266 research outputs found

    Strategy Innovation as Business Model Reconfiguration

    Get PDF
    Strategy innovation gained popularity during the 1990s as a notion applying to firms that reinvented competition in an industry. Throughout the 2000s business model innovation drew much of the spotlight. The key traits of both these concepts (and how they relate to each other) are often implicit or unclear. Through a literature review and by applying the key elements to some innovative firms for illustrative purposes, this paper discusses the emergence of the notion of strategy (and business model) innovation aiming to bridge these concepts while identifying their basic constituents. Successful firms manage to envision and implement new combinations along different routes, but always exploiting the complementarities through self-reinforcing mechanisms. Finally, the paper argues that strategy innovation triggers the need to broaden the interpretative schemes in the field of strategy, as it resembles more an art than a science

    Vertical Differentiation and a Comparison of Online Advertising Models

    Get PDF
    Designing business models that take into consideration the role of advertising support is critical to the success of online services. In this paper, we address the challenges of these business model strategies and compare different ad revenue models. We use game theory to model vertical differentiation in both monopoly and duopoly settings, in which online service providers may offer an ad-free service, an ad-supported service, or a combination of these services. Offering both ad-free and ad-supported services is the optimal strategy for a monopolist because ad revenues compensate for the cannibalistic effect of vertical differentiation. In a duopoly equilibrium, exactly one firm offers both services when the ad revenue rate is sufficiently high. Furthermore, we find that a higher ad revenue rate may lead to lower service prices. Consistently across both monopoly and duopoly settings, such price reductions are more severe in the cost-per-thousand-impressions model than in the cost-per-click model. Our findings emphasize the role of advertising revenues in vertical differentiation and offer strategic guidance for monetizing online services. © 2012 M.E. Sharpe, Inc. All rights reserved.link_to_subscribed_fulltex
    • 

    corecore