Business Model Implementation within Networked Enterprises: A Case Study on a Finnish Pharmaceutical Project

• Published date: 01 March 2018
• Date: 01 March 2018
• Author: Harry Bouwman,Sam Solaimani,Marikka Heikkilä
• DOI: http://doi.org/10.1111/emre.12124

Business Model Implementation within

Networked Enterprises: A Case Study on a

Finnish Pharmaceutical Project

SAM SOLAIMANI,

1

MARIKKA HEIKKILÄ

2

and HARRY BOUWMAN

3,4

1

Center for Marketing & Supply Chain Management, Nyenrode Business University,The Netherlands

2

Centre for Collaborative Research, University of Turku

3

IAMSR, Abo Akademi, Turku, Finland

4

Faculty of Technology, Policy and Management, Delft University of Technology, The Netherlands

In many entrepreneurial projects, the concept of the business model (BM) is used to describe a business idea at

a high-level and in a holistic way. However, existing literature pays less attention to implementation (or execution)

of BM. Implementation becomes more complex when a BM is proposed by or requires a network of collaborating

enterprises. The aim of this paper is to provide an approach based on empirical research that supports BM

transition from design to implementation. The empirical data used in this paper is based on a case study involving

an innovative project in the pharmaceutical sector in Finland. The case analysis demonstrates how a high-level

BM needs careful consideration of its operational components from a network perspective to secure both value

creation and capture. Drawing on the analysis, six concluding propositions on BM implementation in networked

settings are put forward.

Keywords: business model; business processes; networked enterprises; case study

Introduction

Magretta (2002) states that a business model (BM) is

essential to every successful organization, whether it is a

new venture or an established player. A growing

community of scholars shares that view (see Pateli and

Giaglis, 2004; Osterwalder et al., 2005; Zott et al.,

2011). Strictly speaking, the design or innovation of a

BM should be distinguished from its implementation as

the former represents the business logic and the latter is

the form BM takes in reality (Osterwalder et al. 2005).

Despite increasing attention in academia and practice,

literatureon BM has mainly been focusing on frameworks

that are highly useful in BM conceptualization, while

largely neglecting the question of how a BM should be

implemented in order to create and capture value

(Bouwman et al., 2008, 2012; Al-Debei and Avison,

2010; Teece, 2010). In response, scholars call for more

attention to BM implementation and the inherent

complexities (Veit et al., 2014; Wirtz et al.,2016), and

emphasizing the urgency of guidelines and insights in

how BM can be implemented and which operational

factors may impedeor contribute to implementation(Bask

et al., 2010; El-Sawy and Pereira, 2013; Osterwalder

et al., 2005).

Part of the complexity can be attributed to the dynamic

network-driven context of contemporary businesses

(Haaker et al., 2006; Solaimani et al., 2015). Most BM

frameworks take a single firm perspective and in that

way ignore the fact that more often than not firms operate

as multi-actor cross-industry networked enterprises.

Networked enterprises are marked by heterogeneous

inter-organizational processes and interdependencies (El-

Sawy and Pereira, 2013;Palo and Tähtinen, 2013), where

value creation andcapture is not a mere result of a dyadic

relationship between provider and consumer, but value is

created and captured by a collective effort of the involved

network (Sharma et al., 2010). Hence, the twofold aim of

this paper is to advance our understanding of BM

implementation and the role of operational network

processes in value creation and capture.

The empirical data usedin this paper is based on a case

study involving an innovative Finnish pharmaceutical

project in which multiple actors have to work together.

Correspondence: Sam Solaimani, Center for Marketing & Supply Chain

Management, Nyenrode Business University, Breukelen, The

Netherlands.E-mail s.solaimani@nyenrode.nl

European Management Review, Vol. 15, 79–96, (2018)

DOI: 10.1111/emre.12124

©2017 The Authors European Management Review published by John Wiley & Sons Ltd on behalf of European

Academy of Management (EURAM)

This is an open access article under the terms of the Creative Commons Attribution License, which permits use,

distribution and reproduction in any medium, provided the original work is properly cited.

First, the BM canvasmodel (Osterwalder, 2004) is used to

arrive at a comprehensive description of BM from the

focal firm viewpoint, after which the implementation of

the BM is analysed making use of a framework that

focuses on network aspects (Solaimani and Bouwman,

2012). In doing so, a gestalt view of the multi-level

operational interactions and network interdependencies

are developed, which, in turn, helped to identify factors

diluting (or strengthening) BM implementation.

The remainderof the paper is organized as follows. The

subsequent section provides a brief reviewof literature on

BM. Then, the gap betweendesign and implementation is

explicated. Next, the research method is discussedand the

results are presented. The paper discusses the empirical

findings, after which the final conclusions are presented,

along with the limitations and suggestions for future

research.

Business model analysis: a shift from

conceptualization to implementation

The concept of BM has been investigated and used by

many scholars and practitioners from various disciplines

and contexts, which has resulted in a wide variety of

definitions (e.g., an overview is provided by Pateli and

Giaglis, 2004; Osterwalder et al., 2005; Zott et al.,

2011). Generally speaking, the concept of BM refers to a

descriptionor model that represents a firm’slogic to create

and capture value from and for its stakeholders (e.g.,

Timmers, 1998; Linder and Cantrell, 2000; Gordijn

et al., 2000; Petrovic et al., 2001; Weill and Vitale,

2001; Chesbrough and Rosenbloom, 2002; Magretta,

2002; Bouwman et al., 2008). Without making any

pretense of beingcomprehensive (for a thoroughliterature

review see Pateli and Giaglis, 2004; Morris et al., 2005;

Shafer et al., 2005; Al-Debei and Avison, 2010;

Baden–Fuller and Morgan, 2010; Zott et al., 2011), the

extant body of knowledge can be divided into typologies

(Timmers, 1998; Tapscott et al., 2000; Weill and Vitale,

2001; Rappa, 2001; Malone et al., 2006), classifications

(Pateli and Giaglis, 2004; Shafer et al., 2005), and

ontologies, for example, business model components

(Cherbakov et al., 2005), the Service, Technology,

Organization, Finance (STOF) model (Bouwman et al.,

2008), Customer, Service, Organization, Finance,

Technology (CSOFT) (Heikkilä et al., 2010), BM

canvas (Osterwalder, 2004), and BM qube (Lindgren

and Rasmussen, 2013).

Recently, scholars and practitioners underscore the

need to shift the focus from conceptualization toward

implementation, aiming at developing approaches to

analyse BM viability and feasibility (Bouwman et al.,

2008; Al-Debei andAvison, 2010; Teece, 2010; El-Sawy

and Pereira, 2013). According to Teece (2010) promising

technologicalideas are commonly doomed to commercial

fail due to lack of proper attention to implementability.

Although strategic considerations are essential in

designing a BM (c.f., Teece, 2010), BM is not in itself a

strategy (Shafer et al., 2005); instead, it can be deemed

as a coherent system of activities that help firms to

implement their strategy (cf, Casadesus-Masanell and

Ricart 2010). Thus, BM can be positioned at the

intermediatelayer between business strategy and business

processes (Osterwalder, 2004; Morris et al., 2005; Al-

Debei and Avison, 2010; Bask et al., 2010; Cavalcante

et al., 2011). Business process are defined as ‘a specific

ordering of work activities across time and place, with a

beginning, an end, and clearly identified inputs and

outputs: a structure for action’(Davenport, 1993: 5).

Clearly, a firm is not operating in isolation (Håkansson

and Snehota, 1989), both strategy and business processes

need also to be considered from a network perspective.

Chesbrough and Rosenbloom (2002) emphasize the

influence of the firms surrounding network on the value

captured from commercialization, for instance through

the supply of complementary goods on the supply side

and increasing the network effect among consumers on

the demand side. Such network-oriented perspective is

in line with ‘relational view’, which refers to value

creation and capture as a function of network resources

generated in an exchange relationship among networked

stakeholders (Dyer and Singh, 1998). However, with a

network perspective, it becomes clear that value creation

and capture are two distinct processes, as also argued by

Bowman and Ambrosini (2000). Value creation is often

related to value offered to and perceived by consumer or

receiver (e.g., customers), while value capturing is about

how value provider reciprocally benefits from the value

consumer. It is important to notice that in a network

setting, the entity that creates value is not necessarily the

same entity that captures or retains the value in the long

run per se; rather,the value created at one levelof analysis

can be captured at another, a process that is called ‘value

slippage’(Lepak et al., 2007). In order to understand

value slippage a careful analysis of the operational side

of networked enterprises by looking into the multi-level

inter-organizational business processes is required.

In understanding the relationship BM and multi-level

analysis of BM networked business processes, at least,

two streams of literature seem promising, namely, BM

tooling models and conversion models. BM tooling helps

to analyse a BM by focusing on one or more operational

aspects of its implementation. As such, Bouwman et al.

(2012) put forward stress testing to analyse BM

uncertainties, Heikkilä et al. (2014) provide metrics to

measure BM performance, De Reuver et al. (2012)

introduce BM scenario testing, and Tian et al. (2008)

BM financial impact analysis Daas et al. (2013). The

conversion methods, on the other hand, aim to translate

80 S. Solaimani et al.

©2017 The Authors European Management Review published by John Wiley & Sons Ltd on behalf of European

Academy of Management (EURAM)