The business model concept: Theoretical underpinnings and empirical illustrations

Abstract

The business model concept is becoming increasingly popular within IS, management and strategy literature. It is used within many fields of research, including both traditional strategy theory and in the emergent body of literature on e-business. However, the concept is often used independently from theory, meaning model components and their interrelations are relatively obscure. Nonetheless, we believe that the business model concept is useful in explaining the relation between IS and strategy. This paper offers an outline for a conceptual business model, and proposes that it should include customers and competitors, the offering, activities and organisation, resources and factor market interactions. The causal inter-relations and the longitudinal processes by which business models evolve should also be included. The model criticises yet draws on traditional strategy theory and on the literature that addresses business models directly. The business model is illustrated by an ERP implementation in a European multi-national company.