Business Models and Technological Innovation

TLDR

Business models are fundamentally linked to technological innovation, yet the construct is essentially separable from technology. The study defines the business model as a system that identifies customers, engages their needs, delivers satisfaction, monetizes value, establishes a two‑way relationship with technology, and proposes research questions for technology management and innovation. The authors present a framework depicting the business model system as a cause‑effect model that enables classification. Business models mediate the link between technology and firm performance, and choosing the right technology depends on business model decisions about openness and user engagement.

Abstract

Business models are fundamentally linked with technological innovation, yet the business model construct is essentially separable from technology. We define the business model as a system that solves the problem of identifying who is (or are) the customer(s), engaging with their needs, delivering satisfaction, and monetizing the value. The framework depicts the business model system as a model containing cause and effect relationships, and it provides a basis for classification. We formulate the business model relationship with technology in a two-way manner. First, business models mediate the link between technology and firm performance. Secondly, developing the right technology is a matter of a business model decision regarding openness and user engagement. We suggest research questions both for technology management and innovation, as well as strategy.