Business Models: A Unit of Analysis for Company Performance

Abstract

Business models have been popularised in recent practitioner literature as a tool for summarising and representing how a company generates value. But academic consensus remains absent with a multitude of different definitions and typologies generally structured for application within a single focal business.

There remains an opportunity to use the business model beyond intra application and act as a unit of analysis for inter-enterprise comparison. Weill et al (2006) have created a typology titled the MIT Business Model Archetypes. This research applies the MIT typology to New Zealand’s publically listed companies to generate a business model landscape. Several financial metrics are used to compare the performance and patterns of different business models.

Interesting patterns emerge such as 33% annual compound growth for gross shareholder returns exhibited by one archetype, and a total of six out of nine that exhibit higher returns than the S&P/NZX50 index.

The two research questions proposed are; can a business model be used as a unit of analysis? And, do some business models perform differently than others? The results of this analysis evidence a positive response to both questions.