Value Capture in Networked Business Modelling for Social Sustainability

Ariane von Raesfeld ^1*, Yasin Sahhar¹, Tamara Oukes¹

¹University of Twente | Faculty of Behavioural, Management and Social Science | Department of Entrepreneurship and Technology Management

*[email protected]

^{+This research has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No. 101017304}

Extended abstract

Introduction

To deal with the systemic nature of sustainability transitions, there is growing attention to networked business modelling, which refers to value creation and capture between organizations crossing the boundaries of a single firm (Bankvall et al., 2017). As business modelling theory and practice still have a strong single-firm focus, there is a need further to develop concepts and practices of networked business modelling. Academic contributions on networked business modelling for sustainable transitions contribute with descriptive tools to support sustainable transition management (e.g. Derks et al., 2022; Planko & Cramer, 2021). These studies combine networked business models with a socio-technical systems perspective and transition management and stress that sustainable transformation can also arise from business activities next to policy interventions. This study adds to networked business modelling for transformation of social sustainability, by using the work of Feher’s et al. (2018) on systemic logics for platform business models inspired by principles of the service-dominant (S-D) logic. As most networked business model studies focus on value creation rather than value capture (e.g., Geissdoerfer et al., 2016; Rohrbeck et al., 2013; Bullinger et al. 2017), we aim to investigate how systemic value capture is brought about by actors leveraging complementarity, reducing transaction costs, and leveraging network externalities.

This study draws on a case study of a business model development for a regional e-health platform. The research relates to social sustainability, in particular accessible healthcare services, which have become increasingly important due to, among others, the increase of elderly citizens. Multisided e-health platforms can enhance the accessibility of and coordination across care, cure, and prevention, fostering digital transformation and innovation at a systemic level.

Theory on Networked Business Modelling

Systemic business model conceptualizations are still rare despite the need for more networked business modelling approaches. Industrial Marketing and Purchasing (IMP) approach (Snehota & Hakansson, 1995) and S-D logic (Vargo and Lusch, 2016) are two streams of theory that are frequently used to conceptualize networked business modelling. To advance the development of a network perspective of business modelling, we will address an S-D logic informed approach to business modelling as presented by Wieland et al. (2017) and Fehrer et al. (2018). Based on a multiple actor-centric and institutional perspective, Wieland et al. (2017, p. 932) define business models as: “dynamic assemblages of institutions that, through the performative practices (i.e., actions, constructions) of actors, reciprocally link and influence technological and market innovation and contribute to the viability of these actors and the viability of the service ecosystems of which they are a part’.” Fehrer et al. (2018) continued with a S-D logic business model approach by linking it to platform business models. This paper continues on the systemic logic for value capture in platforms (Fehrer, et al 2018), based on complementarity theory (Milgrom & Roberts, 1995), transaction cost theory (Coase, 1937; Williamson 1983), and network externalities (Katz & Shapiro 1985). Three mechanisms for value capture among multiple actors in platform business models are conceptualized: 1) complementarities, which can be enhanced between services, technologies, and activities; 2) transaction costs, which might be reduced for multiple actors in the ecosystem; and 3) network externalities, which can be leveraged among multiple actors.

Method

Research context

This study compromises a case study of a complex regional health network in The Netherlands, allowing us to tap into how value capture manifests at a systemic level. The research is funded by an EU H2020 project aiming to enhance economic growth and quality of life in rural areas by creating digital marketplaces.

Data collection

To elicit different value specifications of multiple users and to describe the ecosystem of actors, activities and resources, various ethnographic data were gathered over 17 months from August 2021 till April 2023. First-order data consisted of fifty interviews with various health care, cure, and prevention service providers. Secondary data were generated through participative engagement in ten workshops and observations, complemented by archival data that included industrial white papers, practice-oriented research reports, and relevant interviews in trade magazines to complete our primary database. The different data sources allowed triangulation to increase internal validity.

After 14 months, several sessions took place to develop a business model for the multisided e-health platform, to guide the process a Platform Canvas (Alweins et al., 2021) and the PDT Platform Design Toolkit - Boundaryless are used.

Data analysis

In accordance with abductive principles (Dubois & Gadde, 2002), data were analysed to reveal the ecosystem. A matrix and resulting network picture of the actor bonds, activity links and resource ties of 38 actors in the regional health eco-system is constructed. In several steps the platform business model is developed in workshops, we analysed how this process is taking place from creation to how the business model is embedded in the practice of the different actors. Value capture is analysed based on complementarities between services, technologies and activities, a cost benefit analysis of some services has been conducted (Kijl & Nieuwenhuis, 2011), network externalities were derived.

Initial Findings

The findings illustrate a network of the actors in the regional health ecosystem, including their interactions and resource exchanged and integrated. This network consists of 38 actors, depicting health care, cure and prevention organizations, citizens and institutional players. The development of the platform business model over time is presented in several visualizations of platform canvasses. Complementarities and network externalities are investigated based on several network properties, such as differentiation of the services, asymmetry between supply and demand, and flexibility of location. Transaction costs are investigated based on transaction frequencies and transaction cost and values exchanged.

Contributions

We add to the networked business model studies that primarily focus on value creation a study inspired by Fehrer et al. (2018) that focusses on value capture. In this way we empirically elaborate on a platform business development process from a Service dominant Logic point of view. As the Service Dominant Logic highlights the importance of institutions, ecosystems, bounded rationality, and ongoing relationships among a broad set of actors, these premises provide abundant opportunities for conceptualization of networked business models for sustainable transitions. Our study focusses on networked business modelling of an e-health platform that aims to improve care, cure, and prevention and in that way supports development of social sustainability goals.

Keywords

Systemic business modelling, Social sustainable transitions, Mechanisms of value capture

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