Business Strategy
The Observable Business Model

Article Details
Pub. Date : June' 2022
Product Name : The IUP Journal of Business Strategy
Product Type : Article
Product Code : IJBS030622
Author Name : Ayoob Sadeghiani
Availability : YES
Subject/Domain : Strategic Journals
Download Format : PDF Format
No. of Pages : 23



Business model representation is used for transferring strategic corporate information in the process of business model innovation. Most of the existing representations are descriptive, and the literature lacks a general representation separating business phenomena and supporting explanatory research. The conceptual paper aims to fill the gap and is based on literature review. The study also uses Hall's encodingdecoding framework to find the challenging grounds of the current business model representations using some empirical data. It found how strategic information is encoded in the process of business model innovation and how the encoded information is decoded. Then, the study refines the concept 'value' and introduces a Business Value Triad at the heart of an Observable Business Model. The new representation helps researchers with designing explanatory research, and guides practitioners to separate the realized business from the planned business in the process of venture building and/or business model innovation.


Using models as tools for explaining and describing real phenomena has a long history in different disciplines such as biology and economics. Similarly, strategy formulation in terms of complementary visualizations such as business model representations is used in the management arena. Business models are in essence conceptual models providing data and demonstrating the logic of value creation, delivery, and capture. These conceptual models are embodied in business plans and represented in some schematic models for better communication. Indeed, business model representation is a schema that organizes managerial understandings about the firms' value mechanisms. Changing this schema can result in innovation. Moreover, business model innovators use framing techniques to present their business models to the stakeholders and to make strategic advantage. Indeed, visual tools are widely used in the process of business model innovation (Baden-Fuller and Morgan, 2010; Teece, 2010; Martins et al., 2015; Tauscher and Abdelkafi, 2017; and Snihur et al., 2018).

Sometimes, these schematic models are used as a recipe for practice. For example, the Business Model Canvas is widely used in business venturing methodologies (Osterwalder and Pigneur, 2010). Business model also adopts individual decision-making approach in relation to cognitive framing and microfoundations of strategy (Bigelow and Barney, 2021). Moreover, business model was attributed as a means of negotiation for a share of business value, and its strategic relevance to negotiation was highlighted (Casadesus-Masanell and Heilbron, 2015). Another application of the business model representation is legitimizing