The role of business models in Finnish construction companies
Business models are seen as an essential part of successful businesses as they define the way companies create value for their customers and subsequently make profit from their operations. A good business model has a potential to separate a company from its competitors by creating a competitive advantage. The purpose of this research is to explore how managers understand and deploy the business model concept in construction. For this, eight experienced managers have been interviewed and their answers have been analysed using the theoretical aspects of business models as a reference. In the interviews, managers deployed business model concept very differently than what is accustomed in practice and in academia; they relate these models to different project delivery and contract structures or to companies’ business segments rather than to analysing how their companies provide value for customers in the selected markets. The results of the interviews indicate that the managers in construction do neither understand the concept properly nor exploit any similar value creation analysis in their business. The interviewees had significant problems describing their companies’ business models and value creation logic, pointing out the lack of analysis and understanding of customer values and needs in the project delivery process. This may be one of the overtones of the persistent client dissatisfaction in the construction industry.
Afuah, A. (2003) 'Redefining firm boundaries in the face of the internet: are firms really shrinking?', The Academy of Management Review, 28 (1), 34-53.
Afuah, A., and Tucci, C. (2000) Internet Business Models and Strategies: Text and Cases, McGraw-Hill Higher Education, Boston, MA.
Barney, J.B. (1991) 'Firm resources and sustained competitive advantage', Journal of Management, 17 (1), 99-121. http://dx.doi.org/10.1177/014920639101700108
Burkhart, T., Krumeich, J., Werth, D., and Loos, P. (2011) 'Analyzing the business model conceptâa comprehensive classification of literature', in International Conference on Information Systems 2011 Proceedings, Shanghai, China.
Casadesus-Masanell, R., and Ricart, J. (2010) 'From strategy to business models and onto tactics', Long Range Planning, 43 (2/3), 195-215.
Casadesus-Masanell, R., and Ricart, J. (2011) 'How to design a winning business model', Harward Business Review, 89 (1/2), 100-107.
Chesbrough, H., and Rosenbloom, R.S. (2002) 'The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies', Industrial and Corporate Change, 11 (3), 529-555. http://dx.doi.org/10.1093/icc/11.3.529
Hamel, G. (2000) Leading the revolution, Harvard Business School Press, Boston, MA.
Hedman, J., and Kalling, T. (2003) 'The business model concept: theoretical underpinnings and empirical illustrations', European Journal of Information Systems, 12 (1), 49-59. http://dx.doi.org/10.1057/palgrave.ejis.3000446
Johnson, M., Christensen, C., and Kagermann, H. (2008) 'Reinventing your business model', Harvard Business Review, 86 (12), 51-59.
Junnonen, J.-M. (1998) 'Strategy formation in construction firms', Engineering, Construction and Architectural Management, 5 (2), 107-114.
Kujala, S., Artto, K., Aaltonen, P., and Turkulainen, V. (2010) 'Business models in project-based firms â towards a typology of a solution-specific business models', International Journal of Project Management, 28 (2), 96-106. http://dx.doi.org/10.1016/j.ijproman.2009.08.008
Linder, J., and Cantrell, S. (2000) 'Changing business models: surveying the landscape', working paper, The Accenture Institute for Strategic Change, 24 May, available at: http://course.shufe.edu.cn/jpkc/zhanlue/upfiles/edit/201002/20100224120954.pdf (accessed 23 April 2013).
Magretta, J. (2002) 'Why business model matter', Harvard Business Review, 80 (5), 86-92.
Morris, M., and Schindehutte, M., and Allen, J. (2005) 'The entrepreneur's business model: toward a unified perspective', Journal of Business Research, 58 (6), 726-735.
Mutka, S., and Aaltonen, P. (2013) 'The impact of a delivery project's business model in a project-based firm', International Journal of Project Management, 31 (2), 166-176.
Nenonen, S., and Storbacka, K. (2010) 'Business model design: conceptualizing networked value co-creation', International Journal of Quality and Service Sciences, 2 (1), 43-59. http://dx.doi.org/10.1108/17566691011026595
Osterwalder, A. (2004) The business model ontology - a proposition in design science approach, doctoral thesis, Department of Business and Economics, University of Lausanne, Switzerland.
Osterwalder, A., and Pigneur, Y. (2009) Business Model Generation, John Wiley & Sons, New Jersey, NJ.
Pateli, A.G., and Giaglis, G.M. (2004) 'A research framework for ananysing eBusiness models', European Journal of Information Systems, 13 (4), 302-314. http://dx.doi.org/10.1057/palgrave.ejis.3000513
Pekuri, A., Herrala, M., Haapasalo, H., and Pekuri, L. (forthcoming) 'Managing value creation: the business model approach in construction', International Journal of Business Innovation and Research.
Porter, M.E. (1980) Competitive Strategy. Free Press, New York.
Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. Free Press, New York.
Porter, M.E. (1996) 'What is strategy', Harvard Business Review, 74 (6), 61-78.
Prahalad, C.K., and Hamel, G. (1990) 'The core competences of the corporation', Harvard Business Review, 68 (3), 79-91.
Shafer, S., Smith, J., and Linder, J. (2005) 'The power of business models', Business Horizons, 48 (3), 199-207. http://dx.doi.org/10.1016/j.bushor.2004.10.014
Stabell, C., and Fjeldstad, â. (1998) 'Configuring value for competitive advantage: on chains, shops, and networks', Strategic Management Journal, 19 (5), 413-437.
Suikki, R., Goman, A., and Haapasalo, H. (2006) 'A framework for creating business models â a challenge in convergence of high clock speed industry', International Journal of Business Environment, 1 (2), 211-233. http://dx.doi.org/10.1504/IJBE.2006.010685
Teece, D. (2010) 'Business models, business strategy and innovation', Long Range Planning, 43 (2-3), 172-194.
Tikkanen, H., Lamberg, J.-A., Parvinen, P., and Kallunki, J.-P. (2005) 'Managerial cognition, action and the business model of the firm', Management Decision, 43 (5/6), 789-809.
Timmers, P. (1998) 'Business models for electronic markets', Electronic Markets, 8 (2), 3-8. http://dx.doi.org/10.1080/10196789800000016
Zott, C., and Amit, R. (2007) 'Business model designs and the performance of entrepreneurial firms', Organization Science, 18 (2), 181-99. http://dx.doi.org/10.1287/orsc.1060.0232
Wikstrâm, K., Artto, K., Kujala, J., and Sâderlund, J. (2010) 'Business models in project business', International Journal of Project Management, 28 (8), 832-841. http://dx.doi.org/10.1016/j.ijproman.2010.07.001
Metrics powered by PLOS ALM