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• 1 2017-01-21T15:25:30-08:00 BUSINESS MODEL RESEARCH 6 Literature Review plain 2017-03-23T14:18:17-07:00 To syncretically establish the foundations of Business Model Research it is fair to start mentioning the effort of several authors that recently have compiled a comprehensive review of the literature on the subject (Osterwalder, 2004, Zott et al. 2011 and, Klang et al. 2014). It is also necessary here to clarify exactly what is meant by the business model. Osterwalder and Pigneur define the business model as a description of ‘the rationale of how an organization creates, delivers, and captures value’ (Osterwalder and Pigneur 2012:14). Other scholars also acknowledge how business models are if not directly linked at least relevant to the successful commercialization of a technology (Baden-Fuller and Haefliger, 2013; Chesbrough and Rosenbloom 2002), other propose the  business model as a unit of analysis for future research on value creation (Amit and Zott 2001), or defend its potential use for explaining complex phenomena such as performance, advantage and growth (Afuah and Tucci 2001; Johnson et al. 2008; Zott and Amit 2008). From an entrepreneurship perspective, some authors also had identified in the business model as the missing link in the literature arguing that “ventures fail despite the presence of market opportunities, novel business ideas, adequate resources, and talented entrepreneurs (Morris et al. 2005:726).
  
  In terms of other business model definitions and literature, authors had approached the subject from many different perspectives listed by  Zott et al. (2011:1022) and ranging from Statement (Stewart & Zhao, 2000), Description (Applegate, 2000; Weill & Vitale, 2001), Representation (Morris, Schindehutte, & Allen, 2005; Shafer, Smith, & Linder, 2005), Architecture (Dubosson-Torbay, Osterwalder, & Pigneur, 2002; Timmers, 1998), Conceptual tool or model (George & Bock, 2009; Osterwalder, 2004; Osterwalder, Pigneur, & Tucci, 2005), Structural template (Amit & Zott, 2001), a method (Afuah & Tucci, 2001), Framework (Afuah, 2004), Pattern (Brousseau & Penard, 2006), Set (Seelos & Mair, 2007).
  
  Nevertheless, researchers have also identified tensions in contributions that relate the business model to strategy. From a theoretical foundation perspective, researchers agree on the integrative nature of the business model, but there are some discrepancies about theoretical bases. Other researchers are considering business model and strategy as conceptually distinct, but there is no consensus on the differentiating factors. A large number of scholars are including value appropriation within the conceptual scope of the business model, even if here there are also some discrepancies. Amit and Zott (2001) discussed the business model and the revenue model as different concepts, even if, as reported by Klang et al. (2014), the revenue model is concerned with value appropriation. Contributions that link business model to strategic design processes are “ambiguous in terms of causality and sequential interdependence” (2014:467). In their comprehensive review, Klang et al. (2014) also identified and listed some of the issues surrounding business model research. Concerns about the validity of the business model concept and any long-term implication of its use were summarized in a table containing quotations from six articles on the subject of Criticism of the business model concept (Figure 6, Klang et al. 2014:455).
  
  
  It has been reported that another major pattern in the business model literature was found in the constitution of the business model concept, specifically in the relation between the concept and its constituent elements often referred as the ‘components’ of the business model (e.g. Amit and Zott 2001; Linder and Cantrell 2000; Magretta 2002; Osterwalder et al. 2005). Publications defining the business model concept describe more than 100 such components, and even if previews reviews  (Morris et al. 2005; Osterwalder et al. 2005; Shafer et al. 2005) have attempted to establish some consensus, findings remain heterogeneous. Klang et al. identified three relevant themes that help to classify business model components, those are: (1) internal artefacts, which are primarily related to the internal sphere of the firm and do not directly influence its relationships with external stakeholders; (2) relational mechanisms, which influence the relationships between the firm and external stakeholders involved in its transactions; and (3) external stakeholders, which exist beyond the boundaries of the firm” (Klang et al. 2014:467)
  
  In his 2004 thesis Osterwalder propose an ontology (Figure 74 in Figure 7) to be applied in future research and the present project is embracing the proposed taxonomy to be used as a tool for coding. Osterwalder argued how the business model concept serve as a bridge between “the worlds of business and IT” and proposed assessing business models on nine axes: the basic building blocks of a business model. His thesis illustrates how this particular business model assessment would look like being used to compare two business models in the airline industry (Figure 75 in Figure 7), but he also encourage researchers to go one step further and assess a larger number of business models in or across industries, and try to analyze if there are any specific pattern in the characteristics of successful business models (2004:158).
  
  
  Osterwalder stated that there are a few available resources to help managers “capture, understand, communicate, design, analyze and change the business logic of their firm”.  In Osterwalder’s opinion, and, as he stated, in “the opinion of many other researchers in this domain, the business model concept can fill some of this gap and can eventually gain an important position in managing under uncertainty” (Osterwalder, 2004:19)
  
  Coming back to value and business model research, George and Bock in his paper ‘The business model in practice and its implications for entrepreneurship research’ (2011:90) identified value as the common element across both literature and practitioner perspectives on business models because it incorporates “structuration of value creation and capture in the context of opportunity enactment. Value structure is the organizational system that defines, supports, and controls the processes of value creation and capture. Value structure serves as the facilitator between the nature of the underlying opportunity and the enactment of that opportunity via resource and transactive elements” (2011:90). Value structure remain relatively constant, providing “high-level guidelines that link the entrepreneur’s perception of available value (George and Bock, 2011:101-102)
  
  There is an undeniable complexity in approaching the issue of managing and evaluating value, for that reason complexity management is the last key fundamental research area to be reviewed under the filter of business model research relevance.
  
  Some authors consider important to “encourage and pursue promising approaches for studying complexity - the strategic and organizational phenomena involving unpredictable changes and ever-shifting competitive rules” (Ilinitch et al., 1996:218) Complexity theory is certainly useful if a researcher is planning to keep a systemic line of inquiring, or, in order words, to addresses the “network effects” that result from interactions between many individual actors. (Kleindorfer et al., 2009:207)
  
  Complexity theory focuses on the overall or aggregate behavior of a large number of connected units (Kleindorfer et al., 2009:209). According to Kauffman, (2001), a remarkable feature of complexity theory is that it applies to many types of “units” (in his words, grains of sand in a pile, molecules in a magnet, people driving cars on freeways, and so on). Kauffman also argues that complexity theory as scientific understanding of biology reveals the nature of evolution and biological processes and that it is argued that biology may be the most appropriate metaphor for explaining the complexity of business culture in the 21st century (Kauffman, 2001). Hence the use of the ecosystem metaphor in this research proposal.