Skip to main content
Log in

A viability theory for digital businesses: Exploring the evolutionary changes of revenue mechanisms to support managerial decisions

  • Published:
Information Systems Frontiers Aims and scope Submit manuscript

An Erratum to this article was published on 06 April 2016

This article has been updated

Abstract

The ongoing integration of Information Technology (IT) into various areas of our lives has led to a plethora of digital products and services. To survive competition in the long run, these offerings not only have to keep up with constant technological developments, but also have to adapt from a business point of view. Managers of these digital businesses have to especially focus on the design and evolution of their business’ revenue mechanisms to ensure the viability of their offerings. The related decisions are not trivial, as managers have to be aware of the relevant contextual factors and have to react quickly to changes in the environment. This paper proposes a viability theory for digital businesses described by 17 propositions that may guide managers in the design of revenue mechanisms and thereby support the evolution as well as the viability of a digital business.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Change history

  • 06 April 2016

    An erratum to this article has been published.

References

  • Alexander, C., Ishikawa, S., Silverstein, M., Jacobson, M., Fiksdahl-King, I., & Angel, S. (1977). A pattern language. New York: Oxford University Press.

    Google Scholar 

  • Amberg, M., & Schröder, M. (2007). E-business models and consumer expectations for digital audio distribution. Journal of Enterprise Information Management, 20(3), 291–303.

    Article  Google Scholar 

  • Amit, R., & Zott, C. (2001). Value creation in e-business. Strategic Management Journal, 22, 493–520.

    Article  Google Scholar 

  • Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41–49.

    Google Scholar 

  • Aubin, J.-P., Bayen, A. M., & Saint-Pierre, P. (2011). Viability theory: new directions. Heidelberg: Springer.

    Book  Google Scholar 

  • Bapna, R., Goes, P., & Gupta, A. (2009). Auctioning vertically integrated online services: computational approaches for real-time allocation. Journal of Management Information Systems, 25(3), 65–97.

    Article  Google Scholar 

  • Benghozi, P.-J., & Lyubareva, I. (2014). When organizations in the cultural industries seek new business models: a case study of the french online press. International Journal of Arts Management, 16(3), 6–19.

    Google Scholar 

  • Berman, S. J., Kesterson-Townes, L., Marshall, A., & Srivathsa, R. (2012). How cloud computing enables process and business model innovation. Strategy & Leadership, 40(4), 27–35.

    Article  Google Scholar 

  • Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: toward a next generation of insights. MIS Quarterly, 37(2), 471–482.

    Google Scholar 

  • Bhargava, H. K., & Sundaresan, S. (2004). Computing as utility: managing availability, commitment, and pricing through contingent bid auctions. Journal of Management Information Systems, 21(2), 201–227.

    Article  Google Scholar 

  • Bourreau, M., Gensollen, M., & Moreau, F. (2012). The impact of a radical innovation on business models: incremental adjustments or big bang? Industry and Innovation, 19(5), 415–435.

    Article  Google Scholar 

  • Brousseau, E., & Penard, T. (2007). The economics of digital business models: a framework for analyzing the economics of platforms. Review of Network Economics, 6(2), 81–114.

    Google Scholar 

  • Bustinza, O. F., Vendrell-Herrero, F., Parry, G., & Myrthianos, V. (2013). Music business models and piracy. Industrial Management and Data Systems, 113(1), 4–22.

    Article  Google Scholar 

  • Casadesus-Masanell, R., & Hervas-Drane, A. (2010). Competing against online sharing. Management Decision, 48(8), 1247–1260.

    Article  Google Scholar 

  • Casadesus-Masanell, R., & Zhu, F. (2013). Business model innovation and competitive imitation: the case of sponsor-based business models. Strategic Management Journal, 34(4), 464–482.

    Article  Google Scholar 

  • Casero-Ripollés, A., & Izquierdo-Castillo, J. (2013). Between decline and a new online business model: the case of the Spanish newspaper industry. Journal of Media Business Studies, 10(1), 63–78.

    Article  Google Scholar 

  • Chen, Y.-J., & Seshadri, S. (2007). Product development and pricing strategy for information goods under heterogeneous outside opportunities. Information Systems Research, 18(2), 150–172.

    Article  Google Scholar 

  • Chen, L.-D., Gillenson, M. L., & Sherrell, D. L. (2002). Enticing online consumers: an extended technology acceptance perspective. Information and Management, 39(8), 705–719.

    Article  Google Scholar 

  • Chesbrough, H. (2007). Business model innovation: it’s not just about technology anymore. Strategy & Leadership, 35(6), 12–17.

    Article  Google Scholar 

  • Chesbrough, H. (2010). Business model innovation: opportunities and barriers. Long Range Planning, 43(2), 354–363.

    Article  Google Scholar 

  • Clemons, E. K. (2009). Business models for monetizing internet applications and web sites: experience, theory, and predictions. Journal of Mangement Information Systems, 26(2), 15–41.

    Google Scholar 

  • Clemons, E. K., & Madhani, N. (2011). Regulation of digital businesses with natural monopolies or third-party payment business models: antitrust lessons from the analysis of Google. Journal of Management Information Systems, 27(3), 43–80.

    Article  Google Scholar 

  • Concha, D., Espadas, J., Romero, D., & Molina, A. (2010). The e-HUB evolution: from a custom software architecture to a software-as-a-service implementation. Computers In Industry, 61(2), 145–151.

    Article  Google Scholar 

  • Corbin, J. M., & Strauss, A. (1990). Grounded theory research: procedures, canons, and evaluative criteria. Qualitative Sociology, 13(1), 3–21.

    Article  Google Scholar 

  • Currie, W. L. (2004). Value creation from the application service provider e-business model: the experience of four firms. Journal of Enterprise Information Management, 17(2), 117–130.

    Article  Google Scholar 

  • Currie, W. L., Joyce, P., & Winch, G. (2007). Evaluating application service provisioning using system dynamics methodology. British Journal of Management, 18(2), 172–191.

    Article  Google Scholar 

  • Das, S., Du, A. Y., Gopal, R., & Ramesh, R. (2011). Risk management and optimal pricing in online storage grids. Information Systems Research, 22(4), 756–773.

    Article  Google Scholar 

  • De Lara, M., Martinet, V., & Doyen, L. (2014). Satisficing versus optimality: criteria for sustainability. Bulletin of Mathematical Biology, 77(2), 281–297.

    Article  Google Scholar 

  • Del Giudice, M., & Straub, D. (2011). IT and entrepreneurism: an on-again, off-again love affair or a marriage? MIS Quarterly, 35(4), 3–8.

    Google Scholar 

  • Demil, B., & Lecocq, X. (2010). Business model evolution: in search of dynamic consistency. Long Range Planning, 43(2), 227–246.

    Article  Google Scholar 

  • Deodhar, S. J., Saxena, K. B. C., Gupta, R. K., & Ruohonen, M. (2012). Strategies for software-based hybrid business models. Journal of Strategic Information Systems, 21, 274–294.

    Article  Google Scholar 

  • Desai, B., & Currie, W. (2005). Towards the ASP e-business model: a conceptual framework for mapping ASP specific value propositions. Journal of Internet Commerce, 4(1), 79–101.

    Article  Google Scholar 

  • Dewan, R. M., Freimer, M. L., & Zhang, J. (2003). Management and valuation of advertisement-supported web sites. Journal of Management Information Systems, 19(3), 87–98.

    Google Scholar 

  • Dosi, G., & Nelson, R. R. (1994). An introduction to evolutionary theories in economics. Journal of Evolutionary Economics, 4, 153–172.

    Article  Google Scholar 

  • Eurich, M., Giessmann, A., Mettler, T., & Stanoevska-Slabeva, K. (2011). Revenue streams of cloud-based platforms: Current state and future directions. Proc. of the 17th Americas Conference on Information Systems, Detroit, MI.

  • Fagerberg, J. (2003). Schumpeter and the revival of evolutionary economics: an appraisal of the literature. Journal of Evolutionary Economics, 13(2), 125–159.

    Article  Google Scholar 

  • Feng, Y., Guo, Z., & Chiang, W.-Y. K. (2009). Optimal digital content distribution strategy in the presence of the consumer-to-consumer channel. Journal of Management Information Systems, 25(4), 241–270.

    Article  Google Scholar 

  • Ford, C. M., & Gioia, D. A. (2000). Factors influencing creativity in the domain of managerial decision making. Journal of Management, 26(4), 705–732.

    Article  Google Scholar 

  • Gamma, E., Helm, R., Johnson, R., & Vlissides, J. (1995). Design patterns: elements of reusable object-oriented software. Reading: Addison-Wesley.

    Google Scholar 

  • Glaser, B. G., & Strauss, A. L. (1967). The discovery of grounded theory: strategies for qualitative research. Chicago, IL: Aldine Publishing.

    Google Scholar 

  • Golinelli, G. M., Pastore, A., Gatti, M., Massaroni, E., & Vagnani, G. (2011). The firm as a viable system: managing inter-organizational relationships. Sinergie Italian Journal of Management, 58(2), 65–98.

    Google Scholar 

  • Günzel, F., & Holm, A. B. (2013). One size does not fit all - understanding the front-end and back-end of business model innovation. International Journal of Innovation Management, 17(1), 13400021–134000234.

    Article  Google Scholar 

  • Hedman, J., & Kalling, T. (2003). The business model concept: theoretical underpinnings and empirical illustrations. European Journal of Information Systems, 12(1), 49–59.

    Article  Google Scholar 

  • Hinz, O., & Spann, M. (2008). The impact of information diffusion on bidding behavior in secret reserve price auctions. Information Systems Research, 19(3), 351–368.

    Article  Google Scholar 

  • Hinz, O., Hann, I.-H., & Spann, M. (2011). Price discrimination in e-commerce? An examination of dynamic pricing in name-your-own price markets. MIS Quarterly, 35(1), 81–98.

    Google Scholar 

  • Hu, X., Lin, Z., Whinston, A. B., & Zhang, H. (2004). Hope or hype: on the viability of escrow services as trusted third parties in online auction environments. Information Systems Research, 15(3), 236–249.

    Article  Google Scholar 

  • Johnson, M., Christensen, C., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12), 51–59.

    Google Scholar 

  • Kerrigan, F., & Graham, G. (2010). Interaction of regional news-media production and consumption through the social space. Journal of Marketing Management, 26(3–4), 302–320.

    Article  Google Scholar 

  • Khanagha, S., Volberda, H., & Oshri, I. (2014). Business model renewal and ambidexterity: structural alteration and strategy formation process during transition to a cloud business model. R&D Management, 44(3), 322–340.

    Article  Google Scholar 

  • Kim, M.-S., & Ahn, J.-H. (2007). Management of trust in the e-marketplace: the role of the buyer’s experience in building trust. Journal of Information Technology, 22, 119–132.

    Article  Google Scholar 

  • Kishore, R., & McLean, E. R. (2002). The next generation enterprise: a CIO perspective on the vision, its impacts, and implementation challenges. Information Systems Frontiers, 4(1), 121–138.

    Article  Google Scholar 

  • Koo, C., Song, J., Kim, Y. J., & Nam, K. (2007). Do e-business strategies matter? The antecedents and relationship with firm performance. Information Systems Frontiers, 9(2–3), 283–296.

    Article  Google Scholar 

  • Krawczyk, J. B., & Pharo, A. (2013). Viability theory: an applied mathematics tool for achieving dynamic systems’ sustainability. Mathematica Applicanda, 41(1), 97–126.

    Article  Google Scholar 

  • Krishnan, R., Smith, M. D., Tang, Z., & Telang, R. (2007). Digital business models for peer-to-peer networks: analysis and economic issue. Review of Network Economics, 6(2), 194–213.

    Article  Google Scholar 

  • Krueger, C. C., & Swatman, P. M. C. (2004). Developing e-business models in practice: the case of the regional online newspaper. International Journal of Information Technology and Management, 3(2–4), 157–172.

    Article  Google Scholar 

  • Laffey, D. (2010). Comparison websites: Evidence from the service sector. The Service Industries Journal, 30(12), 1939–1954.

    Article  Google Scholar 

  • Lehmann, H. (2001). Using grounded theory with technology cases: distilling critical theory from a multinational information systems development project. Journal of Global Information Technology Management, 4(1), 45–60.

    Article  Google Scholar 

  • Li, S., Da Xu, L., & Zhao, S. (2015). The internet of things: a survey. Information Systems Frontiers, 17(2), 243–259.

    Article  Google Scholar 

  • Lin, M., Li, S., & Whinston, A. B. (2011). Innovation and price competition in a two-sided market. Journal of Management Information Systems, 28(2), 171–202.

    Article  Google Scholar 

  • Lin, M., Ke, X., & Whinston, A. B. (2012). Vertical differentiation and a comparison of online advertising models. Journal of Management Information Systems, 29(1), 195–235.

    Article  Google Scholar 

  • Liu, D., Chen, J., & Whinston, A. B. (2010). Ex ante information and the design of keyword auctions. Information Systems Research, 21(1), 133–153.

    Article  Google Scholar 

  • March, J. G. (1994). Primer on decision making: how decisions happen. New York, NY: Simon and Schuster.

    Google Scholar 

  • Marshall, M. N. (1996). Sampling for qualitative research. Family Practice, 13(6), 522–525.

    Article  Google Scholar 

  • McGrath, R. G. (2010). Business models: a discovery driven approach. Long Range Planning, 43(2), 247–261.

    Article  Google Scholar 

  • Mettler, T., & Eurich, M. (2012). A design pattern-based approach for analyzing e-health business models. Health Policy and Technology, 1(2), 77–85.

    Article  Google Scholar 

  • Mitchell, J. R., Shepherd, D. A., & Sharfman, M. P. (2011). Erratic strategic decisions: when and why managers are inconsistent in strategic decision making. Strategic Management Journal, 32(7), 683–704.

    Article  Google Scholar 

  • Morris, M., Schindehutte, M., & Allen, J. (2005). The entrepreneur’s business model: toward a unified perspective. Journal of Business Research, 58(6), 726–735.

    Article  Google Scholar 

  • Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change. Cambridge, MA: Belknap.

    Google Scholar 

  • Oestreicher-Singer, G., & Zalmanson, L. (2013). Content or community? A digital business strategy for content providers in the social age. MIS Quarterly, 37(2), 591–616.

    Google Scholar 

  • Okoli, C. (2012). A critical realist guide to developing theory with systematic literature reviews. http://ssrn.com/abstract=2115818. Accessed 07.08.2015.

  • Osterwalder, A. (2004). The business model ontology: a proposition in a design science approach. Lausanne: University of Lausanne.

    Google Scholar 

  • Osterwalder, A., & Pigneur, Y. (2010). Business model generation. Hoboken, NJ: John Wiley & Sons.

    Google Scholar 

  • Osterwalder, A., Pigneur, Y., & Tucci, C. L. (2005). Clarifying business models: origins, present, and future of the concept. Communications of the Association for Information Systems, 16(1), 1–25.

    Google Scholar 

  • Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2015). Value proposition design: how to create products and services customers want. Hoboken, NJ: John Wiley & Sons.

    Google Scholar 

  • Panagou, D., & Kyriakopoulos, K. J. (2013). Viability control for a class of under actuated systems. Automatica, 49(1), 17–29.

    Article  Google Scholar 

  • Papadakis, V. M., Lioukas, S., & Chambers, D. (1998). Strategic decision-making processes: the role of management and context. Strategic Management Journal, 19(2), 115–147.

    Article  Google Scholar 

  • Papies, D., Eggers, F., & Wlömert, N. (2011). Music for free? How free ad-funded downloads affect consumer choice. Journal of the Academy of Marketing Science, 39(5), 777–794.

    Article  Google Scholar 

  • Porra, J. (2000). Electronic commerce internet strategies and business models - a survey. Information Systems Frontiers, 1(4), 389–399.

    Article  Google Scholar 

  • Roquilly, C. (2011). Control over virtual worlds by game companies: issues and recommendations. MIS Quarterly, 35(3), 653–671.

    Google Scholar 

  • Rowe, F. (2014). What literature review is not: diversity, boundaries and recommendations. European Journal of Information Systems, 23(3), 241–255.

    Article  Google Scholar 

  • Sanchez, R., & Heene, A. (1997). Managing for an uncertain future: a systems view of strategic organizational change. International Studies of Management and Organization, 27(2), 21–42.

    Article  Google Scholar 

  • Schwaninger, M. (2006). Theories of viability: a comparison. Systems Research and Behavioral Science, 23(3), 337–347.

    Article  Google Scholar 

  • Shaw, M. J. (1999). Electronic commerce: review of critical research issues. Information Systems Frontiers, 1(1), 95–106.

    Article  Google Scholar 

  • Shaw, M. J. (2000a). Electronic commerce: integration of web technologies with business models. Information Systems Frontiers, 1(4), 327–328.

    Article  Google Scholar 

  • Shaw, M. J. (2000b). From e-business to electronic commerce: integration of web technologies with business models. Information Systems Frontiers, 2(1), 5–6.

    Article  Google Scholar 

  • Solaimani, S., Bouwman, H., & Itälä, T. (2015). Networked enterprise business model alignment: a case study on smart living. Information Systems Frontiers, 17(4), 871–887.

    Article  Google Scholar 

  • Spieth, P., Schneckenberg, D., & Ricart, J. E. (2014). Business model innovation - state of the art and future challenges for the field. R&D Management, 44(3), 237–247.

    Article  Google Scholar 

  • Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2), 172–194.

    Article  Google Scholar 

  • Timmers, P. (1998). Business models for electronic markets. Electronic Markets, 8(2), 3–8.

    Article  Google Scholar 

  • Urquhart, C., Lehmann, H., & Myers, M. D. (2010). Putting the ‘theory’ back into grounded theory: guidelines for grounded theory studies in information systems. Information Systems Journal, 20(4), 357–381.

    Article  Google Scholar 

  • Vecchiato, R. (2012). Environmental uncertainty, foresight and strategic decision making: an integrated study. Technological Forecasting and Social Change, 79(3), 436–447.

    Article  Google Scholar 

  • Webster, J., & Watson, R. T. (2002). Analyzing the past to prepare for the future: writing a literature review. MIS Quarterly, 26(2), 13–23.

    Google Scholar 

  • Williams, K., Chatterjee, S., & Rossi, M. (2008). Design of emerging digital services: a taxonomy. European Journal of Information Systems, 17, 505–517.

    Article  Google Scholar 

  • Williamson, P. J. (2010). Cost innovation: preparing for a ‘value-for-money’ revolution. Long Range Planning, 43(2), 343–353.

    Article  Google Scholar 

  • Winter, S. G., & Szulanski, G. (2001). Replication as strategy. Organization Science, 12(6), 730–743.

    Article  Google Scholar 

  • Wolfswinkel, J. F., Furtmueller, E., & Wilderom, C. P. M. (2013). Using grounded theory as a method for rigorously reviewing literature. European Journal of Information Systems, 22(1), 45–55.

    Article  Google Scholar 

  • Wu, S.-Y., & Banker, R. D. (2010). Best pricing strategy for information services. Journal of the Association for Information Systems, 11(6), 339–366.

    Google Scholar 

  • Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future research. Journal of Management, 37(4), 1019–1042.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Tobias Mettler.

Additional information

An erratum to this article is available at https://doi.org/10.1007/s10796-016-9645-y.

Appendix 1

Appendix 1

Table 3 Overview of cases

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Sprenger, M., Mettler, T. & Winter, R. A viability theory for digital businesses: Exploring the evolutionary changes of revenue mechanisms to support managerial decisions. Inf Syst Front 19, 899–922 (2017). https://doi.org/10.1007/s10796-016-9638-x

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10796-016-9638-x

Keywords

Navigation