Underlying Business Models Research Articles

Relational or Transactional? The Importance of Distinguishing Two Types of Community-Supported Business Models

Scholars are increasingly exploring community-supported businesses (CSBs) as promising alternatives to conventional ones. However, researchers are so far overlooking that CSBs vary in their underlying business models, that is, how they propose, create, and capture value. We apply a multi-staged qualitative research process to carve out the differences between community-supported business models (CSBMs) that exist in practice. Our research shows that transactional and relational CSBMs differ in how they propose, create, and capture value which, in turn, has implications for the resources required to thrive.

A Study on the Relationship Between Leveraged Buyouts and Profitability

This article delves into the profitability of post-buyout subsidiaries resulting from Leveraged Buyouts (LBOs), focusing on prominent examples such as Blackstone, Hilton, Bain Capital, and Toys "R" Us. Through a comparative analysis of two scenarios, it scrutinizes the impact of LBOs on the profitability of these companies. Previous research predominantly concentrated on isolated aspects, lacking comprehensive cross-comparisons across various domains. This study addresses this gap by broadening the scope, aiming for a more holistic understanding. The paper examines notable instances such as the Blackstone Hilton lawsuit and Bain Capital's involvement with Toys "R" Us. It reveals that the success of LBOs hinges on several critical factors, including a robust underlying business model, an appropriate financing structure, and a well-defined exit strategy. By elucidating these key components, the research provides insights into the dynamics of LBOs and their implications for post-buyout profitability. The findings contribute to a deeper comprehension of the intricate relationship between LBOs and profitability, offering valuable guidance for stakeholders in the financial and corporate sectors.

Where you go is who you are: a study on machine learning based semantic privacy attacks

Concerns about data privacy are omnipresent, given the increasing usage of digital applications and their underlying business model that includes selling user data. Location data is particularly sensitive since they allow us to infer activity patterns and interests of users, e.g., by categorizing visited locations based on nearby points of interest (POI). On top of that, machine learning methods provide new powerful tools to interpret big data. In light of these considerations, we raise the following question: What is the actual risk that realistic, machine learning based privacy attacks can obtain meaningful semantic information from raw location data, subject to inaccuracies in the data? In response, we present a systematic analysis of two attack scenarios, namely location categorization and user profiling. Experiments on the Foursquare dataset and tracking data demonstrate the potential for abuse of high-quality spatial information, leading to a significant privacy loss even with location inaccuracy of up to 200 m. With location obfuscation of more than 1 km, spatial information hardly adds any value, but a high privacy risk solely from temporal information remains. The availability of public context data such as POIs plays a key role in inference based on spatial information. Our findings point out the risks of ever-growing databases of tracking data and spatial context data, which policymakers should consider for privacy regulations, and which could guide individuals in their personal location protection measures.

Circular economy implementation in operations & supply chain management: Building a pathway to business transformation

Our aim is to understand the circular economy (CE) transformation challenge and the synergies with operations & supply chain management (OSCM). CE represents a major industry transformation from linear production to circular value creation where products, components and resources are maintained at the highest value for the longest period. Yet despite OSCM’s long association with reverse logistics, the practical means of CE implementation is lacking where business transformation means systemic innovation not incremental change. Our method is to adopt a longitudinal approach where rich data from over 1000 senior practitioners on interactive events identifies 3 stages comprising of identification, initiation, and implementation, and reveals why some companies move between the stages and others become stuck. We illustrate these stages and the successful pathways used in 5 industry cases: Philips, Schweizer Bundesbahn, Renault, Ricoh, and Steelcase. Rather than develop new tools, we present a framework for implementing CE using business elements which are grounded in everyday practice and part of a taxonomic process that is continuously tested over time. We find successful CE implementation requires attention to product design, underlying business models, reverse flow management and enabling conditions (e.g. policy, finance), unlocking new sources of circular value creation and capture. There is no one-size-fits-all model for successful initiation and implementation of CE, but rather a continuous process of identifying value leakage and creation opportunities, progressive initiation of pilots, evaluation of business outcomes, and ability to manage risks associated with complexity and scaling. Our contribution views the challenge as a complex pathway consisting of configuring CE building blocks whose business transformation hallmarks are reflected in architectural change and systemic innovation.

Carbon, economics, and labor: a case study of deconstruction’s relative costs and benefits compared to demolition

The authors formed a collaborative working group with the “specific aim to investigate the circular potentials of the local built environment by researching and proposing methods for material reuse and recycling, reversible construction, reactivating embodied values, creating green jobs, and reinventing the underlying business models of construction.” Seeking to demonstrate deconstruction as an alternative to demolition, the group found a collection of 11 residential structures from the year 1910 that were planned for demolition. The group was able to convince the developer to deconstruct – instead of demolish – one of the structures. Over the course of five days in January 2022, a crew of up to eight workers methodically carved the 420 square meter, 13-bedroom structure into sections from top to bottom. Data was collected during this process on material quantities successfully salvaged from the structure in relation to its total mass, the associated carbon savings the salvage of these materials indicate, their resale value, and labor time and costs required to both remove and process these materials for resale. The results of the study show an increase in carbon savings and sequestration through deconstruction and reuse when compared to demolition, but increased labor and economic costs. However, the resale of materials significantly discounts a significant portion of the cost of the deconstruction, and as capacity and knowledge is built in the local reuse ecosystem the authors believe deconstruction can reach parity with demolition in the future.

Embodied, Everyday Systemic Design - A Pragmatist Perspective

Abstract Systemic design is gaining popularity as an emerging professional design practice that works to address complex societal problems. This elitist view of systemic design reinforces the difficulty of grappling with complexity and the need for specialized design knowledge, skills, and methods to do so. Such an understanding emphasizes the power of the designer, feeds the underlying business model through which systemic design is bought and sold in a capitalist market, and limits its transformative potential. Taking a pragmatist perspective of systemic design, this article brings forward an alternative view of systemic design as an embodied, everyday experience of shaping social structures amid communities. It repositions systemic design as a pervasive, mundane, and pluralistic practice central to autonomous communities. The article calls for an emphasis on cultivating the reflexivity of collectives so that people can continue to shape their own worlds in respectful relations with others.

The after party: Cynical resignation in Adtech's pivot to privacy

Digital advertising and technology companies are resigned to a new privacy imperative. They are bracing for a world where third-party tracking will be restricted by design or by law. Digital resignation typically refers to how companies cultivate a sense of powerlessness about privacy among internet users. Our paper looks through this optic from the other end of the lens: How is the digital advertising industry coping with the increasing salience of privacy? Recent developments have forced companies to implement “privacy-preserving” designs—or at least promise some semblance of privacy. Yet, the industry remains dependent on flows of data and means of identification to enable still-desired targeting, measurement, and optimization. Our paper analyzes this contradiction by looking at systems that aim to replicate existing functionalities while protecting user “privacy.” We call this a form of “cynical resignation” and characterize its key maneuvers as follows: (a) sanitizing surveillance; (b) party-hopping; and (c) sabotage. We argue that this “cynical resignation” to a privacy imperative represents a policy failure. In the absence of decisive interventions into the underlying business models of data capitalism, companies offer techno-solutionism and self-regulations that seem to conform to new laws and norms while reinforcing commitments to data-driven personalization. This may benefit the largest tech companies, since their privileged access to first-party data will make more companies reliant on them, and their computational power will be even more valuable in a world where modeling is used to compensate for the loss of third-party data and traditional methods of personal identification.

Responsibly strategizing with the metaverse: Business implications and DEI opportunities and challenges

This viewpoint article aims to lay out the foundations for IS research on the strategic implications as well as diversity, equity, and inclusion (DEI) opportunities and challenges of the metaverse – a sociotechnical system providing users with an immersive, synchronous 3D experience of (virtual) reality through interoperable platforms and sensor devices. We first examine the metaverse’s technologies and its underlying business models, which hold immense strategic implications for organizations and industries, and might require rethinking the future of work. As with most emerging technologies able to generate, collect, and process user data, the metaverse comes at a price; leveraging the metaverse strategically will require ethical and DEI considerations. After examining all these aspects of the metaverse, we reflect on ways IS scholarship engaged in strategizing can advance theoretical and practical knowledge by generating novel research questions and outlining a research agenda. Our contribution is twofold: first, we analyze the metaverse using a sociotechnical lens, thereby setting the ground for future studies of the phenomenon. Second, we identify specific strategic implications as well as DEI opportunities and challenges associated with the metaverse, and discuss how scholarship versed in IS strategizing can contribute to addressing them, both theoretically and empirically.

Successful Innovation Transfer through Pre-Standardization: A Case Study

This study presents an approach to structure, analyze and evaluate corporate standardization processes using the example of pre-standardization for the reduction of environmental impacts in product design and development. For this purpose, we give a detailed description of the evolution of the European Standard EN 16524 entitled “Mechanical products—Methodology for reduction of environmental impacts in product design and development”. The standardization strategy behind the evolution of EN 16524 is analyzed using the approach of a Business Model Canvas combined with an evaluation using pre-defined success factors. Moreover, we derive general recommendations for corporate standardization professionals in checklists for each field of the underlying Business Model Canvas. With regard to the case study depicted here, we come to the conclusion that pre-standards are especially suited for innovation transfer in the field of emerging and rapidly evolving scientific and technical results.

A data-based business concept to support product creation in reducing greenhouse gas emissions

The anthropogenic climate change and the resulting global warming cause a multitude of problems for humans and the environment. For this reason, politicians have set ambitious climate targets with the adoption of the Paris Climate Agreement and the implementation of the European Green Deal. However, especially in the industrial sector, the savings of climate-damaging greenhouse gas emissions have so far fallen short of the politically set targets. A significant lever to reduce emissions in production is offered when optimal decisions are already made in the product creation process. One approach is shifting the focus from the product itself to the provision of its service, so different options for geometry, material, manufacturing process and machines are enabled. By forecasting a carbon footprint for each variation of the mentioned options, the greenhouse gas optimal configuration can be identified. Automating this process requires a trustful data and service exchange framework with interfaces, where data exchanges (e.g. raw material properties) and service provisions (e.g. prognosis algorithm for energy consumption) are simplified. Lastly, an inherent changeover and investments must be justifiable in terms of measurable benefits and return on investment for participating companies.This paper aims to propose a data-driven business model for the greenhouse gas emission reduction in product creation. It addresses the data and revenue streams for the participating stakeholders by a use case from the field of plastic injection molding within the Gaia-X lighthouse project EuProGigant. In this context, the underlying business model architecture is derived. Finally, possible economic potentials and chances for saving greenhouse gas emissions are discussed. Likewise, possible obstacles that could prevent economic operation in industrial practice are also addressed.

Implementation of Fuel Cells in Aviation from a Maintenance, Repair and Overhaul Perspective

Hydrogen is one of the most promising power sources for meeting the aviation sector’s long-term decarbonization goals. Although on-board hydrogen systems, namely, fuel cells, are extensively researched, the maintenance, repair and overhaul (MRO) perspective remains mostly unaddressed. This paper analyzes fuel cells from an MRO standpoint, based on a literature review and comparison with the automotive sector. It also examines how well the business models and key resources of MRO providers are currently suited to provide future MRO services. It is shown that fuel cells require extensive MRO activities and that these are needed to meet the aviation sector’s requirements for price, safety and, especially, durability. To some extent, experience from the automotive sector can be built upon, particularly with respect to facility requirements and qualification of personnel. Yet, MRO providers’ existing resources only partially allow them to provide these services. MRO providers’ underlying business models must adapt to the implementation of fuel cells in the aviation sector. MRO providers and services should, therefore, be considered and act as enablers for the introduction of fuel cells in the aviation industry.

The dominant logic of Big Tech in healthcare and pharma

Digital health and digital pharma are considered supportive tools for patients and healthcare providers (HCPs), making the market highly attractive for industry players. Not surprisingly, Tech Giants have started to move into this area. We utilized established management models and publicly available information sources, such as annual company reports, and performed a thorough analysis to uncover the underlying business models of Alphabet, Amazon, Apple, IBM, and Microsoft in order to better understand their intention and process of entering the healthcare and pharma industries. Our results indicate that they do address the needs of patients and physicians, while having built clear value propositions, value chains, and revenue models to sustainably revolutionize the healthcare and pharma industries.

Networked Trust & the Future of Media

Abstract Americans believe the civic information ecosystem is collapsing. Trust in journalism has declined in the past generation, and news media now draw polarized audiences. Public confidence in social media as a news and information source has never been strong, and people today say social media firms cannot be trusted to be objective or impartial information curators of political discourse or stewards of their users’ personal data. This adds up to public despair about disinformation and misinformation that impinges on the way expert knowledge is evaluated and deeply affects public life. A reckoning for both the news media and social media is at hand: For journalists, the existential challenge centers on the viability of their underlying business model. For social media firms, “techlash” might force them to change their structures and practices. Under the circumstances, networked individuals will determine the contours of trust in media.

A BUSINESS MODEL ENABLING A PASSENGER-DISTANCE-IMPROVED LONG-HAUL NETWORK TO DECREASE TRANSPORT INEFFICIENCIES

The air transport system faces pressing challenges arising from CO2-emission reduction targets, fragmented passenger needs, and a highly competitive market environment. Aiming for a reduction of CO2-emissions in the long-haul sector, a holistic solution is suggested incorporating both operational and technological innovations in three areas: (1) changes in the air transport network structure, (2) (liquid) hydrogen as energy carrier, and (3) new aircraft and cabin design. To these ends, this paper focuses on the implications resulting from a passenger-distance improved air transport network. Demand pooling is proposed to enable higher load factors, offer more point-to-point connections for passengers, and generate new revenue sources for airlines. Based on a discussion of traditional airline business models, a seat exchange platform named “ShAirline” is proposed, allowing multiple providers to rent out cabin space. The underlying business model is evaluated considering implications for aircraft and cabin design, new passenger services, additional revenue opportunities, passenger journey times, required aircraft, as well as implications for airports. Findings indicate that the proposed seat exchange platform in conjunction with a change in aircraft ownership structure assist in removing inefficiencies across the current long-haul network and help offset barriers connected to the use of novel eco-efficient technologies.

Business models for the Anthropocene: accelerating sustainability transformations in the private sector

The rapid pace and escalating severity of climate change impacts have made clear that current incremental approaches to pressing global socio-ecological challenges are insufficient to address the root causes of unsustainable development. This has spurred increasing interest in the dynamics of transformation: the actors, capacities and resources needed to fundamentally shift development paths. The private sector is at the core of essential transformative processes necessary to build a future premised on environmental integrity, social inclusivity, and resilience. The activities of the private sector are structured and driven by their underlying business model, which is at its core a set of assumptions about how a business creates, extracts and delivers value. Dominant conceptualizations of the business model remain a narrow imagining of how business interacts with societal processes and shape development patterns. In this article we call for the conceptualization and design of business models anchored in societal purpose and operating within planetary boundaries, apt for the Anthropocene. We identify five building blocks for business models where transdisciplinary sustainability research can accelerate entrepreneurial activity that fosters desirable sustainable pathways by enabling the creation of new capabilities in support of broader transformational processes. This article seeks to inform (and potentially re-orient the efforts of) transdisciplinary scholars engaging the private sector in the co-production of community-based sustainability and resilience-building initiatives. Likewise, the building blocks provide a guide for businesses who aim to deepen their capacity to build new partnerships, identify, and incorporate new information on climate risk into their operations and develop practices, sequences and procedures oriented toward the sustainable development goals and disaster resilience.

Mobiles for Development – A Comparative Analysis of Business Decisions

ABSTRACT Much research on ‘mobiles for development’ focuses on outcomes and impact of services. This paper focuses on the underlying business models. It draws on two case studies as part of a UK Aid funded evaluation of the GSM Association led mNutrition programme. Vodafone Farmers Club in Ghana provides agricultural and nutrition information via SMS and Wazazi Nipendeni in Tanzania is a maternal and child health SMS service. The paper presents the salient points of the two contrasting business models, highlighting the strengths and weaknesses of both. The merits of the different approaches depend on the principle motivation, but when it comes to delivering positive outcomes among the poorest, the weight of evidence appears to be in favor of an independent, third party driven model.

Optimization of what? For-profit health apps as manipulative digital environments

Mobile health applications (‘health apps’) that promise the user to help her with some aspect of her health are very popular: for-profit apps such as MyFitnessPal, Fitbit, or Headspace have tens of millions of users each. For-profit health apps are designed and run as optimization systems. One would expect that these health apps aim to optimize the health of the user, but in reality they aim to optimize user engagement and, in effect, conversion. This is problematic, I argue, because digital health environments that aim to optimize user engagement risk being manipulative. To develop this argument, I first provide a brief analysis of the underlying business models and the resulting designs of the digital environments provided by popular for-profit health apps. In a second step, I present a concept of manipulation that can help analyze digital environments such as health apps. In the last part of the article, I use my concept of manipulation to analyze the manipulative potential of for-profit health apps. Although for-profit health can certainly empower their users, the conditions for empowerment also largely overlap with the conditions for manipulation. As a result, we should be cautious when embracing the empowerment discourse surrounding health apps. An additional aim of this article is to contribute to the rapidly growing literature on digital choice architectures and the ethics of influencing behavior through such choice architectures. I take health apps to be a paradigmatic example of digital choice architectures that give rise to ethical questions, so my analysis of the manipulative potential of health apps can also inform the larger literature on digital choice architectures.

Communicating Sustainable Business Models to Consumers: A Translation Theory Perspective

Firms can embed sustainability efforts in business model elements such as key resources, key activities, or key partners. To capitalize on their sustainability efforts, firms must present these efforts in a way that is meaningful to consumers that is—translate them. This study explores how sustainability efforts are translated to consumers on webpages, newsletters, and social media profiles of Norwegian yarn firms. Data analysis revealed that firms’ sustainability communications could be related to underlying business model elements. At the same time, to consumers they were framed as product attributes or consequences to consumers, society, or the environment. This shows that firms conveyed business model information, but not in business model terms, which supports the idea of business model translation. The findings also indicated variation in how sustainability efforts were framed based on the firm’s sustainability focus.

Pairing a Circular Economy and the 5G-Enabled Internet of Things: Creating a Class of ?Looping Smart Assets?

The increase in the world's population has led to a massive rise in human consumption of the planet's natural resources, well beyond their replacement rate. Traditional recycling concepts and methods are not enough to counter such effects. In this context, a circular economy (CE), that is, a restorative and regenerative by-design economy, can reform today's "take-make-dispose" economic model. On the other hand, the Internet of Things (IoT) continues to gradually transform our everyday lives, allowing for the introduction of novel types of services while enhancing legacy ones. Taking this as our motivation, in this article we analyze the CE/IoT interplay, indicating innovative ways in which this interaction can drastically affect products and services, their underlying business models, and the associated ecosystems. Moreover, we present an IoT architecture that enables smart object integration into the IoT ecosystem. The presented architecture integrates circularityenabling features by maximizing the exploitation of assets toward a new type of IoT ecosystem that is circular by design (CbD). Finally, we provide a proof-of-concept implementation and an application study of the proposed architecture and results regarding the applicability of the proposed approach for the telecommunications (telecom) sector.

Modern Slavery Responses Need International Business Scholarship

Modern slavery poses a challenge to many areas of international business and sometimes questions the legitimacy of underlying business models. All businesses are exposed to modern slavery in one way or another through their supply chains, but their actions to address the issue differ hugely. Some blame the complexity and anonymity of international supply chains or the limits of their market power to push for change. These are of course familiar experiences of international business practitioners, but no excuse to avoid action. This article hopes to offer routes and inspiration for international business scholars to contribute to ending modern slavery.