Designing Business Models in the age of Pervasive Digitization

Turber S; vom Brocke J; Gassmann O

Abstract
The increasing pervasiveness of digital technologies, also referred to as Internet of Things, offers new business model opportunities, which often involve an ecosystem of partners. Hence, product-developing companies are required to look at business models beyond a firm-centric lens and respond to changed dynamics. However, extant literature does not provide actionable approaches for business models in inter-connected IoT- enabled business environments. Our research addresses the need for a business model framework that captures the specifics of digitization to enable managers to build business models in IoT in a structured way. The suggested framework builds upon the activity system perspective, and is enriched and expanded by insights from digital innovation research and central tenets of the service-dominant logic. The enhanced dimensions in the framework include (1) the network of value co- creating partners, including customers and third-party developers (structure); (2) the sources of value creation by recognizing the organizing logic of digital technology (activities); (3) the reasons and conditions of collaboration for involved value co- creators (governance). To the author's knowledge, the suggested business model framework is the first, which incorporates the nature of digital technology as an endogenous part to convey that the physical and the digital world are intricately intertwined in IoT.

Keywords
Business models; Internet of Things; digitization; value networks; service-dominant logic; digital ecosystem; generativity