developing a unified framework of the business model concept

Developing a unified framework of the business

model concept

Mutaz M. Al-Debei1 andDavid Avison2

1Information Systems and Computing,

Brunel University, Uxbridge, U.K.;2ESSEC Business School, Dept SID,Cergy-Pontoise, France

Correspondence: Mutaz M. Al-Debei,Information Systems and Computing,Brunel University, Uxbridge, UB8 3PH, U.K.Tel: þ44 (0) 7599429672;Fax: þ44 (0) 1895 251686;E-mail: [email protected]

Received: 2 February 2009Revised: 8 September 20092nd Revision: 9 January 20103rd Revision: 2 March 2010Accepted: 4 March 2010

AbstractRecent rapid advances in Information and Communication Technologies (ICTs)

have highlighted the rising importance of the Business Model (BM) concept in

the field of Information Systems (IS). Despite agreement on its importance toan organization’s success, the concept is still fuzzy and vague, and there is

little consensus regarding its compositional facets. Identifying the fundamental

concepts, modeling principles, practical functions, and reach of the BM rele-vant to IS and other business concepts is by no means complete. This paper,

following a comprehensive review of the literature, principally employs the

content analysis method and utilizes a deductive reasoning approach toprovide a hierarchical taxonomy of the BM concepts from which to develop a

more comprehensive framework. This framework comprises four fundamental

aspects. First, it identifies four primary BM dimensions along with their

constituent elements forming a complete ontological structure of the concept.Second, it cohesively organizes the BM modeling principles, that is, guidelines

and features. Third, it explains the reach of the concept showing its interactions

and intersections with strategy, business processes, and IS so as to place the BMwithin the world of digital business. Finally, the framework explores three major

functions of BMs within digital organizations to shed light on the practical

significance of the concept. Hence, this paper links the BM facets in a novelmanner offering an intact definition. In doing so, this paper provides a unified

conceptual framework for the BM concept that we argue is comprehensive and

appropriate to the complex nature of businesses today. This leads to fruitful

implications for theory and practice and also enables us to suggest a researchagenda using our conceptual framework.

European Journal of Information Systems (2010) 19, 359–376.

doi:10.1057/ejis.2010.21; published online 11 May 2010

Keywords: business model; conceptual framework; content analysis; taxonomy;information systems

IntroductionThe Business Model (BM) is fundamental to any organization (Magretta,2002). This is because BMs provide powerful ways to understand, analyze,communicate, and manage strategic-oriented choices (Pateli & Giaglis,2004; Osterwalder et al., 2005; Shafer et al., 2005) among business andtechnology stakeholders (Gordijn & Akkermans, 2001). The concept is alsoof importance as it informs the design of information systems (IS)supporting the BM of an organization (Eriksson & Penker, 2000).Consequently, no one organization can afford ‘fuzzy thinking’ about thisconcept (Magretta, 2002).

Having realized the high significance of the BM, there has been anincreasing interest (from the time when business modeling had risen toprominence by the end of 1990s with the growth of hi-tech businesses up

European Journal of Information Systems (2010) 19, 359–376

& 2010 Operational Research Society Ltd. All rights reserved 0960-085X/10

www.palgrave-journals.com/ejis/

to now) in delineating the concept and providing furtherunderstanding. For example, some attempt to define theconcept (Timmers, 1998; Osterwalder et al., 2005; Shaferet al., 2005; Al-Debei et al., 2008a), others understandits relationships with IS (Hedman & Kalling, 2003),and other business concepts, such as corporate strategy(Mansfield & Fourie, 2004), and business process model-ing (Gordijn et al., 2000), and yet others to identify itsconstituent elements (Mahadevan, 2000; Gordijn &Akkermans, 2001; Chesbrough & Rosenbloom, 2002;Pateli & Giaglis, 2003).

Researchers have also looked at the BM concept in thecontext of different domains. The majority of researchinto BMs in the IS field has been concerned witheBusiness and eCommerce, and there have been someattempts to develop convenient classification schemas.For example, definitions, components, and classifica-tions into eBusiness models have been suggested (Alt &Zimmermann, 2001; Afuah & Tucci, 2003). Someresearchers have applied the BM concept in the domainsof business management and strategy (Linder & Cantrell,2000; Magretta, 2002), the telecom sector includingmobile technology along with its services (Bouwmanet al., 2008; Al-Debei & Fitzgerald, 2010), softwareindustry (Rajala & Westerlund, 2007), and eGoverment(Janssen et al., 2008).

However, although the concept is instinctively appeal-ing and promises to ‘fill a niche’ (Hawkins, 2004), theIS-related literature reveals a clear lack of consensusregarding its underpinnings. To date, the BM concept isstill considered an ill-defined ‘buzzword’ (Seddon et al.,2004; Seppanen & Makinen, 2007). Porter (2001) suggeststhat the BM concept is ‘murky’ at best. Some otherresearchers argue that the concept is underdeveloped(Magretta, 2002; Chesbrough & Rosenbloom, 2002). Inaddition, the BM concept has sometimes been misper-ceived as a substitute of corporate strategy, businessprocess, or business case. This murkiness could bebecause of the following three main reasons:

(1) The youthfulness of the BM concept and its asso-ciated research; the BM concept has only recentlyappeared frequently in scholarly reviewed journals(see Osterwalder et al., 2005).

(2) The fact that it comes from diverse disciplines such aseBusiness and eCommerce, IS, strategy, businessmanagement, economics, and technology (Pateli &Giaglis, 2004; Shafer et al., 2005).

(3) The newness of sectors within which the BM conceptis being investigated. A particular case in pointconcerns new technological ventures such as tele-communication providers along with their productsand services.

Nevertheless, the authors appreciate the vital role thatthe BM can play in today’s complex and turbulentenvironment. Hence, this paper is motivated by the needfor a comprehensive, generic, sound, and tight concep-tual framework to the BM concept in the IS domain. This

is pertinent now as there is little consensus on theessential BM attributes and aspects (Morris et al., 2005).The BM domain knowledge is fragmented, indeed, theconcept is rarely clarified explicitly (Chesbrough &Rosenbloom, 2002). Such clarification is therefore re-quired to unify the different points of view into onecomprehensive framework providing a common under-standing, language, and labeling in order to leverage ourcommunication in this context and our utilization of theconcept.

The remainder of this paper is structured as follows. Inthe next section, the research aims and the employedresearch method are described. Next, we highlight andanalyze the different viewpoints of authors within the ISfield researching into BMs and a table is constructedshowing the different views. We then present the syn-thesized conceptual framework showing and discussingthe BM compositional facets which we hope will lead to aconsensus. In this section, we discuss the four mainconcepts and values of the concept along with theirbuilding blocks and their interactions which positionsthe BM within the organization. We also demonstratethe reach and the major modeling principles of BMs. Toestablish its practical relevance, we identify three mainfunctions of the BM concept in digital business. Beforepresenting the conclusions, the paper provides implica-tions for theory and practice and suggests future avenuesof research which are necessary to continue to refine thisimportant area of research.

Research aims and methodsThe main aim of this paper is to provide a cohesiveunderstanding of the BM concept; that is supplying asolid and complete foundation for researchers andpractitioners. This includes those looking forward toutilizing the concept in their practices and applications.To this aim, the paper analyzes and synthesizes thedifferent viewpoints relating to the BM concept in aconceptual framework. Aiming to work as a unifiedmodel, this paper seeks to provide simple, but tightand comprehensive answers relating to the followingfundamental issues:

(1) The dimensions and elements of the BM concept,that is, what constitutes BMs, or what aspects needexamining when designing, evaluating, and mana-ging BMs.

(2) The modeling principles of BMs, that is, what guide-lines organizations need to draw upon when model-ing their BMs, what is characteristic in BMs, and whatfeatures are included.

(3) The reach of the BM concept, that is, the positioningof the BM concept within organizations, and whatsort of relations exist between the BM concept andother related notions such as strategy, businessprocess, and IS.

(4) The functions of the BM concept (its rationale andpractical roles), that is, why BMs are significant, why

Developing a unified framework of the BM concept Mutaz M. Al-Debei and David Avison360

European Journal of Information Systems

companies should care about it, and what are the

tasks that would be more effective when they are

based on BMs.

As these facets of the BM are essential but their relatedknowledge is fragmented and somehow imprecise andincomplete, there is a need to integrate the existing viewswithin the literature and analyze them to provide aunified framework that clarifies the concept. To do so,we primarily follow content analysis (Agar, 1980) as itenables researchers to include large amounts of textualdata and then systematically mines, makes inferences,and identifies common shared properties concerningthe phenomenon under investigation (Holsti, 1969;Krippendorff, 2004). Thus, content analysis is deemedappropriate in this research given that the data source isthe existing body of literature that examines the BMconcept in the digital business arena and thus theresearch data is in the ‘text’ format.

Essentially, ‘there is no simple right way to do contentanalysis’ (Weber, 1990), and Stone et al. (1966) define it as‘any research technique for making inferences by system-atically and objectively identifying specified character-istics within text’. In line with Stone’s definition, Holsti(1969) defines content analysis as ‘any technique formaking inferences by objectively and systematicallyidentifying specified characteristics of messages’ that arein the form of text. For making systematic and objectiveinferences, Agar (1980) highlights the importance ofdata classification when employing content analysis. Healso indicates that such a classification technique uses aform of content analysis where the data are read andcategorized into concepts that are suggested by the datarather than imposed from outside (see also Orlikowski,1993).

Retrospectively, the authors find it more useful tounderstand the BM concept by categorizing its currentinterpretations in the literature into a classificationschema or a taxonomy that contains conceptually mean-ingful groups of objects that share common character-istics, that is, classes. Basically, taxonomy is a systemizingmechanism utilized to map any domain, system, orconcept, as well as a conceptualizing tool relating itsdifferent constructs and elements. However, the terms‘taxonomy’, ‘classification’, ‘typology’, and ‘categoriza-tion’ have been used interchangeably within the IS andcomputing disciplines as they all aim to provide astructured grouping of similar data (although strictlythere are slight differences amongst these terms).

Generally speaking, classification methods are ofvalue in satisfying the needs of understanding data anddiscovery concepts (Zhifang, 1988). Categorizing databased on their shared characteristics is highly useful sinceit represents the means by which the collected datatransforms into more useful information, often called‘pre-knowledge’. Subsequently, this pre-knowledge canbe analyzed to mine new, valuable knowledge. Further-more, taxonomical or categorization methods provide

simplicity since they aim to reduce the complexity ofdealing with many instances (Parsons & Wand, 2008).Parsons & Wand (2008) also agree that classifying anobject supports deductions and inferences about itsunobserved properties. In line with this, Clancey (1984)and Fisher & Yoo (1993) argue that classification tech-niques are useful means for guiding inference and forproblem-solving purposes. Interestingly, all of thesecharacteristics match the definitions of content analysisprovided by Stone et al. (1966), Holsti (1969), and Agar(1980).

Content analysis approachThe employed content analysis approach uses the exist-ing BM literature as its main source of data. In order tounderstand such a fuzzy concept, the authors find itmore convenient to delineate the existing BM defini-tions within IS-related literature in a comprehensive andgeneric manner. Therefore, definitions are extracted fromliterature in IS, eCommerce, eBusiness, the technologyand telecoms industry, and business management. Thesearch process relies mostly on the use of electroniclibraries (e.g. ScienceDirect, EBSCO, JSTOR, and ACMDigital Library), by means of keywords. The mosteffective keywords used included the word ‘model’ (inparticular, BM and business modeling). The list ofreferences within the extracted literature representsanother valuable source of the targeted information.However, selecting the definitions chosen depended on‘heuristic evaluation measures’, and 22 definitions aredeliberately selected using the following criteria:

(1) Creation of a comprehensive pool (database) ofdefinitions in terms of anticipated knowledge cover-ing all the perspectives and standpoints from whichthe BM has been perceived and assessed.

(2) Quality Assurance, in terms of content, number ofcitations, and publication source.

(3) Coverage of an inclusive time frame; from 1998 to2008. As we established earlier, the BM concept hadrisen to prominence by the end of 1990s and the firstrecognizable articles on the concept were publishedin 1998 (e.g. Timmers, 1998).

Having the content identified – the 22 selecteddefinitions – we start analyzing them thematically. Thecoding is done by assigning ‘indicators’, ‘indexes’, or‘keywords’ to each extracted definition based on themain ‘themes’ of each. This is presented in Table 1, in the‘Thematic indicators’ column. Consequently, based onthese indicators, the process of aggregating definitionsinto individual classes was triggered. The classificationtechnique used in this paper could be depicted as a‘non-predefined’ or ‘unsupervised’ technique (as withgrounded theory and unsupervised conceptual cluster-ing), since no one can know the ensuing classes prior tothe process. In other words, discovering a categorystructure in initially unclassified data represents anunsupervised task (Fisher & Yoo, 1993). With hindsight

Developing a unified framework of the BM concept Mutaz M. Al-Debei and David Avison 361


Tab

le1

Sele

cted

sch

ola

rly

desc

rip

tio

ns

of

the

Bu

sin

ess

Mo

del

con

cep

t

Auth

ors

BM

des

crip

tions

Them

ati

cin

dic

ato

rs

Tim

mers

(1998,

p.

4)

An

arc

hitect

ure

for

pro

duct

s,se

rvic

es

an

din

form

ation

flow

s,in

clud

ing

ad

esc

rip

tion

of

various

busi

ness

act

ors

an

dth

eir

role

s;a

desc

rip

tion

of

the

pote

ntialb

enefits

for

the

various

busi

ness

act

ors

;an

da

desc

rip

tion

of

sourc

es

of

reve

nues.

Arc

hitect

ure

,V

alu

ePro

posi

tion

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ness

act

ors

an

d

role

s,Reve

nue

sourc

es.

Ven

katr

am

an

&H

en

ders

on

(1998,

pp

.33–34)

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rate

gy

that

reflect

sth

earc

hitect

ure

of

avi

rtualorg

an

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(2001,

p.

4)

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line,

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e

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er

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(2005,

pp

.17–18)

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tsand

their

rela

tion

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ress

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ork

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men

ts,

Arc

hitect

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etw

ork

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ners

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nue.

Haake

ret

al.

(2006,

p.

646)

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luep

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ies

tooffer

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int

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eir

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ep

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ork

of

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s,C

ust

om

ers

,V

alu

e

pro

posi

tion

.

An

ders

son

etal.

(2006,

pp

.1–2)

Busi

ness

mod

els

are

create

din

ord

er

tom

ake

clear

wh

oth

eb

usi

ness

act

ors

are

ina

busi

ness

case

an

dh

ow

tom

ake

their

rela

tion

sexp

licit.Rela

tion

sin

ab

usi

ness

mod

ela

refo

rmula

ted

in

term

sof

valu

es

exch

an

ged

betw

een

the

act

ors

.

Busi

ness

act

ors

an

dre

lation

s,V

alu

eexch

an

ge.

Kalli

oet

al.

(2006,

pp

.282–283)

Th

em

ean

sb

yw

hic

ha

firm

isab

leto

create

valu

eb

yco

ord

inatin

gth

eflow

of

info

rmation

,

good

san

dse

rvic

es

am

on

gth

eva

rious

ind

ust

ryp

art

icip

an

tsit

com

es

inco

nta

ctw

ith

incl

ud

ing

cust

om

ers

,p

art

ners

with

inth

eva

lue

chain

,co

mp

etito

rsan

dth

eg

ove

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en

t.

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ep

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tion

:in

form

ation

/good

s/se

rvic

es,

Ind

ust

ryp

art

icip

an

ts:

cust

om

ers

/part

ners

/

com

petito

rs/g

ove

rnm

ent.

Raja

la&

West

erlun

d(2

007,

p.

118)

Th

ew

ays

of

creatin

gva

lue

for

cust

om

ers

an

dth

ew

ayin

wh

ich

ab

usi

ness

turn

sm

arke

t

op

port

un

itie

sin

top

rofit

thro

ug

hse

tsof

act

ors

,act

ivitie

s,and

colla

bora

tion

s.

Valu

ep

rop

osi

tion

,Set

of

act

ors

,Reve

nue.

Jan

ssen

etal.

(2008,

p.

204)

Ab

usi

ness

mod

elre

flect

sth

eco

reb

usi

ness

of

an

org

an

ization

an

dis

use

fulto

desc

rib

e(a

nd

eve

np

resc

rib

e)

the

org

an

ization

from

the

pers

pect

ive

of

its

main

mis

sion

,and

the

pro

duct

s

an

dse

rvic

es

that

itp

rovi

des

toits

cust

om

ers

.

Busi

ness

log

ic,

Valu

ep

rop

osi

tion

,C

ust

om

ers

;

Curr

en

tor

futu

reb

usi

ness

.

Rap

pa

(2008,

Onlin

e)

Am

eth

od

ofd

oin

gb

usi

ness

by

wh

ich

aco

mp

an

yca

nsu

stain

itse

lf,th

at

is,g

en

era

tere

ven

ue.

Th

eb

usi

ness

mod

elsp

ells

out

how

aco

mp

an

ym

ake

sm

on

ey

by

speci

fyin

gw

here

itis

posi

tion

ed

inth

eva

lue

chain

.

Reve

nue

sourc

es,

Posi

tion

inth

eva

lue

chain

.



and while we aim to let the BM classes and conceptsemerge from the data, our application of content analysisis similar to the way it is used in grounded theory (seeGlaser & Strauss, 1967). Nevertheless, instead of collect-ing data empirically from the research site, the data usedin this research is gathered from relevant literature.

Parsons & Wand (2008, p. 839) argue that ‘classificationholds that classes do not exist independently, but areconstructed as useful abstractions of the similarities ofthe classified phenomena’. Therefore, we used an evalua-tion function to discover clusters or classes and definitionswere clustered into the same class only if they satisfy thefollowing three conditions:

(1) They are thematically similar to each other, that is,they communicate same or very similar semanticsand ideas about the concept.

(2) They have contextual relationships that complementeach other, thus they become more useful if clustered.

(3) The clustered definitions as a whole articulate aunique compositional aspect of the BM concept.

The outcome of this analytical course of action is ataxonomy which encompasses 13 unique (i.e. mutuallyexclusive) individual classes related to different aspects ofthe concept (i.e. dimensions and elements, modelingprinciples, reach, and functions). Subsequently, to groupclasses sharing common characteristics with each other,we employed a bottom-up approach in which the 13classes have been classified into four compositionalaspects of the BM concept, using the same principlesand techniques mentioned previously (see the aforemen-tioned evaluation framework; points 1–3). This representsa hierarchical classification schema (see Gordon, 1987)and we use a conceptual tree that describes how theclasses are related for understanding and communicationreasons. However, we assign conceptual metaphors toeach class within the taxonomy that we believe to beboth clear and understandable to ensure the quality ofthe taxonomy provided (see Michalski & Stepp, 1983).

Within the content analysis, this paper follows adeduction reasoning method utilizing the collected dataand information as guidelines to synthesize the BMknowledge into a generic and comprehensive, but con-cise BM definition. According to Johnson-Laird (1999),‘reasoning is a process of thought that yields a conclusionfrom percepts, thoughts, or assertions’ (p. 110), and thatreasoning is deductive when considering that the truth ofthe premises positively establishes the truth of theconclusion. Hence, the employed reasoning approachhere is deductive as we believe that the truth of premisesin the literature leads to the truth of the developeddefinition of the BM concept. The deduction technique isuseful for our purpose as we follow a process of reasoning(arguing) to infer a general definition of the conceptbased on individual cases and examples including bits ofevidence and other rules of inference. In particular,within the employed deductive reasoning approach, wefollow a systematic incremental methodology in which

BM definition is rapidly updated as it reacts to eachnew stimulus and we work out a definition for the BMusing the following three rules of inference: (1) thedefinition should be comprehensive and general; (2) it isnot sufficient to define the BM only in terms of itscomponents; and (3) the definition should synthesize thedifferent points of view presented in earlier research.

Grounding of the unified framework: the BMunderpinningsThe digital era has meant that the availability ofappropriate levels of information and knowledge havebecome critical to the success of the business. Organiza-tions need to adapt in order to survive and succeedas their business domains, processes, and technologieschange in a world of increasing environmental complex-ity. Enhancing their competitive positions by improvingtheir ability to respond quickly to rapid environmentalchanges with high quality business decisions can besupported by adopting suitable BMs for this new world ofdigital business.

However, the BM concept is still seen to be unclear, andresearchers in this area have depicted the BM fromdifferent perspectives. Most often, researchers only con-sider one or a few pieces of the whole. Each definitionexemplifies only one or at most a few branches of theentire narrative without considering the research in otherrelated fields (Pateli & Giaglis, 2004). In other words,researchers in this field are seeing different aspectsof the BM by gazing through different lenses (Shaferet al., 2005).

This section provides a first level of clarity by chrono-logically presenting and examining a classification of 22selected scholarly definitions of the BM concept (Table 1),covering the years 1998–2008. The content of the‘Thematic indicators’ column represents initial indicatorsused for building up the conceptual framework presentedin the next section.

Unsurprisingly, the applied analysis over the existingBM definitions within the literature illustrates the lack ofconsensus regarding the BM theoretical foundations(Chesbrough & Rosenbloom, 2002; Magretta, 2002;Morris et al., 2005; Kallio et al., 2006). It is more obviousnow that the IS-related literature contains a wide varietyof different views regarding the BM concept. The authorsagree with Linder & Cantrell (2000) that researchersmean different things when they write about BMs. Togive just a few examples, for Hedman & Kalling (2003)the BM concept is used to describe the key components ofa given business, while for Rappa (2008) it is the methodof doing business in which a company generates revenue.Venkatraman & Henderson (1998) on the other handdepict the concept as a strategy reflecting the architectureof virtual organizations, and Janssen et al. (2008) under-stand the BM as a way of describing an organization fromits mission perspective as well as the products-services itoffers to customers. Another example is that of Andersson



et al. (2006) who describe the BM as a mechanism thatmakes the business actors’ relations more explicit.

Another notable issue is that some researchers havedescribed the BM only through its components or evenon one or some of its components. For example, Timmers(1998) considers products-services architecture as well asactors and their roles and benefits in addition to sourcesof revenue as the BM primary constructs. Magretta (2002)puts emphasis on customers, value elements, andrevenues as the main components of BMs, while theBM elements for Bouwman (2002) are actors (customers,partners, and suppliers) and their roles, relationships, andflows-communications.

The applied analysis also reveals that the other BMfundamental details concerning modeling principles,reach, and functions are somehow available within theliterature, but indirectly, incompletely, fragmentally, andsometimes lacking a consensus. To give just a fewexamples, Stahler (2002) characterizes the BM as abstractin a sense that it provides a simplification of current orfuture business reality. Similarly, Campanovo & Pigneur(2003) typify it as conceptual tool, and Haaker et al. (2006)symbolize it as a blueprint. Moreover, Hedman & Kalling(2003) demonstrate the BM as dynamic, appreciating theturbulent nature of businesses today.

Nonetheless, the views diverge on the reach of the BMconcept. For example, Leem et al. (2004) define the BM asa strategy, while Petrovic et al. (2001) perceive it as anintermediate layer between strategy and business pro-cesses. The latter view however highlights the ‘alignmentrole’ of the BM concept. The view of Chesbrough &Rosenbloom (2002) exemplifies another role of theconcept as a ‘coherent mediating framework’ betweentechnological artifacts and the achievement of economicvalues.

With hindsight, it is more evident now that knowledgeabout the BM is disjointed and unclear. All of these issuesmaintain, and probably add to, the blurred view held ofthe BM and keep the BM-related knowledge fragmented.This suggests that the domain is fuzzy and vague andstill in its conceptualization phase, despite its perceivedsignificance. We consolidate and classify these views, andwe present a hierarchical taxonomy in the next sectionwhich organizes these different perspectives.

The synthesized conceptual frameworkThe use of content analysis over the extracted definitionsand descriptions of the BM concept facilitates theconstruction of a taxonomy that classifies the differentpoints of view into 13 mutually exclusive classes or‘clusters’ briefly described in Table 2. The deducted 13classes complement each other and can be consideredconstituent elements (i.e. subclasses) of a higher level ofontological abstraction. The conducted analysis inthis paper suggests V4BM Dimensions (i.e. the four valuedimensions of BMs), Modeling Principles, BM Reach, and BMFunctions as four upper classes fitting to encapsulate theoriginal 13 classes that have emerged from the collected

data (see Table 2). This hierarchical taxonomy of the BMdefines the concept comprehensively. It not only high-lights the major facets and aspects related to the concept,but also it reveals their important inter-relationships(see Figure 1).

As exemplified in Table 2, the first four classes – valueproposition, value architecture, value network, and valuefinance - represent the primary constructs and dimen-sions of the BM concept. The terminology used signifiesthat these fundamental dimensions are value-based. Thisis to indicate that only core arrangements are delineatedwithin these four dimensions. Each aims to provide themarket with desired values through the provision ofservices and products so as to capture economic valuesin return.

The principles those guide the modeling of BMs arealso included within the taxonomy. The applied analysisreveals that the BM is a conceptual coherent frameworkthat provides a holistic but abstract understanding of theunderlying business logic of an organization. The BM isalso dynamic and could be utilized at different levels andfor varied purposes within organizations.

As for the reach of the BM concept, the conductedanalysis indicates that the BM is an intermediate layerbetween business strategy and business processes includ-ing their supportive IS. Hence, the BM is not a substitutefor the corporate strategy but does sustain it as theconcept’s configurations are strategically oriented. TheBM also encompasses information helpful in translatingstrategic objectives into implementation tasks andfunctions.

Concerning the practical roles of the concept, theapplied analysis suggests that the BM can be usefullyemployed as a conceptual tool of alignment, a mediatingconstruct between technology and the attainment ofgoals and other values, and finally as knowledge capitaluseful in supporting decision-making functions. A moredetailed discussion and analysis of the identified BMfacets are provided in the following four subsections.

The ontological structure of the BM concept: V4 BMdimensionsThe ontological structure of the BM is important as itexplains the primary components of the concept. Hence,this section describes the main elements to be examinedwhen designing, analyzing, and evaluating BMs.

The BM has been described as a way in whichorganizations create value (Amit & Zott, 2001; Kallioet al., 2006) with two different approaches for the valueproposition:

(1) The ways in which an organization along with itssuppliers and partners (business actors) create valuefor its customers (Magretta, 2002; Osterwalder et al.,2005; Rajala & Westerlund, 2007).

(2) The ways in which an organization along with itsstakeholders create value for each party involved(Stahler, 2002; Andersson et al., 2006).



Tab

le2

Ah

iera

rch

ical

taxo

no

my

of

the

Bu

sin

ess

Mo

del

con

cep

t

BM

face

tsBM

class

esBrief

des

crip

tion

Rep

rese

nta

tive

liter

atu

re

V4

BM

dim

en

sion

s(1

)V

alu

ep

rop

osi

tion

Aw

ay

thatd

em

on

stra

tes

the

busi

ness

log

icofcr

eatin

gva

lue

forcu

stom

ers

an

d/o

rto

eac

h

part

yin

volv

ed

thro

ug

hofferin

gp

rod

uct

sand

serv

ices

that

satisf

yth

en

eed

softh

eir

targ

et

seg

men

ts.

Am

it&

Zott

(2001),

Petr

ovi

cet

al.

(2001),

Mag

rett

a(2

002),

Ost

erw

ald

er

etal.

(2005).

(2)

Valu

earc

hitect

ure

An

arc

hitect

ure

for

the

org

an

ization

incl

ud

ing

its

tech

nolo

gic

alarc

hitect

ure

an

d

org

an

ization

alin

frast

ruct

ure

that

allo

ws

the

pro

visi

on

ing

of

pro

duct

sand

serv

ices

in

ad

ditio

nto

info

rmation

flow

s.

Tim

mers

(1998),

Ven

katr

am

an

&H

en

ders

on

(1998).

(3)

Valu

en

etw

ork

Aw

ayin

wh

ich

an

org

an

ization

en

able

str

an

sact

ion

sth

roug

hco

ord

ination

an

d

colla

bora

tion

am

on

gp

art

ies

an

dm

ultip

leco

mp

an

ies.

Am

it&

Zott

(2001),

Gord

ijn&

Akk

erm

an

s

(2001),

Bouw

man

(2002).

(4)

Valu

efin

an

ceA

way

inw

hic

horg

an

ization

sm

anag

eis

sues

rela

ted

toco

stin

g,

prici

ng

,an

dre

ven

ue

bre

akd

ow

nto

sust

ain

an

dim

pro

veits

creation

of

reve

nue.

Tim

mers

(1998),

Lin

der

&C

an

trell

(2000),

Rap

pa

(2008).

Mod

elin

gp

rin

cip

les

(5)

Con

cep

tual

Aco

nce

ptu

alto

ol,

an

ab

stra

ctio

nan

da

blu

ep

rin

tof

the

exis

tin

gb

usi

ness

an

d/o

rth

e

futu

rep

lan

ned

busi

ness

.

Sta

hle

r(2

002),

Ost

erw

ald

er

etal.

(2005),

Haak

er

etal.

(2006).

(6)

Multi-le

vel

Aw

ayofd

esi

gn

ing

,analy

zin

gand

eva

luatin

gd

iffe

ren

tun

its

or

leve

lsw

ith

inorg

an

ization

s

such

as

pro

duct

san

dse

rvic

es,

busi

ness

un

it,

an

org

an

ization

,or

eve

na

netw

ork

of

org

an

ization

s.

Mag

rett

a(2

002),

Kalli

oet

al.

(2006),

Al-D

eb

ei

etal.

(2008a,

b),

Bouw

man

etal.

(2008).

(7)

Dynam

icA

dyn

amic

con

cep

tas

the

BM

con

fig

ura

tion

san

dd

esi

gn

chan

ge

ove

rtim

ere

flect

ing

inte

rnalan

dexte

rnalva

riation

s.

Hed

man

&K

alli

ng

(2003),

MacI

nn

es

(2005),

Al-D

eb

ei

etal.

(2008a)

.

(8)

Gra

nula

rA

gra

iny

con

trolla

ble

way

of

desi

gn

ing

an

deva

luatin

gb

usi

ness

as

the

con

cep

tis

sub

div

ided

into

man

ag

eab

leele

men

ts.

Gord

ijn&

Akk

erm

an

s(2

001),

Ost

erw

ald

er

etal.

(2005),

Sh

afe

ret

al.

(2005).

(9)

Coh

ere

nt

Aco

mp

rehen

sive

way

ofd

ep

ictin

ga

part

icula

rb

usi

ness

en

tire

lyta

kin

gin

toco

nsi

dera

tion

the

inte

rlin

ksb

etw

een

its

diffe

ren

tasp

ect

s.

Ch

esb

roug

h&

Rose

nb

loom

(2002),

Al-D

eb

ei&

Fitz

gera

ld(2

010).

BM

reach

(10)

Inte

rmed

iate

layer

An

inte

rface

or

ath

eore

tica

lin

term

ed

iate

layer

betw

een

the

busi

ness

stra

teg

yan

dth

e

ICT-e

nab

led

busi

ness

pro

cess

es.

Neve

rth

ele

ss,

itin

ters

ect

sw

ith

both

:st

rate

gy

an

d

ICT-e

nab

led

busi

ness

pro

cess

es.

Th

eBM

inte

rsect

ion

with

stra

teg

yre

pre

sents

ase

tof

org

an

ization

’sst

rate

gic

-orien

ted

choic

es

for

busi

ness

est

ab

lish

men

tan

dm

anag

em

en

t,

wh

ileits

inte

rsect

ion

with

pro

cess

es

sig

nifie

sa

set

of

busi

ness

imp

lem

en

tation

pra

ctic

es

and

fun

ctio

ns.

Leem

etal.

(2004),

Morr

iset

al.

(2005),

Shafe

ret

al.

(2005),

Kalli

oet

al.

(2006),

Raja

la&

West

erlun

d(2

007),

Al-D

eb

ei

etal.

(2008a).

BM

Fun

ctio

ns

(11)

Alig

nm

en

t

inst

rum

en

t

Ath

eore

tica

lto

olof

alig

nm

en

tp

rovi

din

ga

cruci

alin

stru

men

t(i

.e.

brid

ge)

for

imp

rovi

ng

harm

oniz

ation

an

dco

nsi

sten

cyam

on

gst

rate

gy

an

db

usi

ness

pro

cess

incl

ud

ing

their

sup

port

ive

info

rmation

syst

em

s.

Cam

pan

ovo

&Pig

neur

(2003),

Ost

erw

ald

er

etal.

(2005),

Al-D

eb

ei

etal.

(2008a)

.

(12)

Inte

rced

ing

fram

ew

ork

Am

ed

iatin

gco

nst

ruct

or

fram

ew

ork

that

con

nect

ste

chnolo

gic

alp

ote

ntials

and

inn

ova

tion

sw

ith

the

realiz

ation

of

eco

nom

icva

lue

an

dth

each

ieve

men

tof

stra

teg

ic

outc

om

es.

Ch

esb

roug

h&

Rose

nb

loom

(2002),

Kam

oun

(2008),

Al-D

eb

ei&

Fitz

gera

ld

(2010).

(13)

Kn

ow

led

ge

cap

ital

An

inta

ng

ible

an

dta

ctic

alin

form

ation

/kn

ow

led

ge

ass

et

use

fulin

sup

port

ing

stra

teg

ic

deci

sion

-maki

ng

fun

ctio

ns,

and

thus

valu

ab

lein

pro

vid

ing

the

org

aniz

ation

with

an

en

durin

gco

mp

etitive

ad

van

tag

e.

Ven

katr

am

an

&H

en

ders

on

(1998),

Al-D

eb

ei

etal.

(2008a,

b).



This view highlights the value proposition dimension(Magretta, 2002; Hedman & Kalling, 2003) of the BMconcept. This dimension implies that a BM shouldinclude a description of the products/services a digitalorganization offers, or will offer, along with their relatedinformation. Furthermore, the BM needs also to describethe value elements incorporated within the offering, aswell as the nature of targeted market segment(s) along withtheir preferences. Innovations relating to this particulardimension are of high concern to modern Informationand Communication Technology (ICT) business organi-zations to attract and sustain a large proportion ofcustomers.

Another view which places emphasis on the valuearchitecture branch of the BM (Timmers, 1998; Torbayet al., 2001) portrays the concept as a holistic structuraldesign of an organization, including its technologicalarchitecture, organizational infrastructure, and theirconfigurations. This comprises tangible and intangibleorganizational assets, resources, and core competencies.The foundation of the value architecture construct isin the resource-based view (RBV). The RBV (Wernerfelt,1984; Barney, 2001) assumes that each company is abundle or resources. More specifically, RBV puts emphasison the strategic importance of resources coupled withtheir integration with the generation of desirable valueby customers and thus sustainable competitive advantageto the company possessing the resources.

In this context, Hedman & Kalling (2003) indicate thatfor any business organization to serve the marketeffectively it needs resources and inputs that could takehuman, physical, and organizational forms. They alsoargue that such resources need to be organized andconfigured in an appropriate manner that facilitates acompetitive value proposition in the market. In fact,resource configuration demonstrates an organization’s

capability to integrate the varied organizational andtechnological assets and resources in a way that allowsefficient and effective roll-out of its products and services.The economic value of a digital business is determined byits ability to absorb ICT resources and align them alongwith the existing resources, and then diffuse them inactivities which should be managed to create value pro-positions at lower cost and/or higher quality than rivals(see Hedman & Kalling, 2003). Therefore, we considerresource configuration as a key enabler of combinativecapabilities which are important in creating rare, valu-able, hardly imitable, and non-substitutable resources(Koruna, 2004). When capabilities or core competencies(see Hamel & Prahalad, 1990) arise because of the methodin which resources are configured, they can be viewed asrepeatable patterns of action in the use of assets anddeployment of acquired resources to create and/or offerproducts and services to target segments (Osterwalder &Pigneur, 2002). Based on this discussion, we argue thatBMs also need to represent an organization’s resources,their configurations, and the resultant core competencies(Al-Debei & Fitzgerald, 2010).

The value network class represents the third positionfrom which the BM concept has been examined. Thisconstruct depicts the cross-company or inter-organizationperspective towards the concept and has gained muchattention in the BM literature. Several researchers havedescribed the concept as a way in which transactions areenabled through the coordination and collaborationamong parties, multiple companies and stakeholders(Shafer et al., 2005; Andersson et al., 2006). Accordingto this point of view, a BM is a description of the positionof an organization in the value system (Rappa, 2008)and its relationships with different stakeholders. It alsoindicates the mode of collaboration in regards to thenetwork, that is whether the value network is open in a

BM ReachBM FunctionsV4 BM Dimensions Modelling Principles

The BM Concept

IntermediateLayerValue

PropositionValue

Architecture

ValueFinance

ValueNetwork

Conceptual

Multi-Level

Dynamic

Used as

Alignmentinstrument

KnowledgeCapital

Mobilize

Contextualize

Granular

IntercedingFramework

Coherent

Modelling Principles for

Figure 1 A unified BM conceptual framework.



sense that any one can suggest and provide ideas, or isclosed in a sense that ideas only come from selected actors(Pisano and Verganti, 2008). Moreover, this viewpointperceives the BM as a way to demonstrate the roles ofdifferent actors more clearly, and to show explicitlyhow the value is exchanged - flowed and communicated viachannels - among stakeholders (Gordijn et al., 2000), aswell as to explain which actor(s) is governing or beingdominant (Amit & Zott, 2001; Haaker et al., 2006) in thebusiness network.

Interestingly, the term actors in the value networkdimension has been used in a quite comprehensivemode. In its basic use, the term has been employed todepict different business organizational actors thoseinvolved in the main functions relating to the offering,such as value creation, marketing, and delivery (Timmers,1998; Rajala & Westerlund, 2007). This includes suppli-ers, partners, marketers, distributors, and intermediaries.In a wider perspective, the term has been also used toinclude competitors (Hedman & Kalling, 2003) as well aspublic organizations such as governmental bodies andagencies (Kallio et al., 2006). Given that all previouslymentioned actors are some kind of organization, one caninclude all of them under one umbrella, that is ‘organiza-tional actors’. However, not only are organizationsactors within the value network, but customers as well(Bouwman, 2002). Therefore, the value network could bebest perceived and presented as a multi-party stakeholdernetwork (Gordijn & Akkermans, 2001). However, thisadds actors (organizational actors and customers), roles,relationships, channels, flows and communications, andgovernance as design concepts to be addressed withinthe BM.

Considering the primary dimensions of the concept,the last recognizable view is that a BM is a way in whichorganizations generate revenue (Linder & Cantrell, 2000;Rappa, 2008). The BM seems to be strongly connectedwith economic and financial designs within organi-zations. Whenever the concept is used, many people

assume that the user is going to address financialarrangements with respect to revenue generation. Never-theless, we believe that the BM is more comprehensiveand that value finance represents only one dimension ofthe whole narrative. However, being financially rele-vant indicates that the value finance dimension depictsinformation related to costing, pricing methods, and revenuestructure (Osterwalder et al., 2005; Shafer et al., 2005) andconcerns the other three dimensions and most particu-larly the value proposition arrangements. Hence, effi-ciency is most likely the main factor in this dimension.

Having identified the primary dimensions of a BMconcept along with their constituent elements (seeFigure 2 for a summary), it is important to highlight thefact that they are substantially interrelated and inter-dependent. Designing a BM requires a balance ofdifferent and often conflicting design requirementspresented within the four dimensions and their buildingblocks. To give just an overview, based on an externalenvironment scanning course of action, an organizationcould determine its targeted value customers as well astheir wants and needs in relation to its offerings. Anorganization’s products-services should match customers’preferences for superior performance (Kasper et al., 1999).However, the characteristics of the provisioned products-services are highly correlated with the value architecturearrangements. On the other hand, the value architectureis dependent on the organization’s internal resources aswell as the resources it acquires from its value network.Value finance on the other hand is concerned with allneeded financial arrangements regarding the other threedimensional arrangements.

Modeling principles of BMs: guidelines and featuresAfter examining the ontological structure of the BMconcept, we now address the principles that direct themodeling course of action of BMs. The ontological stru-cture of the BM spells out the concept as a coherentframework given that it depicts the business logic

Figure 2 The V4 ontological structure of Business Models (Al-Debei & Fitzgerald, 2010).



comprehensively. The BM provides a holistic view(Chesbrough & Rosenbloom, 2002) of a particular busi-ness which is not only useful in understanding itsinternal structure and functions, but also in realizinghow an organization is connected to its external environ-ment and how it interacts with it.

Nevertheless, this depiction of business logic is abstractsince the BM is a conceptual tool or a blueprint thatcovers only the key business components (Janssen et al.,2008) and thus considered a simplification that reflectsthe business reality (Stahler, 2002). One of the inferencesgenerated through the applied analysis demonstrates theBM as a granular concept in the sense that its componentscould be broken down into dimensions which could aswell be subdivided into elements. Granularity in this con-text is highly significant given that the concept is compre-hensive and covers a wide range of business aspects. It isalso useful as it allows more focused designs of BMs.

The constructed taxonomy also reveals that the BM is aversatile concept. Enjoying this particular feature impliestwo main issues related to versatility. Firstly, it indicatesthat BMs could be utilized to understand the businesslogic at different levels: (a) individual organizations (e.g.Venkatraman & Henderson, 1998; Linder & Cantrell,2000; Campanovo & Pigneur, 2003), or even (b) partof an organization such as business units, products/services, and product/service bundles (e.g. Timmers,1998; Chesbrough & Rosenbloom, 2002), and (c) businessnetworks that consists of more than one organization(e.g. Gordijn et al., 2000; Torbay et al., 2001; Haaker et al.,2006). In its second sense, versatility specifies that the BMcould be used for different purposes within organizations:(a) alignment instrument; (b) mediating construct; and(c) knowledge capital.

The modern ICT-based world of business imposes avital need for BMs with high levels of adaptability toaccommodate the ongoing changes more efficiently.Within today’s business environment, the BM should

also be enjoying dynamicity in order to cope successfullywith the continuous changes. Characterizing the BM asdynamic (Hedman & Kalling, 2003; MacInnes, 2005) isessential mainly because many industries nowadays,such as telecommunications, are undergoing continuingrevolutions driven by innovative technologies, globa-lization including deregulations, and market changes.Indeed, the business environment has been greatlytransformed. Unlike the traditional world of businesswhich is characterized by stability and low levels ofcompetition, the world of digital business is complex,dynamic and has high levels of uncertainty and competi-tion (see Figure 3). Hence, in the more complex andsometimes unique digital business, the BM needs to beexplicit and more flexible.

The reach of BMs: the positioning of the concept withinorganizations and its interlinks with strategy and ICT-enabled business processesThe reach of the BM concept is another aspect that hasbeen tackled within the literature. Yet BM researchers arebeginning to determine its boundaries, and relationshipswith IS and other business aspects, such as businessprocesses and business strategy. There is already someconsensus regarding the differences between the BM andthe ICT-enabled process model (Gordijn et al., 2000;Pateli & Giaglis, 2003; Morris et al., 2005). Although theoverall goal of conceptual modeling is to supportdecision-making activities (Gordijn et al., 2000), businessprocess modeling supports operational decisions, and theprocess of creating the BM provides support for strategicdecision-making.

On the other hand, the debate on the differencebetween the BM and business strategy has not yet beenresolved (Porter, 2001; Stahler, 2002; Pateli & Giaglis,2004). Some researchers view them as identical and usethe terms interchangeably. Leem et al. (2004) and Kallioet al. (2006), for example, depict BM components as a set

Business Strategy

Business Processes

Business Processes

Gap

Stable environmentLow level of competition Certainty Knowledge utilization

Relatively simple and static business processesLimited ways of doing businessModerate stakeholders ’ pressure

Business Strategy

Dynamic environmentHigh level of competitionUncertaintyKnowledge creation and innovation

Dynamic, IT-based business processesMultiple ways of doing businessSevere stakeholders ’ pressure

World of Traditional Business World of Digital Business

Figure 3 Comparison between the world of traditional and modern digital business.



of business strategies. Some researchers, mainly from thebusiness discipline, argue explicitly that the BM is not astrategy, and yet they include the strategy and/or part(s)of its elements (e.g. mission, strategy, competitivestrategy) within the BM components or vice versa (e.g.Chesbrough & Rosenbloom, 2002; Shafer et al., 2005).

Other researchers suggest an alternative way of lookingat the BM concept which we see as more helpful. Theyargue that even though both concepts are related, theyrepresent different levels of information, useful fordifferent purposes. They see the BM as an interface oran intermediate theoretical layer between the businessstrategy and the business processes including their IS(Morris et al., 2005; Osterwalder et al., 2005; Al-Debeiet al., 2008a). Magretta (2002) argues that the businessstrategy explains how business organizations hope to dobetter than their rivals, while the BM describes how thepieces of a business all fit together. However, the mainreason behind this confusion in our context is the shiftthat the business world experienced from the traditionalways of doing business to the new ways of digitalbusiness, which feature a high level of complexity andrapid change. As illustrated in Figure 3, this transforma-tion has created a gap between strategy and processeswhich calls for new ways of thinking about BMs.

Nonetheless, the BM is by no means independent; itintersects with the business strategy as well as thebusiness processes including their supportive IS, asillustrated in Figure 4. Thus, it creates a unique strategic,operational, and technological mix. These intersectionsrepresent two crucial transitional points to be followed bybusiness organizations.

(1) Business strategy to BM: This is depicted by the firstintersection point which represents the first transi-tional stage. According to Porter (1980), businessstrategy is a way by which a business organiza-tion positions itself within its industry throughadopting one of the following generic strategies: costleadership, differentiation, and focus. However, at

this stage, the business organization translates itsbroad strategy into more specific business architec-tural, co-operational, value propositional, and finan-cial arrangements needed to achieve the strategicgoals and objectives of the business. Moreover, theBM in the first intersection point is dependent on andderived from the business strategy.

(2) BM to business process model along with their IS: This isthe second transitional stage represented by thesecond intersection point. At this stage, the BM actsas the base system from which the detailed andoperational business process model along with its ISshould be derived. A business process is defined interms of process elements (activities) whose unitedbehavior allows the provision of a particular service(de Cesare et al., 2003). IS, on the other hand, con-tinuously emerge from the adaptive usage made bythe users of Information Technology (IT) systems, incombination with processes so as to make businessesfunction (Paul, 2007). However, although businessprocesses and IS are derived from the BM, the latterdoes not define precisely how processes and IS areexecuted and run in a specific environment. But, itimplies options on which to design different businessprocesses and IS. For instance, having an InternetEnterprise Resource Planning system (IERP) as one ofthe technological resources would affect the config-uration of value system-related processes and IS.However, they still can be designed and configuredin a flexible manner.

The functions of BMs: practical uses withinorganizationsThe useful roles of the BM and the benefits organizationscan achieve by appropriately employing the concept arehighly significant. Interestingly, the applied analysis inthis research reveals that the BM is a multi-purposeconcept. The utility of BMs is diverse and the concept

Businessstrategy

Businessprocesses

Digital Business Organization

Businessmodel

People(users)

ICT

Intersectionpoints

Information system

Figure 4 Business Model intersection points.



could be used for three main functions within digitalorganizations as follows:

(1) Conceptual tool of alignment: Having established thereach of the BM concept as an intermediatetheoretical layer, we now move a further steptowards the contextualization of the BM conceptas a conceptual alignment layer. In this moderndigital world as opposed to the traditional one,translating business strategy into business processeshas become much more of a challenge. Businessprocesses are now mainly ICT-enabled. In addition,today’s business environment is more dynamic,characterized by ongoing fast changes and severestakeholders’ pressure all adding to the complexityof managing modern ICT-based businesses. There-fore, the BM has risen to prominence as a conceptualtool of ‘alignment’ to fill the gap between corporatestrategy and business processes including their IS,and to provide a crucial harmonization among theseorganizational layers (illustrated in Figure 5). Never-theless, for businesses to survive and succeed, thebusiness strategy, BM, and business processes alongwith their IS, should be treated as a harmonizedpackage. This package should be reviewed continu-ally to ensure its consistency with the externalenvironment as well as the stakeholders’ interests.

(2) Interceding framework: The BM signifies a media-ting construct between technological artifacts and

the fulfillment of strategic goals and objectivesincluding the creation of the essential economicvalue, as illustrated in Figure 6. Chesbrough &Rosenbloom (2002) argue that ‘a successful businessmodel creates a heuristic logic that connects tech-nical potential with the realization of economicvalue [and that] the business model unlocks latentvalue from a technology’ (p. 529). Similarly,Kamoun (2008) argues that the ‘BM becomes theblueprint of the way a business creates and capturesvalue from new services, products, or innovations.’(p. 638). In line with this approach, Yuan & Zhang(2003) argue that it is not the technologicalapplication itself, but rather the BM behind thetechnological artifacts that makes the success andallows hi-tech companies to achieve their strategicgoals and objectives.

Based on this standpoint, the BM portrays a soundtranslating method essential to obtain and capturevalues from the proposed digital innovations.Indeed, the technology is positive only if it addressesthe requirements of its users in an efficient andeffective approach. The BM has been perceived as theprimary reason behind technologies’ success or fail-ure. In the telecommunications sector, for example,the success of NTT DOCOMO’s i-mode mobileservices is primarily credited to its well-designedBM in action (Ratliff, 2002; Ballon, 2007). On theother hand, the low adoption of WAP (WirelessApplication Protocol) services is mainly seen as being

Business strategy

Business model

Highly aggregated

Tactical

IS/IT

Business process model

Nature of Information

Operational, highly detailed

ALIGNMENT

ALIGNMENT

Figure 5 Digital business layers.

DigitalBusinessModels

TechnologyInnovations and

Artifacts

Attainment ofStrategic Goalsand Objectives

Figure 6 The function of the Business Model as an interceding framework.



because of the absence of a feasible BM and itsinappropriate configurations (Sigurdson 2001; Kumaret al., 2003).

Appreciating this particular function for the BM,the authors believe that the concept could beperceived fruitfully as a backbone providing a consis-tent and systematic approach for designing, evaluat-ing, and managing different technologies and theirconnected products and services.

(3) Strategic-oriented knowledge capital: The BM is highlycritical given that it portrays the underlying logicof a business system, demonstrating the ways inwhich businesses are performed and strategic objec-tives are achieved. Moreover, the importance of theBM to any organization also comes from the factthat it is considered as strategic-functional algo-rithms demonstrating high-level business rulesand practices. Thus, it answers questions related tovalue creation and configuration in addition tovalue exchange, that is, value created and proposedas well as value captured. Notwithstanding, BMsof organizations are rarely articulated or definedexplicitly. Most often they represent a tacit knowl-edge in the minds of one or few key managers withinorganizations and are seldom communicated toothers.

Describing the BM explicitly has become a vitalnecessity and one of the most important organiza-tional assets. An explicit BM enhances digitalbusiness managers’ control over their businesses,and enables them to compete better because of theappropriate and necessary level of information thatthe BM provides. This level of information alsoextends digital business managers’ knowledge ofhow the business organization will adapt theirstrategy, business domains, business processes, andIS to cope with the complex, uncertain, and rapidlychanging digitalized environment. Thus, there arepotential improvements in the organizations’ abil-ities in achieving their strategic outcomes given thatthe information that the BM offers is neither highlyaggregated, which is in the case of business strategy,nor highly detailed, which is the case of theoperational business process model.

In retrospect, the authors here suggest that anexplicit depiction of the BM could be positivelyemployed to mobilize an organizational knowledgecapital useful in enhancing strategic decision-makingfunctions and at the same time leveraging thepractice of the BM in action. The business mode – ifexplicit – forms a critical organizational asset orresource promising to provide a digital organizationwith the longest enduring competitive advantage.

Having explored and discussed the functions for theBM concept, it is worth mentioning here that thesethree main roles or functions of the concept are not

mutually exclusive; they could be utilized simultan-eously for different purposes and objectives withinorganizations. However, we assume that the realizationof the importance of BMs and their functions explainsthe significance behind the rise of BM research with theadvent of IT-centered businesses, such as those intelecommunications.

Implications and research agendaThe critical analysis of the existing views toward the BMconcept in this paper has highlighted important gaps.The concern that the concept is still fuzzy and ill-defined,the consideration of BMs as substitutes for strategies, thepartial views and definitions of the concept as its relatedknowledge is fragmented, and the fact that its practicalfunctions are not yet clearly defined have highlighted theneed for a conceptual framework that integrates theexisting views and analyzes them to add novel minedknowledge to this important area of research. In the lightof these arguments, the theoretical and practical implica-tions of the constructed conceptual framework can besummarized as follows:

� Fruitfulness: This unified framework synthesized theBM compositional dimensions (ontological structure,characteristics, reach, and functions) in a novelmanner. It provides a complete foundation forresearchers and practitioners who are looking forwardto utilizing the BM concept in their practices andapplications. Furthermore, it represents a versatileinstrument that can be of assistance to the BMscientific research community as well as practitionerssince (a) it organizes and manages the BM founda-tional knowledge and hence, it is helpful in assuagingthe ‘fuzziness’ problem which has been associatedwith the BM concept; (b) since the propagation ofmany synonyms and labels adds to the haziness of theBM concept at this stage, this framework achievesparsimony and establishes a common language andterminology to reduce this problem; and (c) from apractical perspective, this unified view enhancesorganizations’ ability to design, create, communicate,compare, analyze, evaluate, and modify their existingand future BMs.

� Completeness of the BM ontological structure: Ourinstantiation of the BM concept represents a steptowards building up a concrete ontology (see Gruber,1993). This paper defines the BM as an abstractrepresentation of an organization, be it conceptual,textual, and/or graphical, of all core interrelatedarchitectural, co-operational, and financial arrange-ments designed and developed by an organizationpresently and in the future, as well all core productsand/or services the organization offers, or will offer,based on these arrangements that are needed toachieve its strategic goals and objectives. This defi-nition indicates that value proposition, value



architecture, value finance, and value network articu-late the primary constructs or dimensions of BMs. Thedeveloped framework also synthesizes the constituentelements of these dimensions forming a completeontological structure of the concept. However thiscould be developed further. An engineering BMontology in terms of elements, properties (relation-ships), constraints and rules, semantics and possiblynotations might, for instance, reinforce understand-ing, while also facilitate the development of compu-ter-based modeling tools that would be potentiallyhelpful to practice.

� Practical functions of the BM concept. This novel frame-work explores three main practical functions for theconcept. The applied analysis reveals that the conceptis versatile in a non-mutual exclusive mode sinceit can used concurrently for alignment functions,technology leverage, and decision-making practices.The idea of utilizing the BM as a conceptual tool ofalignment is highly significant as most of the existingalignment research (see Avison et al., 2004) addre-sses this issue at the strategic level only. BMs onthe other hand promise to align business organiza-tions by harmonizing all organizational layers andthus be seen as an essential intermediate conceptuallayer, BM improves cohesively organizations’ internalalignment.

Although we have provided theoretical insightsconcerning the role of the BM in providing theneeded fit between the business strategy and IS withindigital organizations, there is still a need for futureresearch in this particular area. In fact, this functionfor the concept is still a theory to be tested practically.Researching this particular issue using for example acase study methodology, would add to our knowl-edge. Further, addressing the characteristics of thedigital business and testing how each feature affectsthe mapping of business strategy to the BM and theBM to ICT-enabled business processes has strongtheoretical and practical implications. Moreover,identifying the intersection elements that representtwo transitional stages in the mapping process wouldbe particularly useful.

Looking at the BM as a mediating construct betweentechnological artifacts and the attainment of strategicoutcomes is also useful. Particularly in IS, there seemsto be an agreement that a technology does notsucceed by itself; rather the perception is that aconsistent and effective organizational setting andstructure are needed in addition to technologicalarchitecture if the technology is to be successful anduseful to its intended users. The BM however fulfilsthese requirements because of its comprehensiveconfigurations discussed previously.

This paper has also introduced the idea of utilizingthe BM as novel strategic-oriented knowledge capitalto enhance an organization’s innovation capability

and decision-making practices. In our context, the BMconcept represents a distinct form of knowledge. Weargue that an organization’s understanding of its BMcould be viewed as novel strategic-oriented knowledgecapital that is crucial for business organizations in anemerging, turbulent, and digital business environ-ment. The BM, as knowledge capital, could serve asexecutives’ guidance with respect to strategic deci-sion-making practices. Thus, exploring the relation-ship between an organization’s knowledge, decision-making, and strategic position from a BM viewpointappears not only to be theoretically interesting, butalso to have strong practical implications. Potentialvalue may also be offered through researching thedifferential influences among approaches of repre-senting the BM knowledge (oral, textual, graphical)on strategic decision-making practice and in turn theorganization’s strategic position. Moreover, an under-standing of the organization informed by the knowl-edge-based BM might lead to increased innovation.Theorizing and empirically verifying this also haspotential.

� Granularity for flexibility and reusability: Characterizingthe BM as granular in addition to other characteristicsis novel. In particular, understanding the BM conceptas granular implies flexibility in its related functionssuch as design, management, evaluation, and changeand also facilitates the reusability of the componentsfor new BMs. This highlights the concept as anefficient and effective framework essential to digitalorganizations. This area of research is still unexplored;therefore theoretical as well as practical investigationand delineation of this particular area would be veryuseful.

� BM dynamics: We have seen that a BM for digitalbusiness organizations is being designed and shapednot only according to the internal variables oforganizations such as strategy, but also with respectto external environmental factors. The BM needs to becompatible with external variables such as nationalculture, market opportunities, laws and regulations,customer-base size and nature, competition level, andtechnological advances. For example, NTT DoCoMo’si-mode is a successful BM in Japan that, a few yearsago, faced varied results in the European market(Kallio et al., 2006). There are therefore opportunitiesfor researchers to provide insights into how digitalorganizations could develop compatible BMs withinternal-external factors, ensuring flexibility in termsof re-engineering their existing BMs to cope with aturbulent business environment.

� Agenda for future research: Although this research hasprovided some clarification to the BM area, particu-larly for digital businesses, there are many areas forfuture-related research. We have discussed some of



these avenues in this section and we add other threetrajectories as follows:

(1) The degree of importance of each BM primary dimension:This paper has already identified the primary dimen-sions of the BM concept (value proposition, valuearchitecture, value network, and value finance).However, different industries/businesses may placedissimilar emphasis on those four dimensions. Forexample, while manufacturing companies may drawmore attention to their value networks as they belongto a tight supply chain system, telecommunicationproviders are likely to lay more emphasis on theirvalue architectures as being the primary enablers ofvalue propositions.

(2) BMs consistency of value network actors: Part of a digitalorganization’s BM concerns collaborating with itsvalue network actors. The success of an organization’sBM depends to some extent on the relationships itmaintains with various players within the valuesystem. However, the expected benefits are notachieved easily as actors might pursue differentbusiness logics, and chase different strategic goalswith the collaboration. Exploring how actors belongto the same value network could achieve ‘win-win’situations, and improve their economic valuesthrough pursuing consistent BMs has significanttheoretical and practical implications.

(3) The relationship between BM and business performance:Enhancing business performance is the target of anybusiness organization. Exploring what constitutes theoptimal and most viable BM that would boost thebusiness performance is important. However, thoseconstituent elements of the BM success differ acrossindustries. Consequently, deliberating and compar-ing those differences among industries would alsohave much potential. Moreover, empirical investiga-tions on how adopting the optimal BM wouldadvance the business performance also have practicalimplications.

ConclusionsDespite awareness of the significance of the BM toan organization’s success in business, in particulardigital business, there has been little consensus aboutits basis. The BM concept is relatively young but has beenused in various contexts. While researchers might viewthe concept subjectively, practitioners perceive it accord-ing to their organizations’ environment and culture.Consensus about BM compositional aspects is crucialsince it represents a framework or a theoretical under-pinning on which researchers may apply to differentindustries within different contexts. It is also fundamen-tal to practitioners since the BM could be utilizedas a reference measure for their business performanceanalysis.

To address these issues, this paper clarifies the BMconcept. The authors have reviewed the IS-relatedliterature, classified the BM definitions, and extracted ahierarchical taxonomy which was used as a guideline onwhich to develop a more comprehensive and general BMconceptual framework. In this paper, the authors haveprovided a complete ontological structure of the BMconcept showing that value proposition, value network,value architecture, and value finance are the maindimensions. This paper also reveals the modeling princi-ples of BMs as conceptual, multi-level, dynamic, granular,and coherent.

Furthermore, the authors have shown that the BM is anessential conceptual tool of alignment in digital business.It can be depicted as an intermediate layer betweenbusiness strategy and ICT-enabled business processes inorder to fulfill the missing link created by the complexityof the digitalized environment. The BM is derived directlyfrom the business strategy on which the business pro-cesses and the required information system is derived.This paper also shows that making the BM more explicithelps digital organizations assess the value of intangiblesin their businesses since the information provided by theBM mobilizes knowledge capital that supports organiza-tional strategic decision making. Further, this mobilizedknowledge signifies an organizational asset that enablesa digital business to achieve sustainable competitiveadvantage in its market.

The BM is also an important backbone for technologi-cal artifacts as it leverages their success and facilitates theattainment of strategic aims including economic value.However, for business organizations to survive and tosucceed, a well-designed BM that ensures harmonizationamong business strategy, business processes, and IS iscrucial. Moreover, a BM for a digital business should bereviewed continually to ensure its fit with the complex,uncertain, and rapidly changing external environment.Pressing forward the body of BM scientific knowledgehelps practitioners such as managers, BM designersand evaluators, and industry consultants realize themost appropriate BM to achieve their strategic goalsand objectives.

The authors have proposed a novel unified BM frame-work which takes into account the different viewsexpressed in the IS literature and incorporates new minedknowledge based on the applied analysis utilizing con-tent analysis methods. It is hoped that this generic,comprehensive, and unified BM framework works as areference model and enables consensus that has not yetbeen achieved.

AcknowledgementsWe greatly thank Professor Guy Fitzgerald for his valuable

comments and suggestions on earlier versions of this paper.

We also thank Dr. Pamela Abbott for her useful notesregarding content analysis. Thanks are also due to the

Associate Editor (AE) and the two anonymous reviewers for

their careful and constructive comments.



About the authors

Mutaz M. Al-Debei is a Ph.D. candidate and teachingassistant at Brunel University – West London. His researchinterests include the design and engineering of mobile(cellular) data services and other technological artifactsfrom business model and design-science perspectives. Al-Debei holds a B.Sc. in Computer Engineering and an MBAdegree with IS concentration. He also has IT industryexperience having worked in Jordan for the Royal ScientificSociety and the Jordan National bank as a network engineerand Database Administrator (DBA), respectively. Thereafter,Al-Debei worked as an IT manager for Arab Radio and Tele-vision (ART). He is also a trainer for a number of pro-fessional certificates such as OCP for Oracle Developers andDBAs, MCSE, Securityþ , Networkþ , CCNA, and CreditCard Frauds. In the academic world, Al-Debei worked asa lecturer of information systems and computing at theUniversity of Jordan and Al-Ahliyya University and now heis working as a teaching assistant at Brunel University.

David Avison is Distinguished Professor of InformationSystems at ESSEC Business School and visiting professor

at Brunel University. He was President of the Associationof Information Systems (AIS) 2008–2009. He is jointeditor of the Information Systems Journal. So far,over 25 books are to his credit including the fourthedition of the well-used text Information Systems Deve-lopment: Methodologies, Techniques and Tools (jointlyauthored with Guy Fitzgerald) and most recently thetext Information Systems Project Management (withReza Torkzedah). He has published a large number ofresearch papers in learned journals, edited texts andconference papers. He was Chair of the InternationalFederation of Information Processing (IFIP) 8.2 groupon the impact of IS/IT on organizations and society.He has been program chair, conference chair andgeneral chair of several conferences including ICIS andIFIP. He researches in the area of information sys-tems development and more generally on informationsystems in their natural organizational setting, inparticular using action research and case study, thoughhe has also used a number of other qualitative researchapproaches.

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