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Business Model Theory

In: The Theory of Entrepreneurship

Author

Listed:
  • Chandra S. Mishra

    (Florida Atlantic University)

  • Ramona K. Zachary

    (The City University of New York)

Abstract

Teece (2007) posited that an enterprise’s success is contingent upon how astutely its business model is crafted. Entrepreneurial competence, formulated in Stage 1, will not result in value creation and appropriation without an efficient and sustainable business model design. Business models “reflect management’s hypothesis about what customers want and how an enterprise can best meet those needs, and get paid for doing so” (Teece, 2007, p. 1329). According to Chesbrough and Rosenbloom (2002, pp. 533–534), “The function of a business model is to ‘articulate’ the value proposition, select the appropriate technology and features, identify target market segments, define the structure of the value chain, and estimate the cost structure and profit potential.” Business models provide a rationale as to how value is created and appropriated within a venture.

Suggested Citation

  • Chandra S. Mishra & Ramona K. Zachary, 2014. "Business Model Theory," Palgrave Macmillan Books, in: The Theory of Entrepreneurship, chapter 9, pages 227-250, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-37146-1_9
    DOI: 10.1057/9781137371461_9
    as

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