The business model is expanding its significance and value as an alternative to product and process innovation, a strategic tool for performance creation, and a driver of industry growth across various industries. However, in reality, the majority of ...
The business model is expanding its significance and value as an alternative to product and process innovation, a strategic tool for performance creation, and a driver of industry growth across various industries. However, in reality, the majority of companies, especially small and medium-sized enterprises, often lack a comprehensive understanding of business models and their strategic application.
This study aimed to address the recognition that, in the context of small and medium-sized enterprises (SMEs), the strategic utilization of a business model requires a practical definition of the business model, the development of a practical framework, the proposal of component development approaches, the definition of the relationship between the business model and strategy, and the proposal of strategic utilization of the business model. To tackle this challenge, the study developed a business model framework and proposed its strategic utilization. To validate the utility of the developed framework and the validity of the strategic utilization, multiple case studies were conducted.
In the framework development, the study initially derived the core components of a business model, namely customers, value propositions, processes, and profit structures, based on prior research. Furthermore, the business model was practically defined as "explaining how a company targets specific customers, delivers value, and generates profits." The concepts of the core components were defined, and the interrelationships between these components were systematically structured. A practical two-step template was developed. Additionally, specific methods and procedures for developing each core component were provided.
The research on the strategic utilization of the framework involved establishing the relationship between the business model and strategy and proposing strategic utilization. Unlike previous research, the relationship between the business model and strategy was redefined to be flexible depending on the company's situation. Strategic utilization was primarily proposed, taking into account the redefined results and the generic competitive strategy, differentiating between the business model design phase and the business model innovation phase.
Validation of the framework's utility and the validity of strategic utilization was conducted through multiple case studies, considering global companies and domestic small and medium-sized enterprises for each core component. The validity of strategic utilization was validated based on each case's company profile, the pre-innovation market and company situation, the focus and content of the business model innovation, and the effectiveness of business model innovation. In addition, the utility of the framework was confirmed through a comparison of business models applied using the framework. In the validation process, the study examined changes in other core components resulting from the innovation of specific core components. This allowed for additional confirmation of the fundamental cause-and-effect relationships between core components, as well as exceptional cause-and-effect relationships.
Through this research, several academic and practical contributions were made. Firstly, previous research on business models was systematically organized, taking into account the overall scope and themes. Secondly, essential components of the business model were derived by applying an analysis and comparison of prior research on the definition of business models and their components. Thirdly, a practical definition of the business model was developed to facilitate easy understanding, development, and innovation. Fourthly, the study systematized the basic impact relationships and exceptional impact relationships between core components. Finally, a new perspective was introduced, suggesting that the relationship between the business model and strategy can be flexible depending on the company's industry stage and the level of information about the environment.
Practically, a highly accessible and usable framework that can easily understand business models and can develop or innovate. The framework was then applied to propose ways to strategically utilize the business model, differentiating between the business model design phase and the business model innovation phase.
Based on the research findings, successful development or innovation of business models is expected. Ultimately, startups and small and medium-sized enterprises can enhance their competitiveness and business performance by strategically leveraging their business models.
Keywords: Business Model, Business Model Innovation, Framework, Strategic Utilization, Case Study