Considering that there is not a single, unique and general accepted definition, business models might simply be described as “stories that explain how enterprises work” (Magretta, 2002:87). This definition would aim at pointing out, not only the target customer, the product or service provided and how profit is generated, but how value is created for both the customer and the firm. Indeed, the value creation process is considered as a crucial aspect of the business model concept. In fact, according to Teece (2010:172), “a business model describes the design or architecture of the value creation, delivery and capture mechanisms employed”. This definition refers to the main components of BM (business model) such as value proposition, target segments and the revenue capture procedures. However, a crucial focus relies on the word “architecture” which highlights the interdependency and complementarity of business model’s components; Therefore, Business model can be considered a complex system (Foss & Saebi, 2016) as its parts interact in a nonsimple way (Simon, 1962). This system, according to Johnson, Christensen & Kagermann (2008) is composed by four elements through which enterprises create and deliver value:
1. Customer Value Proposition, defines the way in which the company is willing to create value for the customer fulfilling its need. The more the problem solved is considered crucial for the customer, the superior the value proposition will be.
2. Profit Formula, defines how the company is willing to generate value for itself. It includes four elements, namely: a revenue model, cost structure, resource velocity and a margin model.
3. Key Resources, key elements that interacting create value for the customer and the company (e.g. employees, technology, brand, etc.)
4. Key Process, both managerial and operational, through which value is created and successfully delivered to both the firm and the customers.
On the other hand, Amit and Zott (2001) state that value creation is generated by business models through four drivers, namely: Novelty, Lock-in, Complementarities, and Efficiency. Novelty expresses the degree of innovation within the activity system; Lock-in regards those activities that increase the participants’ willingness about staying in the system through switching costs or increasing benefits; Complementarities refer to the higher value that is reached thanks to interdependencies between activities; and Efficiency refers to ability of saving cost through the activity system interconnection (Amit & Zott, 2012). The presence of each of these features make the others better off enhancing the general effectiveness of the business on the firm’s performance. Indeed, business models featured by novelty result in superior value creation (Morris et al., 2005).
Another crucial reason why business models are highly considered within the business world is due to the fact that they represent a pivotal instrument for a company to gain competitive advantage. In fact, according to Morris et al., (2005:727), business models aim at creating “sustainable competitive advantage in defined markets”. Moreover, the competitive advantage gained thanks to an effective business model, is different from the firm’s product market position (Christensen, 2001). Indeed, in agreement with Zott and Amit (2008), companies that aim to tackle the same customer problem and pursue similar product market strategies can utilize different business models.
Finally, even though there is no exact definition of the concept, a business model can be described as a “system” (Amit & Zott, 2012) or an “architecture” (Teece, 2010) of interconnected activities through which a company creates and captures value (Baden-Fuller & Haefliger, 2013). Therefore, since undoubtedly the business model adopted represents a crucial matter for a company, it can be considered part of intellectual property (Rappa, 2001; Rivette & Kline, 2000). In fact, BM affects the strategy of an enterprise, how the latter gains competitive advantage and, of course, the company’s performance.