Value creation in E‐business

TLDR

A business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. The study investigates how 59 publicly traded American and European e‑businesses create value, proposes the business model construct as a unit of analysis, and argues that a firm’s business model is a key locus of innovation and source of value for stakeholders. Using rich case‑study data from 59 e‑businesses and grounded in entrepreneurship and strategic‑management theory, the authors develop a model of the sources of value creation. They find that value can be created by enabling transactions, that the potential hinges on four interdependent dimensions—efficiency, complementarities, lock‑in, and novelty—and that no single theory suffices, requiring an integrated perspective. © 2001 John Wiley & Sons, Ltd.

Abstract

Abstract We explore the theoretical foundations of value creation in e‐business by examining how 59 American and European e‐businesses that have recently become publicly traded corporations create value. We observe that in e‐business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the sources of value creation. The model suggests that the value creation potential of e‐businesses hinges on four interdependent dimensions, namely: efficiency, complementarities, lock‐in, and novelty. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e‐business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such an integration, we offer the business model construct as a unit of analysis for future research on value creation in e‐business. A business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. We propose that a firm's business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers. Copyright © 2001 John Wiley & Sons, Ltd.