2. Business Model

BM represents how a firm operates and creates value for its stakeholders. It is more than a logical way to do business, it represents a system of interdependent activities with a firm's partners, including how it delivers value to stakeholders. As defined by Teece, the "essence of a business model is in defining how the enterprise delivers value to customers, entice customers to pay for value and converts those payments to profit". Casadesus and Ricart argue that a BM represents a set of choices (policies, assets, and governance) and consequences (flexibility and rigidity). In addition to different concepts of BM, Schneider and Spieth state that the common element of these concepts is the fact that no one limits their scopes on a firm's internal elements or external environmental factors. The concept of BM is more of a holistic perspective to understand the activities of a firm.

A BM must be designed to create value through the exploitation of business opportunities which fulfills customers' needs and creates customers surplus while generating profit for local firms and partners. It can also be considered a coordinated plan to design strategy through customer interaction, asset configuration, and knowledge leverage. Other elements include the architecture for products, services, and information flows, as well as the descriptions of the business actors and their roles, including their potential benefits, and the sources of revenue.

A BM must reflect the managers' hypothesis related to the customers' needs, how they want to be satisfied and what they will pay for, organizing all these answers in a system capable of giving the customers the best offer and assuring a better return for the company. To address the same costumers' needs, or even to pursue similar product market strategies, firms can adopt very different BM. As Zoot and Amit highlight "business model design and product market strategy are complement, not substitutes".

The concept of BM emerges from the need of frameworks to create and capture value out of innovative ideas or technological developments that were not able to do it by itself. Casadesus-Masanell and Zhu argue that, besides all the interest that the BM subject had attracted over the last few years, it is still a 'slippery' research construct. Spieth, Schneckenberg, and Ricart investigated the literature related to the field. According to them, the papers address one of these three goals: explaining the business; running the business; or developing the business.

As investigated by Schneider and Spieth, three theoretical approaches have been used to explain and support a BM. The first is the Resource-Based View (RBV), which focuses on the heterogeneity between firms to emphasize their unique, imitable, rare, and non-substitutable resources, which are used as source of competitive advantage. The Dynamic-Capabilities is the second view, which emphasizes the decreasingly lasting character of competitive advantage in volatile environments, as well as the need for companies to re-create themselves and to apply new value creating strategies. The third theoretical approach is the Strategic Entrepreneurship Perspective that allows the consideration of a company's internal initial situation and of external opportunities including an entrepreneurial opportunity-seeking and strategic advantage-seeking as part of the unit of analysis. Based on these approaches, it is possible to highlight that, while the RBV and the Dynamic Capabilities approaches allow the company to identify and adjust aspects to develop a BM, the Strategic Entrepreneurship approach better explains how companies can explore and exploit opportunities to BMI.