The concept of business model and modelling of firms in economics

Abstract

Ever since firms have existed, they have been constantly adjusting and readjusting their behavior and structure when reacting to the changes in the business environment and technology. However, the concept of business model only emerged and grew in popularity after the internet boom of the late 1990s. More than two-decade long research regarding the topic has produced a large quantity of research originating from various scientific disciplines, among which economics is still being underrepresented. Regardless of the high quantity, the comprehension or interpretation of the concept remains highly heterogenous. This thesis aims to thoroughly map out the term’s history as well as its nuanced theoretical and empirical development, in order to construct a business model framework that is both applicable for economics and inclusive regarding the prior research efforts. After providing the reader with a new inclusive definition for the term, the modelling practices are first assessed in theory and then in practice by analyzing the existing empirical research on the topic. Finally, the newly defined micro-firm level concept of business model is linked to a micro-firm and macro-industry level concept of the structure-conduct-performance paradigm, and therefore to the industrial organization branch of economics.