Value creation and value capture alignment in the shift to open business models

Boston 2019

Document identifier: oai:DiVA.org:ltu-76185
Access full text here:10.5465/AMBPP.2019.11432abstract
Keyword: Social Sciences, Open business models, Entreprenörskap och innovation, Digitalization, Advanced services, Servitization, Value capture, Value creation, Business model innovation, Economics and Business, Performance-based contacts, Outcome-based contracts, Företagsekonomi, Ekonomi och näringsliv, Samhällsvetenskap, Business Administration, Entrepreneurship and Innovation
Publication year: 2019
Relevant Sustainable Development Goals (SDGs):
SDG 9 Industry, innovation and infrastructure
The SDG label(s) above have been assigned by OSDG.ai

Abstract:

This study argues that successful shift to open business models relies on aligning value-creation and value-capture activities through interactive processes involving both provider and customer. Yet, little is known about how such processes unfold. To address these research gaps, this study examines how provider-customer relationships unfold by examining outcome-based contracts (OBC). Data from two successful and four failed OBC relationships within the manufacturing and process industry demarcates three phases in the shift to open business models - defining value potential, designing value delivery and delivering value improvements. The success or failure of each phase stems from the interplay and alignment between value creation and value capture activities specific to that phase, instead of focus on value creation in one phase and value capture in another. More precisely, the process model shows that the provider and the customer engaged in OBC relationship iterate and align between: 1) revising the value-creation logic and assessing the value-capture potential 2) formulating value-creation processes and constructing value-capture mechanisms and finally 3) enhancing value-creation activities and regulating value capture. This process model contributes to the literature streams on open business models and servitization by showing that both providers and customers needs to be actively involved in managing the dynamic interdependencies between value creation and value capturing activities in the shift to open business models and OBC.

Authors

David Sjödin

Luleå tekniska universitet; Industriell Ekonomi
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Vinit Parida

Luleå tekniska universitet; Industriell Ekonomi
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Marin Jovanovic

Copenhagen Business School
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Ivanka Visnjic

ESADE Business School
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