements in the construction of an organization’s strategic positioning and offerings in the market. Following the principle of models, they reduce real world complexity by representing only relevant design elements for a specific design purpose (Baden-Fuller and Morgan 2010). All other intricacies existent in the real world, which might be relevant for other purposes, should be suppressed. Thus, business models are helpful in mapping the specific ingredients and mechanics of understanding how a business works. Due to the obvious link to business strategy, a question that was raised is how business R. Alt (*) Information Systems Institute, University of Leipzig, Grimmaische Str. 12, 04109 Leipzig, Germany e-mail: rainer.alt@uni-leipzig.de