MITS5507 Research Report: Critique of Business Model Article

This report provides a critical analysis of the academic paper "Clarifying Business Models" by Osterwalder, Pigneur, and Tucci. The student's critique, prepared for the MITS5507 course, examines the article's intention to clarify the business model concept, its origins, and its evolution within Information Systems. The report summarizes the content, including the definition of a business model, its historical development, and its various components such as Distribution Channel, Partner Network, and Revenue Model. The student highlights the authors' emphasis on the lack of building upon each other's work within the business model literature. The analysis concludes with the relevance of the article's findings to understanding how companies use business models for visualizing, understanding, communicating and sharing their business logic, and its implications for future research, emphasizing the role of business models in the Information System domain.

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Critique of Article
Student Name:
Student ID:

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Critique of Article
The concept of business models is increasingly gaining traction in various disciplines.
It is widely used by managers in different types of companies [1]. The purpose of this report
is to review a particular academic paper that relates to Business Model. The identified article
is titled Clarifying Business Models authored by Alexander Osterwalder and colleagues. The
selected article will be reviewed by explaining its intention and content, commenting on the
issues that its authors have emphasized, and discussing what the authors concluded and their
relevance to what I am studying in this semester.
Intention of the article
According to the authors of the identified article, the topic of business models has
been covered rather superficially by the extant literature. Also, previous scholars have mainly
discussed business models without having an understanding of the origins of this topic, its
potential, as well as its role [2]. For this reason, the intention of their article is to elucidate the
starting point of the business model concept, its current as well as its future, especially within
the domain of Information Systems (IS) [2]. The authors discuss the place of the concept
within companies as the blueprint of how an organization carries out its business.
Content of the article
The content of the article focuses on the topic of business models. Osterwalder,
Pigneur and Tucci [2] begin by describing business models as a concept and defining the
term business model which is made up of two different words: business and model. A
business refers to the activity that involves industrial, commercial, and financial facets, and it
entails providing services and goods. On the other hand, a model is understood as a
simplified representation and description of a process or entity that is intricate. The term

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business model can therefore be defined as a theoretical tool that contains concepts, objects,
as well as their connections with the aim of expressing a company’s business logic [2]. It is
worth mentioning that the definition encompasses the various reflections on business models
in a wide range of fields including management, computer science, Information Systems, and
even electronic business or e-business.
After providing a definition of business models, the authors proceed by describing the
origins of the concept. The concept first appeared in the year 1957 before rising to eminence
in the late 1990s. The notion of business models became growingly important in the ‘90s
largely because of the increasing use of Internet by companies as well as the surge of the
NASDAQ stock market for firms that relied heavily on technology [2]. Starting from the
1990s, the phrase business model was mainly utilized in connection with the Internet.
Over the years, the concept of business model has undergone evolution through five
different phases. Phase 1 was when the concept started becoming prominent. It was during
this stage that different writers provided definitions and classifications of the concept. In
Phase 2, writers began completing the definitions by suggesting the components that belong
into a business model [2]. In Phase 3, exhaustive descriptions of the various constituents of a
business model were provided. In Phase 4, scholars began modelling the constituents
theoretically [2]. Phase 5 is still ongoing in the present day as the application of reference
models in both Information System applications and management is taking place.
Since business model is a rather new concept, its place in the firm and the role it plays
in business organizations is still not very clear. A business model is distinguished from a
business process model in that while business process model focuses on how a business case
is executed in processes, a business model is mainly about a view of the company’s logic for
creating value and commercializing it [2]. Business model has a number of building blocks,

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including Distribution Channel, Partner Network, Revenue Model, Core Competency, Value
Proposition, Relationship, and Cost Structure among others
The main use of the business model concept is largely in creating tools and concepts
that aid managers to capture, comprehend, communicate, create, examine, and modify their
company’s business logic. Managers can also use it to envisage as well as share the business
logic of their firms [2]. In the future, the authors believe that business models may help in
fostering innovation. Businesspersons and firms in electronic business can patent electronic
business process and whole facets of their business models [2]. As such, the authors stated
that business modelling can possibly play a vital role in this legal domain [2]. The concept is
crucial in the Information System domain considering that it could contribute to requirements
engineering. The authors discuss eight propositions that should be watched and ultimately
tested in the future.
Issues highlighted by authors
The major issue that the authors have emphasized in their article is that although there
are various scholars and writers in business model literature, they hardly ever build on each
other’s work. As a result, business model in general progresses much slower than it actually
could and it tends to stay at a rather superficial level [2]. This issue can be effectively
addressed if future authors on the subject can build on the work of prior authors.
Conclusions of the article and its relevance
The main conclusion of the authors is that because the concept of business model is
relatively new and requires explanation, they have attempted to develop the groundwork to
elucidate understandings within the domain of business model. To do so, they have proposed
a business model terminology utilized for describing business models. They have also

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described the uses of the concept in the firm, as well as its role in companies. The authors
have also discussed the importance of discussing business model in connection to IS, and
outlined eight propositions that should be observed and tested in the future. These
conclusions are pertinent to what I am studying this semester in that they reveal how
companies in general can use the concept of business model and the role that this concept
plays in firms. For instance, managers can use business models for the purpose of visualizing,
understanding, communicating and share the business logic of their organizations.
Conclusion
In the selected article, the intention of the authors is to elucidate the basis of the
business model concept, the present state of this concept, and its future, especially within the
domain of Information Systems. The notion of business model originally appeared in the
1950s but it was not until the late 1990s that it became growingly important. It has evolved
through five different phases. Managers can use business models in capturing, understanding,
communicating, designing, analyzing, and changing their organization’s business logic.

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References
[1] C. Baden Fuller and V. Mangematin, V. Business Models and Modelling. Bingley, United
Kingdom: Emerald Group Publishing Limited. 2015.
[2] A. Osterwalder, Y. Pigneur and C. Tucci. Clarifying Business Models: Origins, Present,
and Future of the Concept. Communications of AIS, 15(7): 1-40. 2005.
[3] J. Frishammar and V. Parida. Circular Business Model Transformation: A Roadmap for
Incumbent Firms. California Management Review, 61(2), 5–29. 2019.