Managerial cognition, action and the business model of the firm

Abstract

The purpose of the paper was to outline a generic framework for the business model and illuminate its linkages to managerial cognition. The paper reviewed the focal literature focusing on the actions and evolution of a firm and built a synthesis that describes the different components of a business model. The main finding was that a business model is essentially both a cognitive phenomenon as well as being built on the material aspects of a firm. The paper proposes that the business model can be scrutinized in future studies, especially from the viewpoints of cognition, thus creating new avenues for intra-firm evolutionary studies. The paper found several implications for practising managers. First, the concept itself creates possibilities for self-analysis and scenario building. Second, the understanding that a business model is systemic helps managers to evaluate their actions vis-à-vis the evolutionary path of the business model. Third, the outlined business model is useful in executive education as it creates a cognitive map of the various aspects of business activities.