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SMEs and new ventures need business model sophistication

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  • Kesting, Peter
  • Günzel-Jensen, Franziska

Abstract

Business models are a current hot topic, and their design has become a key to performance. In fact, business model design is often associated with innovation. Many firms, though, fail to realize the full potential of their current business model simply because they are not aware of it. Nevertheless, Google succeeded in realizing its business model's full potential by offering its main service, Internet search, completely for free while capturing value from secondary opportunities such as Google AdWords. Especially for new ventures and SMEs, capturing value from secondary opportunities or business model sophistication is of critical importance toward increasing the pool of resources at hand and giving momentum to the firm's development. But what are these opportunities, and where can they be found? Based on various examples including Google, Ryanair, the Super Girl Contest on Hunan TV, and Spreadshirt, this article develops a framework that introduces five business model sophistication strategies: (1) uncover additional functions of your product, (2) identify strategic benefits for third parties, (3) take advantage of economies of scope, (4) utilize cross-selling opportunities, and (5) involve users and the crowd. All five strategies place a strong emphasis on stakeholder commitment.

Suggested Citation

  • Kesting, Peter & Günzel-Jensen, Franziska, 2015. "SMEs and new ventures need business model sophistication," Business Horizons, Elsevier, vol. 58(3), pages 285-293.
    • Handle: RePEc:eee:bushor:v:58:y:2015:i:3:p:285-293
    DOI: 10.1016/j.bushor.2015.01.002
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    References listed on IDEAS

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    Cited by:

    1. Augustyniak Dobrochna, 2017. "Sources of Value Creation in Born Global Companies," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 53(2), pages 7-22, June.
    2. Vinicius Minatogawa & Matheus Franco & Orlando Durán & Ruy Quadros & Maria Holgado & Antonio Batocchio, 2020. "Carving out New Business Models in a Small Company through Contextual Ambidexterity: The Case of a Sustainable Company," Sustainability, MDPI, vol. 12(6), pages 1-34, March.
    3. Marko Peric & Jelena Durkin & Vanja Vitezic, 2017. "The Constructs of a Business Model Redefined: A Half-Century Journey," SAGE Open, , vol. 7(3), pages 21582440177, September.
    4. Wenchang Fang & Tzong-Hann Wu & Tai-Wei Chang & Cheng-Ze Hung, 2021. "What Could Entrepreneurial Vision Do for Sustainable Development? Explore the Cross-Level Impact of Organizational Members’ Green Shared Vision on Green Creativity," Sustainability, MDPI, vol. 13(10), pages 1-15, May.
    5. Broekhuizen, Thijs L.J. & Bakker, Tom & Postma, Theo J.B.M., 2018. "Implementing new business models: What challenges lie ahead?," Business Horizons, Elsevier, vol. 61(4), pages 555-566.
    6. Laudien, Sven M. & Reuter, Ute & Sendra Garcia, Francisco Javier & Botella-Carrubi, Dolores, 2024. "Digital advancement and its effect on business model design: Qualitative-empirical insights," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    7. Franziska Günzel-Jensen & Anna B. Holm, 2015. "Freemium Business Models as the Foundation for Growing an E-business Venture: A Multiple Case Study of Industry Leaders," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 11(1), pages 77-101.

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