A Framework for Modeling Value in Service-Oriented Business Models – Conceptualizations and Graphical Representation

  • Arash Golnam
  • Paavo Ritala
  • Vijay Viswanathan
  • Valerian Hanser
  • Alain Wegmann
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 142)


Many firms redesign their business models to be service-oriented in light of the increasingly central role that services play in their businesses and strategies. Two fundamental questions should be addressed in designing service-oriented business models: “how is value created for and with the customers by the service provider?” and, “how is the value captured by the service provider?” The first question deals with “value creation” while the second addresses “value capture” – both of which are important facets of any business model. Thus, we suggest that a service-oriented business model that addresses these two questions can sustain the viability and competitiveness of the firm as a service provider. The extant research mainly focuses on the service design from the value creation perspective. Thereby, service providers’ value capture and its trade off with value created for and with service customers have been inadequately addressed. In this paper, adopting a holistic perspective, we introduce a modeling framework that can assist in understanding, analysis and design of value (i.e. value creation and capture and their interplay) in service-oriented business models. Our modeling framework consists of a set of conceptualizations and a graphical representation. The conceptualizations are derived from insights of the extant theories, constructs and frameworks on value creation and capture in business and service-oriented business models. We illustrate the applicability of our framework by conducting a descriptive case study of the value creation and capture in Amazon’s business model in the period between 1997 and 2001.

Keywords modeling service-oriented business models value capture value creation 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Teece, D.J.: Dynamic capabilities and strategic management: organizing for innovation and growth. Oxford University Press, USA (2009)Google Scholar
  2. 2.
    Osterwalder, A., Pigneur, Y.: Business model generation: A handbook for visionaries, game changers, and challengers. Wiley (2010)Google Scholar
  3. 3.
    Vargo, S.L., Lusch, R.F.: Evolving to a new dominant logic for marketing. Journal of Marketing, 1–17 (2004)Google Scholar
  4. 4.
    Vargo, S.L., Lusch, R.F.: Service-dominant logic: continuing the evolution. Journal of the Academy of Marketing Science 36(1), 1–10 (2008)CrossRefGoogle Scholar
  5. 5.
    Gronroos, C., Ravald, A.: Service as business logic: implications for value creation and marketing. Journal of Service Management 22(1), 5–22 (2011)CrossRefGoogle Scholar
  6. 6.
    Bowman, C., Ambrosini, V.: Value creation versus value capture: towards a coherent definition of value in strategy. British Journal of Management 11(1), 1–15 (2000)CrossRefGoogle Scholar
  7. 7.
    Pitelis, C.N.: The co-evolution of organizational value capture, value creation and sustainable advantage. Organization Studies 30(10), 1115 (2009)CrossRefGoogle Scholar
  8. 8.
    Ritala, P., Hurmelinna-Laukkanen, P.: What’s in it for me? Creating and appropriating value in innovation-related coopetition. Technovation 29(12), 819 (2009)CrossRefGoogle Scholar
  9. 9.
    Gordijn, J., Akkermans, J.: Value-based requirements engineering: Exploring innovative e-commerce ideas. Requirements Engineering 8(2), 114–134 (2003)CrossRefGoogle Scholar
  10. 10.
    Weigand, H., et al.: Value-based service modeling and design: Toward a unified view of services. Springer (2009)Google Scholar
  11. 11.
    Weigand, H.: Value Encounters – Modeling and Analyzing Co-creation of Value. In: Godart, C., Gronau, N., Sharma, S., Canals, G. (eds.) I3E 2009. IFIP AICT, vol. 305, pp. 51–64. Springer, Heidelberg (2009)CrossRefGoogle Scholar
  12. 12.
    Pijpers, V., Gordijn, J.: e 3 forces: Understanding Strategies of Networked e 3 value Constellations by Analyzing Environmental Forces. In: Advanced Information Systems Engineering, pp. 188–202 (2007),
  13. 13.
    Yu, E.S.K.: Towards modelling and reasoning support for early-phase requirements engineering. In: The Third IEEE International Symposium on Requirements Engineering. IEEE (1997)Google Scholar
  14. 14.
    Pidd, M.: Tools for thinking: modelling in management science. John Wiley & Sons Ltd., Chichester (2003)Google Scholar
  15. 15.
    Jackson, M.C.: Systems approaches to management. Kluwer Academic/Plenum Publishers, New York, New York (2000)Google Scholar
  16. 16.
    Mingers, J., Rosenhead, J.: Problem structuring methods in action. European Journal of Operational Research 152(3), 530–554 (2004)CrossRefGoogle Scholar
  17. 17.
    Larkin, J.H., Simon, H.A.: Why a Diagram is (Sometimes) Worth Ten Thousand Words**. Cognitive Science 11(1), 65–100 (1987)CrossRefGoogle Scholar
  18. 18.
    Tufte, E.R.: Envisioning information, Cheshire. Graphics Press, CT (1990)Google Scholar
  19. 19.
    Hevner, A.R., et al.: Design science in information systems research. MIS Quarterly 28(1), 75–105 (2004)Google Scholar
  20. 20.
    Brandenburger, A.M., Stuart Jr., H.W.: Value based Business Strategy. Journal of Economics & Management Strategy 5(1), 5–24 (1996)CrossRefGoogle Scholar
  21. 21.
    Kotler, P.: Marketing management, millennium ed. Prentice-Hall International, Upper Saddle River (2000)Google Scholar
  22. 22.
    Wegmann, A.: On the Systemic Enterprise Architecture Methodology (SEAM). In: Proceedings of International Conference on Enterprise Information Systems. Citeseer, Angers (2003)Google Scholar
  23. 23.
    Kim, W.C., Mauborgne, R.: Blue ocean strategy. If you read nothing else on strategy, read thesebest-selling articles. p. 71 (2004)Google Scholar
  24. 24.
    Clausing, D., Hauser, J.R.: The house of quality. Harvard Business Review 66(3), 63–73 (1988)Google Scholar
  25. 25.
    Yin, R.K.: Case study research: Design and methods, vol. 5 . Sage Publications, Inc. (2009)Google Scholar
  26. 26.
    Stake, R.E.: The art of case study research. Sage Publications, Inc. (1995)Google Scholar
  27. 27. Investor Relations: Annual Reports and Proxies (2012), (cited September 2012)
  28. 28.
    Amazon Media Room: News Releases (2012), (cited September 2012 )
  29. 29.
    Afuah, A., Tucci, C.L.: Internet business models and strategies: Text and cases. McGraw-Hill Higher Education (2002)Google Scholar
  30. 30.
    Spector, R.: Amazon. com: Get big fast. Harper Paperbacks (2002)Google Scholar
  31. 31.
    Kalpanik, S.: Seattle Adventures - Seattle Memoirs Inspired By My Stint At Createspace (2011)Google Scholar
  32. 32.
    Kalpanik, S., Zheng, C.: Inside the Giant Machine - An Story, 2nd edn. Center of Artificial Imagination, Inc. (2011)Google Scholar
  33. 33.
    Applegate, L.: Amazon. com: 1994-2000. Harvard Business School, Case#: 9-801-194 (2002)Google Scholar
  34. 34.
    Applegate, L.M.: Amazon. com: The Brink of Bankruptcy. Harvard Business School Case, pp. 9–809 (2008)Google Scholar
  35. 35.
    Heck, E., Vervest, P.: Smart business networks: how the network wins. Communications of the ACM 50(6), 28–37 (2007)CrossRefGoogle Scholar
  36. 36.
    Ambrosini, V., Bowman, C., Collier, N.: Using teaching case studies for management research. Strategic Organization 8(3), 206 (2010)CrossRefGoogle Scholar
  37. 37.
    Chesbrough, H., Spohrer, J.: A research manifesto for services science. Communications of the ACM 49(7), 35–40 (2006)CrossRefGoogle Scholar
  38. 38.
    Golnam, A., et al.: Aligning Value and Implementation in Service Design - A Systemic Approach. International Journal of Service Science, Management, Engineering, and Technology (IJSSMET) 3(1), 19–36 (2011)CrossRefGoogle Scholar
  39. 39.
    Golnam, A., et al.: Modeling Value Creation and Capture in Service Systems. In: 3rd International Conference on Exploring Services Sciences, Geneva, Switzerland. Springer (2012)Google Scholar
  40. 40.
    Day, G.S.: Market driven strategy: processes for creating value. Journal of Marketing 55, 116–122 (1990)Google Scholar
  41. 41.
    Huber, F., Herrmann, A., Morgan, R.E.: Gaining competitive advantage through customer value oriented management. Journal of Consumer Marketing 18(1), 41–53 (2001)CrossRefGoogle Scholar
  42. 42.
    Gronroos, C.: Service management and marketing. Wiley New York, New York (2001)Google Scholar
  43. 43.
    Groth, J.C.: The exclusive value principle - A concept for marketing. Journal of Product & Brand Management 3(3), 08–018 (1994)Google Scholar
  44. 44.
    Lepak, D.P., Smith, K.G., Taylor, M.S.: Introduction to special topic forum: Value creation and value capture: a multilevel perspective. The Academy of Management Review ARCHIVE 32(1), 180–194 (2007)CrossRefGoogle Scholar
  45. 45.
    Eggert, A., Ulaga, W.: Customer perceived value: a substitute for satisfaction in business markets? Journal of Business & Industrial Marketing 17(2/3), 107–118 (2002)CrossRefGoogle Scholar
  46. 46.
    Allee, V.: Value network analysis and value conversion of tangible and intangible assets. Journal of Intellectual Capital 9(1), 5–24 (2008)CrossRefGoogle Scholar
  47. 47.
    Nelson, R.R., Winter, S.G.: An evolutionary theory of economic change. Belknap press (1982)Google Scholar
  48. 48.
    Masten, S.E., Meehan, J.W., Snyder, E.A.: The costs of organization. Journal of Law, Economics, and Organization 7(1), 1 (1991)Google Scholar
  49. 49.
    Blomqvist, K., Kylaheiko, K., Virolainen, V.M.: Filling a gap in traditional transaction cost economics:: Towards transaction benefits-based analysis. International Journal of Production Economics 79(1), 1–14 (2002)CrossRefGoogle Scholar
  50. 50.
    Ryall, M.D., MacDonald, G.: How do value creation and competition determine whether a firm appropriates value? Management Science 50(10), 1319–1333 (2004)CrossRefGoogle Scholar
  51. 51.
    Barney, J.: Firm resources and sustained competitive advantage. Journal of Management 17(1), 99 (1991)CrossRefGoogle Scholar
  52. 52.
    Porter, M.E.: Competitive strategy: techniques for analyzing industries and competitors/Michael E. Porter. Free Press, Maxwell Macmillan, Toronto, Canada (1980)Google Scholar
  53. 53.
    Carson, R.T., et al.: Contingent valuation and revealed preference methodologies: comparing the estimates for quasi-public goods. Land Economics, 80–99 (1996)Google Scholar
  54. 54.
    Brandt, R.L.: One Click: Jeff Bezos and the Rise of Amazon.Com. Portfolio (2011) Google Scholar
  55. 55.
    de Kinderen, S., Gordijn, J.: E 3 Service: A Model-Based Approach for Generating Needs-driven E-Service Bundles In: A Networked Enterprise, Proceedings of the 16th European Conference on Information Systems (ECIS), Galway, Ireland (2008)Google Scholar
  56. 56.
    Kim, W.C., Mauborgne, R.: Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Harvard Business Press (2005)Google Scholar
  57. 57.
    Wegmann, A., et al.: Early Requirements and Business-IT Alignment with SEAM for Business. In: 15th IEEE International Requirements Engineering Conference. IEEE, Delhi (2007)Google Scholar
  58. 58.
    Mingers, J.: A classification of the philosophical assumptions of management science methods. Journal of the Operational Research Society 57(6), 559–570 (2003)CrossRefGoogle Scholar
  59. 59.
    Rosenhead, J., Mingers, J.: Rational analysis for a problematic world revisited. John Wiley and Sons, Chichester (2001)Google Scholar
  60. 60.
    Woolley, R., Pidd, M.: Problem structuring–a literature review. Journal of the Operational Research Society 197–206 (1981)Google Scholar
  61. 61.
    Bryson, J.M., et al.: Visible thinking: Unlocking causal mapping for practical business results. John Wiley & Sons, Chichester (2004)Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Arash Golnam
    • 1
  • Paavo Ritala
    • 2
  • Vijay Viswanathan
    • 1
  • Valerian Hanser
    • 1
  • Alain Wegmann
    • 1
  1. 1.School of Computer and Communication, Sciences (I&C), Systemic Modeling Laboratory (LAMS)Ecole Polytechnique Fédérale de LausanneLausanneSwitzerland
  2. 2.School of BusinessLappeenranta University of TechnologyLappeenrantaFinland

Personalised recommendations