Proposal of a Business Model Based on the Triple Business Performance-E

Proposal of a Business Model Based on the Triple Business Performance-E

Carlos Ricardo Rey-Campero (Universidad Externado de Colombia, Colombia)
DOI: 10.4018/978-1-5225-8939-6.ch007

Abstract

This chapter aims to analyze the relationship between business models and dynamic capabilities in firms of the systems development sector of Bogota (Colombia). Based on the theoretical framework of business models, the author applies an analysis based on principal categorical components and categorical regression. Results show a correlation between the elements of the business model (strategy and dynamic capabilities) and business performance. In conclusion, the author proposes a business model endowed with efficiency, effectiveness, and efficacy for newly created micro, small, and medium-sized family firms that highly correlates with business performance.
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Introduction

This chapter emerges from the necessity to answer the following questions: how to maximize business results to compete better? And how to manage these dynamic environments? (Porter, 1991; Rumelt, Schendel & Teece, 1994; Becerra, 2009). Initially, this analysis was addressed to look over the position of the firm in the market and the external factors affecting it, where business behavior and its performance are both established in the market industry. Based on this fact, Porter (1980, 1985) develops a strategic model grounded on the sectorial analysis of the Porterian’s five forces and the value chain. However, inefficient business performance invites stakeholders to analyze internal factors (Schmalensee, 1985; Rumelt, 1991), where business advantages are based on the resources and capabilities of the firm (Grant, 1991).

According to Barney (2007), the words “resources” and “capabilities” have been used as interchangeable words and sometimes are parallel. According to Grant (1991), “the resources and capabilities of a firm are the central considerations in formulating its strategy: they are the primary constants upon which a firm can establish its identity and frame its strategy, and they are the primary source of the firm’s profitability” (p. 133). As a result, the resources of the firm have an idiosyncratic meaning and are heterogeneous, and these resources are not sometimes available in the market, what is a problem in the strategic positioning model (Brunet, 2011; Dávila, 2009; Teece, 2009). Despite this fact, the competency model does not replace, but complements, the strategic positioning model (Barney, 1991; Mahoney & Padian, 1992; Peteraf & Barney, 2003).

The quality of the resources and the coordination coming from the firm leads to maintaining the firm’s competitive advantage in the long term (Brunet, 2011). The approach to resources and capabilities is considered the most influential theoretical framework to understand the achievement of competitive advantages, and how these advantages can be timeless (Eisenhardt & Martin, 2000).

However, in most countries, their business context is now defined for having an ambiguous, unpredictable and non-linear fluctuations on their industrial structures, with blurred limits and changing business models and players (Eisenhardt & Martin, 2000) affecting to the loss of value of resources as a source of competitive advantage (Priem & Butler, 2001a,b). So, it is necessary to perform a constant change by using the dynamic capabilities of the firm by renewing knowledge for a more competitive one (Eisenhardt & Martin, 2000).

Dynamic capabilities arise in response to the difficulties that companies have in dynamic market environments (Eisenhardt & Martin, 2000), and consist of their ability to integrate, build and reconfigure their internal and external competencies to adapt to fast-track contexts change. Therefore, they reflect the organizational ability to achieve new and innovative forms of competitive advantage (Teece, Pisano, & Shuen, 1997; Teece, 2009). Moreover, it is important to have in mind that the management and performance of micro, small, and medium-sized enterprises (MSMEs) are influenced by the external environment where they operate (Zhara, 1996), and their ability to respond to these changes as part of their survival (Camisón, 1997).

Key Terms in this Chapter

Categorical Regression: A type of regression that quantifies categorical data by assigning numerical values to the categories, resulting in an optimal mathematical adjustment for the transformed variables.

Tacit Knowledge: Non-codified experiences, ideas, and skills that people have, so they are not easily expressed.

Newly Created Firm: It is a type of company between three and seven years of age, having on average five years of being formally established, which has the potential to achieve sustainable business growth.

ISIC (International Standard Industrial Classification): It is the United Nations industry classification system used as an international reference classification of productive activities.

Cronbach's Alpha: Originally used in the mid-1940s, it is a coefficient that measures the reliability of a scale of measurement.

7-K: They are formed by combining the know-how, know-when, know-why, know-where, know-who, know-whom, and know-whose of the firm to determine business strategies and the settlement of goals.

Dynamic Capabilities: They are the type of capabilities formed by the combination of detecting and configuring new business opportunities and taking advantage, managing, and empowering new opportunities.

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