The Roles of Stakeholders in Business Model Development

Paper in proceeding, 2016

Objectives: Expanding the focus of the business model as firm-centric, and developed internally based on the founder or manager, this paper emphasis the notion of network-embeddedness and investigates how stakeholders take role in the business model development in new technology-based firms (NTBF). Prior work: The business model as a concept has been studied by researchers to describe how firms create and capture value, thus, how the firms ‘do businesses’ and how they perform. In this sense, the business model is firm-centric. With increased attention on business model innovation, the development of business models in young firms would need further investigation to increase awareness of how founders focus their attention to develop their initial business models. Furthermore, for NTBFs, resources in the start-up phase are scarce and thus, collaboration with stakeholders in the business network is necessary. Accordingly, the young firm need to rely on external organisations to gain access to resources. Consequently, the business network and the players (stakeholders) in it would impact on the business model developed. However, from the perspective of the business model as network-embedded, how these stakeholders take part in the business model development is still not clear and needs further investigation to explain the roles that different stakeholders play in the business configuration. Approach: The study is based on a longitudinal case study of two NTBFs. Semi-structured interviews with founders of the two case firms over a period of one and a half years, including retrospective data from the first years of start-up, have provided the basis for examine the development of the firms’ business models and what roles different stakeholders played in the development. Further, drawing on an attention-based view of the firm, the cases were analysed to explain mechanisms through which the roles played an important part for the focus of attention in business configuration. Results: The findings indicate that the most common roles of external stakeholders frequently interacting with the NTBF are ‘advisor’, ‘connector’, ‘evaluator’, ‘co-developer’, and ‘supplier of know-how’. The roles of business advisors at Science Parks and incubators differ between the role as advisor and the role as connector for the young firm, depending on the kind of previous industry experience of the founder. Customers and suppliers are the most influencing stakeholders for the firm’s initial business model and share the similarities of playing the role of ‘co-developer’, which is a role that impact on the firm’s value proposition, however, in different ways depending on type of exchange between stakeholder and focal firm. Overall, the closeness of interaction between the founder and a stakeholder (e.g., customer), and the exchange between then, made the role more influential for the business model development, but the role’s impact further depended on what schemas that existed for the founder to structure their attention at founding. Accordingly, three mechanisms were identified through which stakeholders play important roles of the business model developed; closeness of interaction, type of exchange, and founder’s suitable attention structure. Implication and value: The paper adds value to the research field of business models, concerning both academia and practitioner, by offering insights of the role of a firm’s network for business model development and what roles different stakeholder play. Thus, highlighting the firm’s network, allows for a broader perspective on the business model and what roles that are influencing on what is going on with the business model at a firm’s start-up.