Do some business models perform better than others?

Do some business models perform better than others?

The article in question is a study of four business models (Malone et al. 1). However, the authors seek to find which of the four models is better than the others based on asset rights. The authors samples at least 10,970 companies that have traded publicly between 1998 and 2002 across the United States (Malone et al. 1).  The sampling of the companies is determined by three financial performance factors that include market value, profitability and operating efficiency. In addition, the study evaluates six measures of financial performance as subjected to business models. From the article, the most common business models are manufacturers, distributors of physical assets, brokers of financial assets and physical distributors (Malone et al. 1). The authors conduct a theoretical background research on the concept of business models. Conventional scholars categorize business models based on profit and non-profit ventures (Stern and Hicks 12). Other models are based on e-business taxonomies. In this context, major elements of e-business models include product, services, information flow, business stakeholders and source of revenue. There are business models that are defined on the basis of suppliers, distributors and customers. Another definition of the business modelsis founded on two fundamental aspects. In the first dimension, business models are categorized as creator, distributor, landlord and broker (Malone et al. 4). In the second dimension, business models are categorized as physical, financial, intangible and human (Malone et al. 4). Classification of business models follows a predetermined typology criteria (Malone et al. 5). In fact, the typology criteria determines which business model is better than the other. The typology criteria entails the aspects of intuitively sensible, collectively exhaustive and mutually exclusive, construct validity and conceptually elegant.

As indicated earlier, a business model is also determined by the types of rights being sold. In this case, the authors review the type of rights in question; the right of ownership, the right to use an asset and the right to be matched for sale. From this perspective, four basic asset rights models are derived. The asset rights models involves a creator, distributor, landlord and broker. The authors provide a distinctive definition of the four basic asset rights models, as well as, compares the same.

On the other hand, business models can be determined by evaluating the type of assets involved. In this context, four assets in this category are classified as physical, financial, intangible and human. Again, the article gives an in-depth description of the assets. Finally, the study focuses on the description of 16 types of business models. In each business model, the authors describes the functions of each and compares the same to others from a professional perspective (Malone et al. 16).

As indicated earlier, the study of business models samples companies across the United States with an intention of evaluating their financial performances (Malone et al. 16). In this study, the researchers use the recorded revenue figures as a guide. The authors reveal that there is no standard measures for financial performance. Therefore, many of the companies use a wide range of measures to determine the financial performance and position of the firm. For this reason, market value, profitability and operating efficiency are deemed critical in assessing financial performance.

The research findings imply that the distribution of business models between 1998 and 2002 across the sample companies depended on sales. In this context, creators emerge as the most popular business model with a total revenue of 49.6% (Malone et al. 17). The landlord is the second best business model under the sales factor. However, distributors and brokers are another example of best performingmodels under the sales popularity factor. The bestperforming business model based on asset type is the physical assets. In addition, financial, human and intangible assets are basis for business models.Another report suggest that the most popular models ranges from the manufacturer to the financial landlord.In this context, both the wholesales and contractors precede the financial landlord. The study findings suggest that not all models are superior to others when all performance measures are critically considered. In any case, the authors argues that determining the best performing business model is a tricky issue. Nonetheless, the authors alleges that a baseline specification is critical for checking robustness of the research interpretations and alternatives (Malone et al. 23).

As a matter of future research, the authors recommend for additional explanations on business models (Malone et al. 24). In fact, the authors suggest an in-depth analysis of how competition affects business models. A major area of interest is the element of interdependencies in some of the superior business models. Understanding how performance is vital for superior models is critical to initiating improvement of operations in an efficient manner.

In conclusion, it is evident that performance among business models depends on the type of measurement being applied. The study provides business managers with critical information on how organizational structures can be modelled for effective functioning (Malone et al. 25). Besides investing wisely, business managers can establish customized and sustainable business models that withstands environmental challenges (Stern and Hicks 23).

 

Works Cited

Malone, Thomas, et al. “Do some business models perform better than others?.”MIT Working Paper(2006): 4615-06. Web. 28 November 2014. Print.

Stern, J. Alissa and Tim Hicks. The process of business/environmental collaborations: Partnering for sustainability. Boston: Greenwood Publishing Group, 2000. Print.