PhD-Thesis AN EXPLORATION OF THE BUSINESS MODEL CONCEPT’S

[Pages:549]PhD-Thesis

AN EXPLORATION OF THE BUSINESS MODEL CONCEPT'S MEANING AND USAGE IN SWITZERLAND: TOWARDS AN

APPLICATION FRAMEWORK

Oliver Stalder

First supervisor: Prof Gerald Watts Second supervisor: Dr Robin Bell

A thesis submitted to The University of Gloucestershire in accordance with the requirements of the degree of Doctor of Philosophy (PhD) in Business and Management in the Faculty of Business, Education & Professional Studies

December 2018

ABSTRACT

Although considered a popular and useful tool to support the creation of new enterprises and to develop existing businesses, the business model concept is used so widely and loosely that it may have no clear meaning in practice. A thorough literature review showed that the concept is often discussed theoretically and conceptually but there was a distinct lack of empirical studies of its conceptualisation and application. This research is intended to address this limitation in extant knowledge.

The broad research aim was to explore the conceptualisation and application of the business model concept within three Swiss communities of academics, training and consultancy professionals and small business owner-managers. Subsidiary aims were to explore the concept's perceived limitations, and the ways that members of the three communities have further refined the concept in order to address to its shortcomings. To fulfil these aims, indepth interviews were conducted with samples of 10 academics with expertise in business models, 13 business support professionals and 12 owner-managers of technology-based small businesses, all located in the German-speaking part of Switzerland.

The research findings revealed a high level of diversity in the interpretation and application of the business model concept and in evaluations of its usefulness, both within and across the three samples. There were some interesting general differences between the samples. The academics reflected ideas from the literature while support professionals also offered new application perspectives, but only rarely applied the concept in their work with firms. Only a few SME owner-managers applied the concept in any way and some were unaware of it.

The contributions include the finding that the business model concept is understood and applied differently across the three communities, a distinction being made between revenue and `advanced' concept thinking, and the importance of time and emergence in the application of business model thinking. It is shown that SMEs are in a different business model development stage from start-ups and large firms, having different business model needs. The necessity of a framework assisting managers in the creation and diversification of revenue streams is proposed. As a final integrative contribution, the thesis concludes with a conceptual framework differentiating between the two main sub-units `value proposition' and `business architecture/logic' on the one side, and the two main purposes `analysis/refinement' and `creation' on the other side. This four-dimensional framework reduces complexity in application allows for making better-informed business model application decisions.

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ACKNOWLEDGMENTS

At first, my heartfelt thanks go to Prof Gerald Watts and Dr Robin Bell who acted as supervisors of the present thesis. Not only I thank them for their professional and methodological inputs needed to conduct and finally accomplish this thesis, but also for the many inspiring discussions and meetings that finally contributed to my motivation and understanding of the research topic and process. However, at this point, I not only would like to thank them for their valuable inputs in the various Skype meetings we had in the past 2 years, but also for the inspiring in-person meetings and warm welcomes in Cheltenham, Worcester and Birmingham during my thesis, which I always have very much appreciated and which are in my best memories. Many thanks go also to Prof Daniel Huber, who acted as subject advisor and helped me shaping and challenging emerging ideas regarding the specifics of the Swiss SME context. In addition, many thanks go also to my friends and colleagues, in particular to Christoph Dummermuth, Patrick Stalder and Heiner Kaufmann for the inspiring discussions we had about my project. I would also like to thank the team from the University of Gloucestershire, in Cheltenham, for their excellent support in all project stages, the doctoral modules, and the annual Doctoral Colloquia they have been organising. And not at least, many thanks go to the respondents (respondents) who agreed to participate in my study and thus enabled me to conduct the present research.

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DECLARATION

I herewith declare that the content of this thesis is my own work ? except where noted and credited. I further declare that this PhD thesis was created in accordance with the guidelines and regulations of the University of Gloucestershire. I affirm that this thesis has not been submitted to any other educational institution in the United Kingdom or abroad or as part of any other academic award.

All views and opinions tendered in this PhD thesis are solely mine and not, in any way, those of the University of Gloucestershire.

Signed:

Date: 1 December 2018

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TABLE OF CONTENTS

1. Introduction ........................................................................................................ 17 1.1 Background to the research ........................................................................ 17 1.1.1 The author's background relative to the research ................................. 17 1.1.2 The role of business models in non-R&D-intensive firms...................... 18 1.1.3 The geographical context for the research............................................ 19 1.2 The business model concept in the literature .............................................. 19 1.2.1 Origins and evolution of the concept ..................................................... 19 1.2.2 The `dotcom bubble' and the proliferation of the concept...................... 21 1.2.3 The diffusion of the concept to other sectors ........................................ 22 1.2.4 The lack of empirical studies of application........................................... 23 1.3 Evolution of the research topic .................................................................... 24 1.3.1 The need for an exploratory study ........................................................ 24 1.3.2 Clarification of the research focus ......................................................... 25 1.4 Research aims, objectives and research questions..................................... 26 1.4.1 Research aim........................................................................................ 26 1.4.2 Research objectives.............................................................................. 26 1.4.3 Research questions .............................................................................. 27 1.5 Structure of the thesis.................................................................................. 27 1.6 A note on terminology.................................................................................. 29 1.6.1 Employed manager ............................................................................... 29 1.6.2 Entrepreneur ......................................................................................... 29 1.6.3 Owner-manager .................................................................................... 29 1.6.4 Start-up ................................................................................................. 30 1.6.5 Start-up founder .................................................................................... 30

2. Literature Review ............................................................................................... 32 2.1 The role of models in business and management ....................................... 32 2.1.1 Economic models.................................................................................. 34 2.1.2 Integrative models................................................................................. 35 2.1.3 Business Models ................................................................................... 38 2.1.4 Sub-system models .............................................................................. 44 2.1.5 Conclusions of the review on the role of models in business ................ 48 2.2 Definitions.................................................................................................... 49

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2.2.1 Defining the term `business' .................................................................. 49 2.2.2 Defining the term `model' ...................................................................... 50 2.2.3 Defining `Business Model' ..................................................................... 53 2.3 Importance of the business model concept ................................................. 55 2.4 Influential conceptual business model studies............................................. 57 2.4.1 Business model frameworks ................................................................. 57 2.4.2 Other influential conceptual business model studies ............................ 63 2.5 Business models versus revenue models ................................................... 65 2.6 Distinguishing between business models and business plans .................... 68 2.7 Business models ? a strategic perspective.................................................. 70 2.8 Separating established firms from start-ups ................................................ 74 2.9 Business models and corporate culture....................................................... 78 2.10 Business models and technology management ....................................... 81 2.11 Creating value through business models ................................................. 84 2 .1 2 Business models and innovation management ........................................ 88 2.13 Business models and complexity theory .................................................. 93 2.13.1 Applying complexity theory to business models .................................... 94 2.13.2 Investigating complex systems ............................................................. 96 2.14 Experimenting with business models ....................................................... 96 2.15 Entrepreneurship as a source of business model creation....................... 99 2.16 Business models as a teaching instrument ............................................ 103 2.17 A lack of empirical studies...................................................................... 105 2.18 Empirical studies of business model application .................................... 109 2.18.1 Quantitative research .......................................................................... 110 2.18.2 Case studies ....................................................................................... 111 2.18.3 A Delphi study approach ..................................................................... 111 2.18.4 Action research ................................................................................... 112 2.18.5 Qualitative studies............................................................................... 113 2.18.6 Discussion of relevant empirical studies ............................................. 116 2.19 Conclusion to the literature review and implications for the research..... 118 2.19.1 A concept dispersed over many disciplines ........................................ 118 2.19.2 A lack of empirical studies as research gap ........................................ 119 2.19.3 Technology management and the practical contribution ..................... 119 2.19.4 Business model frameworks as output of conceptual studies ............. 120

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2.19.5 Business models as highly complex systems ..................................... 120 2.20 Conceptual conclusion of the literature review ....................................... 121

2.20.1 Current knowledge in the 3 communities ............................................ 121 2.20.2 A conceptual framework of the reviewed literature ............................. 126 2.20.3 The framework explained in depth ...................................................... 127 2.20.4 The application of the framework in the present study ........................ 129 2.21 Critical discussion of the current body of literature ................................. 129 3. An exploratory study......................................................................................... 132 3 . 1 Interviewing 8 Swiss business managers .................................................. 132 3.2 Interview aims and questions .................................................................... 134 3.3 Analysing the interviews ............................................................................ 135 3.3.1 Presenting the findings ....................................................................... 135 3.3.2 Discussion of the findings ................................................................... 136 3.3.3 The case of a start-up ......................................................................... 137 3.4 Conclusions from the exploratory interviews ............................................. 138 4. Methodology and methods ............................................................................... 140 4.1 Philosophical fundamentals ....................................................................... 140 4.1.1 A rationale for the importance of philosophical considerations ........... 140 4.1.2 Phenomena under study ..................................................................... 141 4.1.3 Ontological considerations .................................................................. 142 4.1.4 Epistemological considerations........................................................... 147 4.2 Research paradigms ................................................................................. 152 4.2.1 Paradigms........................................................................................... 152 4.2.2 The adopted paradigm ........................................................................ 153 4.2.3 Methodology ....................................................................................... 154 4.3 Research purpose ..................................................................................... 154 4.3.1 Exploratory studies ............................................................................. 154 4.3.2 Descriptive studies .............................................................................. 155 4.3.3 Explanatory studies............................................................................. 155 4.3.4 Rationale for an exploratory study ...................................................... 156 4.4 Unit of analysis .......................................................................................... 156 4.5 Qualitative and quantitative research ........................................................ 157 4.6 Research designs...................................................................................... 159 4.6.1 Experiment.......................................................................................... 159

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4.6.2 Survey................................................................................................. 160 4.6.3 Case study .......................................................................................... 160 4.6.4 Action research ................................................................................... 161 4.6.5 Grounded theory ................................................................................. 162 4.6.6 Ethnography........................................................................................ 162 4.6.7 Archival research ................................................................................ 163 4.6.8 Individual interviews ............................................................................ 164 4.6.9 Focus groups ...................................................................................... 164 4.6.10 The adopted research design ............................................................. 165 4.7 Collecting data through guided in-depth interviews ................................... 165 4.8 Sampling ................................................................................................... 167 4.8.1 Introduction: what is sampling and why it is important ........................ 167 4.8.2 Time horizon ....................................................................................... 168 4.8.3 Rationale for a judgmental sampling strategy ..................................... 169 4.8.4 The choice of 3 communities (diversity across the samples) .............. 170 4.8.5 Choice of respondents (diversity within the samples) ......................... 172 4.8.6 Sample profiles ................................................................................... 172 4.8.7 Respondent recruitment...................................................................... 174 4.9 Ethical considerations................................................................................ 174 4.10 Development of research instruments.................................................... 175 4.10.1 Considerations for developing the interview guide .............................. 175 4.10.2 Lessons learned from the exploratory study ....................................... 177 4.10.3 Conclusions from the exploration study for the interview guide .......... 178 4.10.4 Developing the main categories of the interview guides ..................... 179 4 . 1 1 The issue of bias .................................................................................... 180 4.11.1 Addressing the researcher bias .......................................................... 181 4.11.2 Bias in researching academics ........................................................... 182 4.11.3 Bias in researching support professionals .......................................... 183 4.11.4 Bias in researching owner managers .................................................. 184 4.12 Data collection........................................................................................ 186 4.12.1 Venue ................................................................................................. 186 4.12.2 Data capture ....................................................................................... 186 4.12.3 Transcription ....................................................................................... 187 4.13 Data analysis.......................................................................................... 187

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