The ultimate goal is to produce a framework that is applicable to firms at different stages of evolution, of different sizes, and operating in different industries.
Note that, although we focus this paper on new technology-based firms, our business model definition is not restricted to these companies. The concep- tualization is meant to be relevant for firms of all types and in various industries.
Accordingly, we define the business model as the way a company structures its own activities in determining the focus, locus and modus of its business. This business model definition centers on company activities. Focus decisions concern the allocation of company resources to different activities where to invest additional resources? Therefore, by identifying what activities the company is focused on, the business model defines the relevance of the different activities and consequently determines the span of the value chain.
The primary business model decision refers to the broadness of the activities the company carries out. Notionally, every company has a value chain, i.
It is important to single out that the value-adding activity list is strictly firm-specific. Locus decisions refer to where the different activities of the company are located.
At the business model level it has to be decided in which geographical areas or industrial clusters individual activities are carried out. This decision has to be made for each activity the company has chosen to focus. A multi-localization approach is possible for both different activities, as well as for the same activity i.
Thus, the business model determines the geographical configuration of the value chain. More specifically, the business model defines which activities to manage in-house and which ones to outsource. For activities performed in-house, the business model defines how the company should approach these activities from among the different options available.
An activity can be alternatively performed in terms of intensive capital technology or labor, and, in the latter case, the quality and skills of the work force is another key decision. For activities that have been outsourced, the vendor has to be selected and also the level of company involvement in the relationship has to be defined should there be a long term collaborative agreement with stable partners or a short term market-transaction?
What kind of involvement should the company have in this business relationship? In internationalization, the terms business mode, cross-border mode or foreign market entry mode are used to define the operational attributes of the way the company does business across borders.
All those are business model decisions. The business model defines also the role a company chooses to play within its network. A company has multiple alternative options for locating the different activities as well as plenty of ways of executing them. Additionally firms can focus on different activities.
Hence they may develop core competencies and capabilities, which are different from those of competitors that have chosen different resource allocations. All these decisions are not neutral on company operations and performance, and bring with them different financial implications and managerial issues that are required to be addressed in a comprehensive way.
We can conclude that, since the company value chain consists of different activities and the decisions of focus, locus and modus apply to each of them, multiple potentially infinite decisions and business models can emerge. Then the output of the business model decisions characterizes the company in a unique way and allows a firm to stand out among competitors. Different business model combinations make companies diverse from each other, even if they are operating in the same target market.
Business model decisions are likely to result in companies executing the same strategy in different ways, and in some instances, business model decisions may trigger strategy change or innovation. As a result, business model decisions strongly influence and characterize the way new technology based firms operate and the strategy they put in place.
In order to better understand these phenomena, further analysis on business models is required, both quantitative and through business cases. This Special Issue aims at contributing to fill this gap, stimulating research about business models for new technology based firms. These phenomena are particularly evident in technology-based industries and more generally in all the sectors which are affected—and even created—by the advent of a new technological platform.
These changes trigger product and process innovations and require new strategic approaches, which can leverage the opportunities arising from the intersection of early and fast internationalization and innovation. The mentioned approaches aim at supporting effective and efficient entrepreneurial processes and permit the new venture to design a sustainable growth path.
Being a new venture in a new technology-based sector nowadays involves strategizing processes which are substantially different than those described by the traditional strategic management literature and where time and space, in terms of geographies, play a dominant role.
The survival and success of a new venture depends on effective business model design, where decisions about core activities and where to focus investments are interconnected to decisions about location of activities, and about inward and outward relationships with other players. For internationally oriented new ventures the boundary spanning design refers to both the network of partners and the network of locations where different activities are placed.
This combination is idiosyncratic and supports a unique strategic positioning and business modeling. We do not intend to provide either a business model format or guidelines for business modeling, but we want to contribute to the identification and discussion about critical variables for strategic design. At the same time, we aim at bridging different fields of academic research.
The emergent characteristics of strategic and business design in international new ventures—and more generally in firms which face many of the same challenges and opportuni- ties—requires integration of relevant strategic management, international entrepre- neurship and internationalization literature.
In fact, the traditional corporate strategy literature has virtually ignored the location decisions and the role of relationships in the prescriptive managerial models. On the other hand, while these dimensions are at the heart of much of the international entrepreneurship literature, the international entrepreneurship scholars have not yet created business modeling approaches for internationally-oriented entrepreneurial processes.
Focus, modus and locus are common issues across internationalization theory, as well as innovation and strategy theories, and in the business model serve as constructs that bridge the different foci of those three theoretical imperatives.
This paper aims to open a debate on the forthcoming challenges for international entrepreneurship scholars around the development of frameworks, approaches and models for guiding in a sustainable way the entrepreneurial process from the exploration to the exploitation of global opportunities.
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