Value creation, value network, value capture : determinants of business models

Abstract

In this paper, we contribute to theory development in relation to business model construction by highlighting how and why an integrated approach based on Transaction Costs Economics should be extended from mainstream considerations of "first order economizing" to incorporate the strategic choices related to the management of combined and concurrent appropriability regimes, and the implications in terms of "mundane" transaction costs of flexing the size of the focal firm's value network. We illustrate the salience of the approach by analysing three case studies of open-source business models in the software industry.