The interaction between business models and business reality

Abstract

Purpose – The purpose of this paper is to conceptualize the connection between business model and business reality. On this basis, the paper aims to put the business models on a solid conceptual ground and to build bridges to its neighboring disciplines. In this way, this paper is intended to contribute to more terminological and conceptual rigor of the business model construct. In addition, this paper aims to conceptualize the processes of constructing and using business models for decision-making.

Design/methodology/approach – This is a conceptual paper; it introduces and specifies a new construct, the status quo, as realistic counterpart to the business model. Based on this, it develops a model of the interaction between business model and status quo.

Findings – The key finding of this paper is that business model and status quo are shaped (and need to be described) by different characteristics. The characteristics of the status quo result from repetition (stability) and routinization (efficiency, low resistance, etc.). The characteristics of the business model result from observation, abstraction and simplification (purpose, observer perspective, etc.).

Originality/value – This is the first paper to develop the status quo as an independent construct for management research. It also offers the first comprehensive model of the relation between business model and business reality.  Furthermore, it offers a new link between business model and routine.

Keywords - business model; innovation; status quo; strategy; inertia; dynamic capabilities