Managerial cognition, action and the business model of the firm

TLDR

The paper outlines a generic framework for the business model that links it to managerial cognition and proposes future research from cognitive perspectives. The authors reviewed literature on firm actions and evolution to synthesize the components of a business model. The study shows that a business model is both a cognitive construct and a material firm structure, offering managers tools for self‑analysis, scenario building, evolutionary evaluation, and executive education.

Abstract

Purpose The purpose of the paper was to outline a generic framework for the business model and illuminate its linkages to managerial cognition. Design/methodology/approach The paper reviewed the focal literature focusing on the actions and evolution of a firm and built a synthesis that describes the different components of a business model. Findings The main finding was that a business model is essentially both a cognitive phenomenon as well as being built on the material aspects of a firm. Research limitations/implications The paper proposes that the business model can be scrutinized in future studies, especially from the viewpoints of cognition, thus creating new avenues for intra‐firm evolutionary studies. Practical implications The paper found several implications for practising managers. First, the concept itself creates possibilities for self‐analysis and scenario building. Second, the understanding that a business model is systemic helps managers to evaluate their actions vis‐à‐vis the evolutionary path of the business model. Third, the outlined business model is useful in executive education as it creates a cognitive map of the various aspects of business activities. Originality/value The paper offers new insights into the functions and evolution of firms and will be of interest to both researchers and practising managers.