J Manag Gov (2012) 16:337–368

DOI 10.1007/s10997-010-9154-1

Internationalization, innovation and entrepreneurship:

business models for new technology-based firms

Alberto Onetti • Antonella Zucchella •

Marian V. Jones • Patricia P. McDougall-Covin

Published online: 10 August 2010

 Springer Science+Business Media, LLC. 2010

Abstract New technology-based firms, particularly those that develop their

business around a new technological platform, are likely to be impacted by glob-
alization, in terms of both pace of innovation and pressure of competition. For these
firms, strategic decisions and growth processes are characterized by a deep inter-
relationship amongst the processes of internationalization, innovation and entre-
preneurship; processes which have tended to be examined independently in distinct
bodies of literature. In practice strategic decisions concern each of these processes
and address issues such as organizational boundaries, location of the operational
activities, what activities to focus on and selection of value partners. The business
model by which firms operate needs also to accommodate the spatial dimensions
indicated by globalization; and the emergence of global technology markets. Little
is known to date about the extent to which business models accommodate or are
adapted to internationalization, innovation and entrepreneurship. This paper pre-
sents a review of the business model literature from which a generic business model
framework is derived, identifying and introducing the main elements of these

A. Onetti (&)
Faculty of Economics, University of Insubria, Via Monte Generoso 71, 21100 Varese, Italy
e-mail: alberto.onetti@uninsubria.it

A. Zucchella
Faculty of Economics, University of Pavia, Via San Felice 5, 27100 Pavia, Italy
e-mail: antonella.zucchella@unipv.it

M. V. Jones
Business School, Department of Management, University of Glasgow, University Avenue, Glasgow
G12 8QQ, Scotland, UK
e-mail: m.v.jones@lbss.gla.ac.uk

P. P. McDougall-Covin
Kelley School of Business, Indiana University, Bloomington, IN 47405, USA
e-mail: mcdougal@indiana.edu

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processes as the firms’ focus, modus and locus. This contribution makes a clear
distinction between the business model and the strategy concepts and highlights the
relevance of location decisions—not considered by extant business model literature
to date. While our discussion draws on the high technology new venture as our
primary example, we believe our business model conceptualization has general
applicability.

Keywords Business model
Entrepreneurship
Internationalization
Innovation

Technology-based firms

1 The framework: the interaction among entrepreneurship, innovation

and internationalization

Entrepreneurship is a process whereby firms and individuals in firms (entrepreneurs)

explore and exploit opportunities (March 1991), leveraging their ability to manage
uncertainty in a proactive way. The current business environment is characterized
by growing complexity, triggered by hyper-competition (D’Aveni and Gunther
1994) and globalization (Knight 2000). Within this framework, entrepreneurial
behavior finds a fertile ground. Nowadays innovativeness or an entrepreneurial
perspective is imperative for the flexible and proactive management of business
activities in a complex and dynamic globalizing world.
This article focuses primarily on young companies operating in industries where
the above mentioned phenomena are particularly evident, and specifically on new
technology-based firms (Autio 1997; Storey and Tether 1998). Young companies that
develop a new technological platform (e.g. as in some applications of biotechnology,
nanotechnology and others) are simultaneously involved with establishing and
growing a firm, commercializing a technology for potentially new markets, and
developing internationalization capabilities to enable them to compete in what
essentially, at least in the case of biotechnology, is a global industry. This requires
originality, strategic vision, and new ways of defining the value proposition and
delivering it to the customers, through the innovative development of business
models (Christensen and Rosenbloom 1995; Chesbrough and Rosenbloom 2002;
Chesbrough 2004). Business model innovation per se is increasingly identified as the
real differentiator in conceiving and delivering novelty to the market (Johnson et al.
2008). A business model perspective is emerging in the entrepreneurship literature
(Hargadon and Douglas 2001; Morris et al. 2005; Zott and Amit 2007), not only as an
expression of innovation but, more in general, as an approach which drives the
strategic design in new entrepreneurial ventures. In highlighting the central role of
business modeling in the entrepreneurial process Zott and Amit (2007, p. 182) suggest
that ‘‘designing a business model is a salient issue for entrepreneurial firms’’.
Young and new technology-based companies typically face growth challenges
characterized by intense product and/or process innovations—frequently combined
with business model innovations—and early and fast internationalization processes
(McDougall 1989; Brush 1992; Hordes et al. 1995; Jones 1999; Preece et al. 1999).
In many cases their competitive domains are naturally global, due to the presence of

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Internationalization, innovation and entrepreneurship 339

global networks of researchers and venture capitalists, global customers and

suppliers, and a globetrotting talent force. For these reasons, amongst others, these
firms may conceive their business as international from inception with an early
international strategic vision (Oviatt and McDougall 2005). For these companies
internationalization is frequently conceived as:
(1) A multidimensional process, both inward and outward (Welch and Luostarinen
1993; Jones 2001; Onetti and Zucchella 2008), in which the coordination of
resources or firm specific assets must be managed across several countries by
means of a variety of relevant business modes (Dunning 1988; Oviatt and
McDougall 1994; Jones and Coviello 2005).
(2) A relational process, built on cross-boundary ties which may be both social
and inter-organizational (Yli-Renko et al. 2002).
(3) A knowledge base augmenting process (Kuemmerle 2002), where the most
important outcome is represented by access to new knowledge embedded in
foreign clusters, networks and ties that enables firms to exploit further
innovation.
For these young new technology-based firms, entrepreneurship, innovation and
internationalization may be considered according to a holistic perspective (Jones
1999), since they are deeply embedded in the overall growth path of the company.
Entrepreneurship is the process through which they explore and exploit global
opportunities, leveraging both local and international relationships, regarding inward
and outward business activities. Relationships give access to new knowledge and
also enable young companies to focus on core activities where they have distinctive
knowledge. Traditionally, innovation and internationalization tended to be consid-
ered as alternative growth options, occurring occasionally in the case of innovation,
and incrementally in internationalization (Ansoff 1957; Vernon 1966; Johanson and
Vahlne 1977). Nowadays, especially for young technology-based firms, innovation
and internationalization are more likely to be instantaneous, fast, and inter-related.
Both processes are driven and influenced by the exploration and exploitation of new
knowledge, which is embedded in different locations and may rely on different social
and inter-organizational ties scattered across the globe (Gereffi and Korzeniewicz
1994; Doz et al. 2001; Schweizer 2005; Powell et al. 2005).
As a result, entrepreneurship, innovation and internationalization are deeply
intertwined. This poses novel challenges for a firm’s survival and success. The
context in which business decisions are taken is far more complex than in the past
and requires entrepreneurs and managers to assume a systemic view of the firm and
its environment (Jones 1999; Golinelli 2010) and to adopt adequate managerial
tools. Today the management of time, space and network relationships have become
key variables for business model design, while, in the traditional corporate strategy
literature, these variables were generally absent from the debate and were typically
not included in the prescriptive managerial models. While these three dimensions
are well represented in international entrepreneurship literature, to date, they have
not been fully incorporated into practical business models.
Following the above arguments, new ventures in high-tech industries need to
leverage the inter-relations between innovation and internationalization and are

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likely to design their strategy and business models accordingly. Therefore, taking an
‘‘entrepreneurial strategic management’’ approach (Onetti and Zucchella 2008), we
suggest that for such firms, current crucial decisions are about:
• The location of activities (i.e. local vs. foreign based activities, inward-outward
relationships with space, entry modes, local embeddedness) (Dunning 1988;
Porter 2000), which will be below referred to as the ‘‘locus’’ dimension.
• The relationships with other players and about organizational boundaries (i.e.
insourcing and outsourcing of activities along social and inter-organizational
ties, inward–outward relationships with other players, strategic alliances) (Glick
2008); in the following sections, we will refer to these decisions as the ‘‘modus’’
dimension.
• The selection of activities on which the company’s efforts are concentrated
(Prahalad and Hamel 1990; Amit and Schoemaker 1993; Delay et al. 1997;
Wernerfeldt 1984) since ‘‘successful business focus on creating advantage
through a small numbers of core activities’’ (Fenny and Willcocks 1998, p. 10);
in the following sections, we refer to these decisions as the ‘‘focus’’ dimension.
These three areas of strategic decision making (locus, modus and focus) are
required to be integrated into a systemic approach of management which reflects the
above mentioned holistic nature of the growth processes that characterize young
new technology-based firms, whereby entrepreneurship, innovation and interna-
tionalization are deeply inter-connected. Such a systemic managerial approach is
needed for coping with internal and external complexity, and for turning the
strategic intent into effective and efficient value creation. Following Zott and Amit
(2007), the business model design and implementation is vital to effective strategic
entrepreneurial management. The design of a business strategy according to the
mainstream doctrine (Porter 1980, 1985; Treacy and Wiersema 1993) is necessary,
but for successful execution it requires a business model to support the
comprehensive set of decisions that jointly determines the focus, modus, and locus
of a company’s business activities.
Our aim is to encourage debate about entrepreneurial approaches for managing
complexity in new technology-based industries and supporting their growth process
with appropriate decision-making and control tools (business model). The integration
of the international entrepreneurship approach with the strategic management
approach is the perspective we address. Both approaches are searching for new
models capable of integrating the dimensions of geography (locations) and networks
(modalities) into their strategic design and value drivers. The business model
represents a relatively formal illustration of how a firm integrates its core activities
with location and modality, drawn together by its strategic and operational intentions.

2 Business model literature review

In a competitive environment dominated by turbulence and complexity, the business

model concept is becoming more and more popular. Despite the growing
importance of this concept, our literature review establishes the absence of a

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Internationalization, innovation and entrepreneurship 341

generally accepted definition of what a business model is. The literature on business
models is fragmented and heterogeneous. Early studies in the strategic management
field, for example Van de Ven and Walker (1984), draw attention to the role of
strategic design as an overall framework for business modeling and to its
importance for the survival and success of new ventures. However, this literature
stream did not attract many contributions for over a decade until the phenomenon of
internet companies indicated that new designs and business models had become a
matter of some importance.
Since that time, two main strands of literature are identifiable. The earlier one
emerged in the mid 1990s and generally focused on e-business contexts. A later, but
more generic stream appears to have emerged at the beginning of this decade. This
later stream of research assumes a more comprehensive approach and is aimed at
identifying business tools which are not necessarily restricted to high-tech
companies.

2.1 Business model literature background: the e-business stream

Growing interest in the business model concept therefore seems to have coincided
with the advent of e-business in the mid 1990s, as many new young ventures began
developing internet-based offers (Mahadevan 2000). Rapid technological change in
this new business era (Tapscott 1997; Kelly 1998) heralded dramatic changes to
competitive approaches in many industries. Viscio and Pasternack (1996) argued
that traditional business models were unable to adapt to the internet era. Some
scholars have introduced and used the business model concept in an attempt to
explain the challenges that high-tech companies face in the new web-business era.
Consequently the definitions they propose are strongly e-business oriented and tend
to refer to web-based business. Typical of the e-business literature stream are
categorizations and taxonomies of companies operating in the web- or e-business
sphere. Authors described alternative business models rather than introducing a
structured and generally accepted definition of what they mean by the term business
model. In the following we highlight the most relevant publications ascribable to the
e-business literature stream.
• Timmers (1998) defined the business model of a company as being a description
of the product, services and information flows, the potential benefits, and the
sources of revenue. Timmers also introduced a taxonomy of eleven business
models for internet companies, categorizing them on the basis of two criteria:
functional integration and the degree of innovation. Timmers’ business model
definition may be considered the first ‘‘structured’’ definition of the business
model (Alt and Zimmermann 2001).
• Tapscott et al. (2000) described a business model for ‘‘b-webs’’ as ‘‘a
distinct system of suppliers, distributors, commerce services providers and
customers that use the Internet for their primary business communication and
transactions’’.
• Rappa (2001) proposed a taxonomy of business models for ‘‘digital enterprises’’,
distinguishing among nine basic categories.

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• Collico Savio (2001) indentified the business model as ‘‘the method of doing
business by which a company can generate revenue and then sustain itself’’ and
proposed a possible taxonomy of business models.
• Petrovic et al. (2001) proposed a methodology for developing e-business
models. According to them an e-business model is comprised of seven sub
models. These are: the value model, resource model, production model,
customer relations model (comprising three other sub components: distribution
model, marketing model and service model), revenue model, capital model and
market model.

2.2 Business model literature background: the generic stream

From the beginning of this decade, scholars have been studying the business model
topic by introducing reference models and ontologies. From basic definitions and
taxonomies scholars have been moving to more articulated definitions and
identifying building blocks and components. Moreover, from its initial focus on
internet-based business, the business model concept became more universally
applicable to other types of firm. The strengths of this literature stream lie in efforts
to understand business by decomposing strategy into a system of inter-related
decisions, relationships and organizational boundaries. A primary weakness of this
literature stream is its failure, to date, to accommodate location decisions and
internationalization. In the following bullet points, we highlight the most relevant
publications from the generic stream of the business model literature.
• Hamel (2000) defined the business model starting from four main building
blocks (i.e. customer logic, strategy, resources and network). Mahadevan (2000)
provided a definition of business model that includes the value stream, the
revenue stream and the logistical stream.
• Afuah and Tucci (2001) described the business model as ‘‘a model designed to
make money for their owners in the long term’’ composed by ten blocks (i.e.
profit site, customer value, scope, price, revenue sources, connected activities,
implementation, capabilities, sustainability and cost structure).
• Weill and Vitale (2001) described a business model as ‘‘the roles and
relationship among a firm’s consumers, customers, allies and suppliers that
identifies the major flow of product, information, and money, and the major
benefits to participants’’.
• Influenced by the Balanced Scorecard approach (Kaplan and Norton 1992),
Osterwalder (2004) proposed a framework based on four pillars (product,
customer interface, infrastructure management, financial aspects) and nine
building blocks (value proposition, target customer, distribution channel,
relationship, value configuration, capability, partnership, cost structure and
revenue model).
• Yip (2004) posited that a business model defines the value proposition, the
nature of inputs and outputs, the scope (vertical, horizontal, and geographical),
the target customers and the structure.

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Internationalization, innovation and entrepreneurship 343

• Shafer et al. (2005) analyzed twelve definitions of the business model and built
an affinity diagram (Pyzdek 2003) to categorize the various business model
components used in the literature. Shafer and colleagues identified four
categories (strategic choices, creating value, capturing value and value network).
Zott and Amit (2008) completed their definition by proposing a quantitative
research approach to establish the effects of product market strategy and
business model choices on firm performance.
• Richardson (2008) categorized the business model as an integrative framework
for strategy execution based on three blocks: the value proposition (the offering,
the target customer, the basic strategy), the value creation and delivery system
(resources and capabilities, organization, position in the value network) and the
value capture (revenue sources and the economics of the business).
In parallel the business model topic has also been addressed by practitioners.
Amongst definitions advanced we refer to:
• Linder and Cantrell (2001) proposed a definition of the business model
articulated in seven components (pricing model, revenue model, channel model,
commerce process model, internet-enabled commerce relationship, organiza-
tional form, and value proposition).
• Chesbrough (2003, 2006) described the business model as ‘‘a cognitive map
across domains’’, able to help managers in identifying a target market,
articulating the value proposition, building the value chain and the costs/margins
structure, describing the position of the firm in the value network and
formulating the competitive strategy.
• Mitchell and Coles (2004a, b) described a business model as ‘‘the combination
of who, what, when, where, why, and how much an organization uses to provide
its goods and services and develop resources to continue its efforts’’.

2.3 Business model literature background: comparative analysis methodology

From the literature review it is apparent that while many authors offer definitions of
the term business model, definitions are fairly heterogeneous and none appears to be
generally accepted. As Shafer et al. (2005, p. 199) observe, ‘‘this lack of consensus
may in part be attributed to interest in the concept from a wide range of disciplines
(i.e. e-business, strategy, technology, and information systems)’’. While the rise of
e-business has thrown a spotlight on the subject of business models, they are still
poorly understood as a research area (Linder and Cantrell 2001) and a dominant and
widely accepted definition is still missing (Jørgensen and Ulhøi 2009). Therefore,
the vagueness concerning the concept’s definition and lack of a clear conceptu-
alization of business model makes it difficult to perform valid comparative
empirical research.
This definitional ambiguity suggests a need to conceptualize the business model
more formally, and to distinguish it from the business strategy, supporting processes
and metrics, thus separating and de-layering it from the multi-layer business
decision process (Osterwalder et al. 2005).

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344 A. Onetti et al.

Our goal is to address this definitional ambiguity and contribute to fill this gap,
proposing a more comprehensive conceptualization that synthesizes earlier work in
this area and incorporates international entrepreneurship/internationalization liter-
ature elements.
Commencing with a review of the extant literature on business models and
classification of the components of definitions cited therein, we build on Shafer et al.
(2005). In their paper they analyzed twelve definitions in established publications
during the years 1998–2002 and identified 42 different business model components.
We update and extend their work by:
• including further definitions to the list Shafer et al. (2005) proposed;
• updating the analysis with definitions from publications published after 2002 to
date;
• reviewing the business model components and grouping some components that
belong to similar concepts;
• excluding concepts such as mission, strategy and finance from the defining
elements of the business model;
• comparing the business model components identified in literature with the
constructs—focus, modus and locus—which we extracted from the international
entrepreneurship/internationalization literature.
Our literature review is therefore based on 70 definitions published from 1996 to
2009. To avoid duplications we grouped authors that proposed the same definitions
in different contributions and we excluded 13 articles that refer only to third party
taxonomies and definitions. This reduced the number of relevant definitions to 48.
The citation for each of the 48 definitions are presented in the top row of each page
of Table 1.
We reviewed all definitions and found out that the list of business model
components proposed by Shafer et al. (2005) can be shortened without losing its
meaning. For example we grouped the components of ‘‘differentiation’’, ‘‘customer
target market’’ and ‘‘pricing’’ into one single block since all of these decisions refer
to the business strategy/marketing sphere. Additionally we removed from the list of
components concepts such as ‘‘management’’ that in our opinion are too vague to
help in building the business model definition. As a consequence, after this
‘‘screening’’ process, we reduced the list to 26 components. These 26 components
are presented in the left-hand column of Table 1.
The next step was to cross-check the 48 definitions with the revised component
list and mark the components the different authors utilized in their definitions. The
output of this comparative analysis is summarized in Table 1. From our analysis of
the 48 definitions, we extracted the following key points from the data:
(1) The large number of components (26) and the scarce correlation among them
(the components are differently combined in different definitions) confirm that
there is ambiguity and a lack of consensus about what business model is.
(2) There is no substantial convergence among the different definitions provided
in the literature: no components are considered by more than 75% of the
definitions; only 5 components are included in over 50% of the definitions,

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 Table 1 Categorization of business model definitions
1 2 3 4 5 6 7- Eased on 4 articles 8 9 10 11 12
Horowitz Slywotzky Timmers Donath Markides Mayo- Gordijn et al. Hamel Mahadevan Stewart Afuah Alt and
(1996) (1996) (1998) (1999) (1999) and (2000 a, b) (2), (2000) (2000) and Zhao and Tucci Zimmermann
Brown Gordijn and (2000) (2001) (2001)
(1999) Akkermans (2001),
Gordijn and
Akkermans (2003)

Mission/Objectives
Mission X X
Value Creation/ X X X X
Value creation for
stakeholders
Susta inability X X X
Exploitation
Internationalization, innovation and entrepreneurship

Innovation X
Corporate Identity/ X
Reputalion/
Culture
Strategy
Strategy X
Value Proposition/ X X X X X X X
Offering
(products and
services)
Competitors/ X
Competitive
environment
345

123
 Table 1 continued
346

1 2 3 4 5 6 7- Eased on 4 articles 8 9 10 11 12
Horowitz Slywotzky Timmers Donath Markides Mayo- Gordijn et al. Hamel Mahadevan Stewart Afuah Alt and

123
(1996) (1996) (1998) (1999) (1999) and (2000 a, b) (2), (2000) (2000) and Zhao and Tucci Zimmermann
Brown Gordijn and (2000) (2001) (2001)
(1999) Akkermans (2001),
Gordijn and
Akkermans (2003)

Differentiation/ X X X X X X X
Cost Leadership/
Target Market/
Pricing
Focus
Processes/ X X X X X X
Activities/Value
Chain
Resources/Assets X X X
Competenceies/ X X X
Capabilities
Modus
Partners/Actors/ X X X X X X
Suppliers/Value
Network/Alliances
Customers/ X X X X X X X
Customer
Relationship/
Interface
Information flown X
Transaction
(content,
governance,
Structure, Costs)
A. Onetti et al.
 Table 1 continued
1 2 3 4 5 6 7- Eased on 4 articles 8 9 10 11 12
Horowitz Slywotzky Timmers Donath Markides Mayo- Gordijn et al. Hamel Mahadevan Stewart Afuah Alt and
(1996) (1996) (1998) (1999) (1999) and (2000 a, b) (2), (2000) (2000) and Zhao and Tucci Zimmermann
Brown Gordijn and (2000) (2001) (2001)
(1999) Akkermans (2001),
Gordijn and
Akkermans (2003)

Infrastructure/ X X X
Infrastructure
Management
Functionalities/ X X
Supporting
Processes
Internationalization, innovation and entrepreneurship

Technology X X
Locus
Location
Finance
Revenue X X X X X
Costs X
Profit X X X
Financial aspects X
Cash flow
347

123
 Table 1 continued
348

13 14 15 16 17 18 19-Based on 20 21 22 23-Based on 24
2 articles 1 article and

123
2 books
Amit and Applegate Collico De Hawkins Linder Auer and Rappa Weill Betz Chesbrough Dubosson-
Zott (2001) Savio et al. (2001) and Follack 2001 and (2002) and Rosenbloom Torbay
(2001), (2001) (2001) Cantrell (2002) Vitale (2002), et al. (2002)
Zott and (2001) Petrovic (2001) Chesbrough
Amit et al. (2003),
(2008) (2001) Chesbrough
(2006)

Mission/Objectives
Mission
Value Creation/Value X X X X
Creation for
Stakeholders
Sustainability X X X X
Exploitation X
Innovation
Corporate Identity/ X
Reputalion/Culture
Strategy
Strategy X X
Value Proposition/ X X X X X X X
Offering (products
and services)
Competitors/ X X X
Competitive
environment
Differentiation/Cost X X X
Leadership/Target
Market/Pricing
A. Onetti et al.
 Table 1 continued
13 14 15 16 17 18 19-Based on 20 21 22 23-Based on 24
2 articles 1 article and
2 books
Amit and Applegate Collico De Hawkins Linder Auer and Rappa Weill Betz Chesbrough Dubosson-
Zott (2001) Savio et al. (2001) and Follack 2001 and (2002) and Rosenbloom Torbay
(2001), (2001) (2001) Cantrell (2002) Vitale (2002), et al. (2002)
Zott and (2001) Petrovic (2001) Chesbrough
Amit et al. (2003),
(2008) (2001) Chesbrough
(2006)

Focus
Processes/Activities/ X X X X X
Value chain
Resources/Assets X X X
Competencies/ X X
Internationalization, innovation and entrepreneurship

Capabilities
Modus
Partners/Actors/ X X X X X X X
Suppliers/Value
Network/Alliances
Customers/Customer X X X X X
Relationship/
Interface
Information flows X X
Transaction (Content, X X
Governance,
Structure, Costs)
349

123
 Table 1 continued
350

13 14 15 16 17 18 19-Based on 20 21 22 23-Based on 24
2 articles 1 article and

123
2 books
Amit and Applegate Collico De Hawkins Linder Auer and Rappa Weill Betz Chesbrough Dubosson-
Zott (2001) Savio et al. (2001) and Follack 2001 and (2002) and Rosenbloom Torbay
(2001), (2001) (2001) Cantrell (2002) Vitale (2002), et al. (2002)
Zott and (2001) Petrovic (2001) Chesbrough
Amit et al. (2003),
(2008) (2001) Chesbrough
(2006)

Infrastructure/ X X X X
Infrastructure
Management
Functionalities/
Supporting processes
Technology
Locus
Location
Finance
Revenue X X X X X X X X
Costs X X X
Profit X X
Financial aspects X X X X
Cash flow X
A. Onetti et al.
 Table 1 continued
25 26 27 28 29 30 31 32 33-Based on 2 34 35 36
articles and 1 book
Hoque Magretta Osterwalder Rayport Van Der Christensen Hedman Hoppe and Mitchell et al. Pateli Osterwalder Yip
(2002) (2002) and and Vorst and Methlie and Breitner(2003) (2003), Mitchel and (2004), (2004)
Pigneur(2002) Jaworsky et al. (2003) Kalling and Coles (2004a, Giaglis Osterwalder
(2002) (2002) (2003) b) (2) 2003 et al. (2005)

Mission/Objectives
Mission X X
Value Creation/
Value Creation
for Stakeholders
Susta inability X X X
Exploitation
Innovation X X
Internationalization, innovation and entrepreneurship

Corporate X
Identity/
Reputalion/
Culture
Strategy
Strategy X
Value X X X X X X X X X X
Proposition/
Offering
(products and
services)
Competitors/ X X X
Competitive
Environment
351

123
 352

Table 1 continued
25 26 27 28 29 30 31 32 33-Based on 2 34 35 36
articles and 1 book

123
Hoque Magretta Osterwalder Rayport Van Der Christensen Hedman Hoppe and Mitchell et al. Pateli Osterwalder Yip
(2002) (2002) and and Vorst and Methlie and Breitner(2003) (2003), Mitchel and (2004), (2004)
Pigneur(2002) Jaworsky et al. (2003) Kalling and Coles (2004a, Giaglis Osterwalder
(2002) (2002) (2003) b) (2) 2003 et al. (2005)

Differentiation/ X X X X X X
Cost Leadership/
Target Market/
Pricing
Focus
Processes/ X X X X X X X
Activities/Value
Chain
Resources/Assets X X X X X
Competencies/ X X
Capabilities
Modus
Partners/Actors/ X X X X X X X X
Suppliers/Value
Network/
Alliances
Customers/ X X X: X X X X X X
Customer
Relationship/
Interface
A. Onetti et al.
 Table 1 continued
25 26 27 28 29 30 31 32 33-Based on 2 34 35 36
articles and 1 book
Hoque Magretta Osterwalder Rayport Van Der Christensen Hedman Hoppe and Mitchell et al. Pateli Osterwalder Yip
(2002) (2002) and and Vorst and Methlie and Breitner(2003) (2003), Mitchel and (2004), (2004)
Pigneur(2002) Jaworsky et al. (2003) Kalling and Coles (2004a, Giaglis Osterwalder
(2002) (2002) (2003) b) (2) 2003 et al. (2005)

Information
Flows
Transaction X
(Content,
Governance,
Structure, Costs)
Infrastructure/ X X X
Infrastructure
Management
Internationalization, innovation and entrepreneurship

Functionalities/ X
Supporting
Processes
Technology X X
Locus
Location X
Finance
Revenue X X X X X
Costs X X X X X
Profit
Financial aspects X X
Cash flow X
353

123
 Table 1 continued
354

37 38 39 40 41 42 43 44 45 46 47 48
Morris Shafer Schweizer Voelpel Watson Peters and Glick Johnson Mason and Richardson JØrgensen and Konde

123
et al. et al. (2005) et al. (2005) Young (2008) et al. Leek (2008) (2008) UlhØi (2009) (2009)
(2005) (2005) (2005) (2006) (2008)

Mission/Objectives
Mission X
Value creation/Value X X X X
creation for
stakeholders
Sustainability X
Exploitation X
Innovation X X X
Corporate identity/ X X
Reputalion/culture
Strategy
Strategy X X
Value proposition/ X X X X X X X X
Offering (products
and services)
Competitors/ X X
Competitive
environment
Differentiation/Cost X X X
leadership/Target
market/Pricing
Focus
Processes/Activities/ X X X X X X X
Value chain
Resources/Assets X X X X X
A. Onetti et al.
 Table 1 continued
37 38 39 40 41 42 43 44 45 46 47 48
Morris Shafer Schweizer Voelpel Watson Peters and Glick Johnson Mason and Richardson JØrgensen and Konde
et al. et al. (2005) et al. (2005) Young (2008) et al. Leek (2008) (2008) UlhØi (2009) (2009)
(2005) (2005) (2005) (2006) (2008)

Competencies/ X X X
Capabilities
Modus
Partners/Actors/ X X X X X X X X X
Suppliers/Value
network/Alliances
Customers/Customer X X X X X X X
Relationship/
Interface
Information flows X X X
Internationalization, innovation and entrepreneurship

Transaction (content,
governance,
structure, costs)
Infrastructure/ X X
Infrastructure
management
Functionalities/
Supporting processes
Technology X X
Locus
Location
Finance
Revenue X X X X X X
355

123
 Table 1 continued
356

37 38 39 40 41 42 43 44 45 46 47 48
Morris Shafer Schweizer Voelpel Watson Peters and Glick Johnson Mason and Richardson JØrgensen and Konde

123
et al. et al. (2005) et al. (2005) Young (2008) et al. Leek (2008) (2008) UlhØi (2009) (2009)
(2005) (2005) (2005) (2006) (2008)

Costs X X
Profit X X X X X X
Financial aspects X X X X
Cash flow
A. Onetti et al.
Internationalization, innovation and entrepreneurship 357

while 17 components are considered in less than 25% of the definitions and 5
in less than 10% of the definitions.
(3) Definitions also include elements that pertain to concepts such as strategy and
finance.
a. Four of the 26 components refer to strategy and elements closely
connected to strategy (such as value proposition and competition), while 6
other components refer to concepts like mission and objectives. Only 3
authors do not include in their definitions components that refer to strategy
and/or mission categories.

(4) Five components refer to financial aspects. Only 13 of the definitions do not
include any of these components. Only 11 of the 26 components refer to
elements that we believe are proper constituents of the business model
concept. The most cited business model components (over 50% of the relevant
literature) are: ‘‘Processes/Activities/Value Chain’’, ‘‘Customer (Relationship/
Interface)’’, and ‘‘Value Network (Partners/Actors/Suppliers/Alliances)’’.
This definitional ambiguity suggests a need to conceptualize the business model
more formally.

2.4 Business model literature comparative analysis: results

In the introduction we extracted from the international entrepreneurship/inter-

nationalization literature the main areas for strategic decision making (locus, modus
and focus) in new technology based firms. We then described the state of extant
knowledge on business models, identifying and categorizing the main business
model components proposed by the literature. We next analyze and critique extant
knowledge on business models and relate the results and criticisms from analysis to
challenges facing new technology based firms as drawn from the international
entrepreneurship/internationalization literature.
From our analysis we identify main areas of improvement for defining the
business model and offer five recommendations. Then we provide a discussion of
each of our five recommendations.
1. There is a need for a clear separation between the business model and the
strategy concepts.
2. A separation between the business model concept and the financial implications
is also required.
3. Business model definitions have to include location decisions that are more and
more relevant in the extant competitive scenario.
4. Business model definitions have to integrate and synthesize the earlier work in
this area that seems to identify, as building blocks, activities (value chain) and
network.
5. Business model conceptualizations must be reasonably simple and generaliz-
able so that they can be applicable to firms of all sorts and sizes (managerial
implication).

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358 A. Onetti et al.

(1) There is a need for a clear separation between the business model and the
strategy concepts: In calling for a distinction between business model and
strategy concepts, we are aware that it is not easy to clearly distinguish
business model components from the strategy it supports or represents. The
overlap however, leads to confusion and makes the business model concept
rather vague. Thus, business model definitions are required that clearly
identify and distinguish what is strategy, and what is the business model. We
agree with Shafer et al. (2005, p. 203) that ‘‘a business model is not a
strategy’’. Strategy and the business model intervene at various levels of the
business decision process. Strategy belongs to an upper level, since it selects
the business/businesses where to compete (corporate strategy) and defines how
to position for each of them (business strategy) (Cotta Ramusino and Onetti
2005). The business model logically is presented at operational level, since it
defines how to execute the strategy, representing the firm’s underlying core
logic and strategic choices. Chesbrough (2007) expresses this point effec-
tively: ‘‘the business model enables an organization to be more effective in
creating as well as capturing value’’, while Osterwalder and Pigneur (2002,
p. 2) define the business model as ‘‘the conceptual and architectural
implementation of a business strategy’’. Similarly, Patzelt et al. (2008) state
that, ‘‘a business model differs from the overall notion of organizational
strategy’’. By excluding strategy from the defining elements of the business
model and without using excessively general elements which are difficult to
specify, the terms are more clearly explained.
(2) A separation between the business model concept and the financial implica-
tions is also required: In calling for a separation of the financial aspects from
the business model we contend that financial aspects (such as cost, revenue,
cash flow, financial aspects, profit) cannot be considered as business model
building blocks. Financials are ‘‘transversal’’ because all other decisions
influence them (Osterwalder and Pigneur 2002). They are metrics that help to
measure the results of the business model and are not in themselves constituent
elements.
(3) Business model definitions have to include location decisions that are more
and more relevant in the extant competitive scenario: Regarding our assertion
that location decisions be included in business models, our review established
that Mitchell and Coles (2004a, b) offer the only definition that includes
location decisions in its business model constituents. The international
entrepreneurship/internationalization literature is grounded on the assumption
that location matters. Moreover, particularly for young and new technology-
based companies, location decisions are among the most relevant ones. In fact,
for these firms, internationalization is not just one of the possible growth
options, but it is a natural condition of the business: what really makes the
difference is the capacity to make fast and appropriate decisions regarding the
most suitable locations for different activities (access to resources and
knowledge, sales,…) jointly with the system of modalities related to them
(make, buy, partner). With ‘‘location decisions’’ we do not just refer to
decision choices like ‘‘which market to address,’’ but also to decisions like

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Internationalization, innovation and entrepreneurship 359

‘‘where do we place our activities and, where do we locate our company?’’

These choices can make the difference in terms of company’s ability to access
resources, develop competences, create a network, benefit from knowledge
spill-overs and therefore excel, innovate and implement its strategy. In our
definition of business model we emphasize these kinds of decisions by our
inclusion of ‘‘locus’’.
(4) Business model definitions have to integrate and synthesize the earlier work
in this area that seems to identify, as building blocks, activities (value chain)
and network: In suggesting that a business model definition has to integrate
and synthesize the extant literature, it is noteworthy that the table shows that
some of the business model components appear in only one definition or in
just a few of them, while others are seen repeatedly. The most recurring ones
(cited by over 50% of the authors) are: ‘‘value proposition’’, ‘‘processes/
activities/value chain’’ ‘‘value network (partners/alliances)’’. Thus, the
literature review suggests that a comprehensive business model definition
should include an understanding of how activities and processes occur. For
this reason, we argue for extending the current understanding of the business
model to include descriptions of the activities and/or processes and networks
of relationships with partners. Conversely, based on the points we made
previously, we do not think that business model definitions have to include
the concept of value proposition, which is part of the higher order or
strategic elements of a business (Kothandaraman and Wilson 2001; Winter
2003).
(5) Business model conceptualizations must be reasonably simple and general-
izable so that they can be applicable to firms of all sorts and sizes (managerial
implication): We suggest that managerial implications should be considered
while developing a business model framework, and for that reason, ‘‘to be
useful, such a framework must be reasonably simple’’ (Morris et al. 2005) and
‘‘be simple enough so that it can be easily understood’’ (Shafer et al. 2005). A
business model definition has to balance comprehensibility and generalizabil-
ity, theoretical foundation and potential to be used as managerial tool. The
ultimate goal is to produce a framework that is applicable to firms at different
stages of evolution, of different sizes, and operating in different industries.
Note that, although we focus this paper on new technology-based firms, our
business model definition is not restricted to these companies. The concep-
tualization is meant to be relevant for firms of all types and in various
industries.

3 Proposing a business model definition

We now introduce a definitional framework for the business model that is intended
to address the recommendations we described in the section above and incorporate
the main elements we extracted from the international entrepreneurship/
internationalization literature. More specifically we use ‘‘focus’’, ‘‘modus’’ and

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360 A. Onetti et al.

Fig. 1 The business model framework

‘‘locus’’—as defined in the introduction—as analytical building blocks of the

business model concept. Accordingly, we define the business model as the way a
company structures its own activities in determining the focus, locus and modus of
its business. Figure 1 presents our business model framework, whereby:
(1) the ‘‘focus’’ of the business, i.e. the activities which provides the basis of the
firm’s value proposition (Fenny and Willcocks 1998);
(2) the ‘‘locus’’ of the business, i.e. the location or locations across which the firms
resources and/or value adding activities are spread (Doz et al. 2001; Dunning
1998; Porter 2000);
(3) the ‘‘modus’’ of the business, i.e. is the modus operandi or business modes
with regards to the internal organization and the network design (Andersen
1993, 1997; Brouthers and Nakos 2004; Zott and Amit 2007).
This business model definition centers on company activities. Consistently with
the propositions we introduced in the prior paragraph, the business model acts as a
strategy ‘‘enabler’’, supporting the implementation of the company’s strategy. Then,
based on our definition, the output of the business model are the ‘‘focus’’, ‘‘locus’’
and ‘‘modus’’ of the company activities, i.e. the way the company models its own
activities and delivers its strategy to the market. In the following three paragraphs,
we explain the terms ‘‘focus’’, ‘‘locus’’ and ‘‘modus’’ and discuss their inclusion in
our business model definition.
Focus decisions concern the allocation of company resources to different
activities (where to invest additional resources? from where to divest resources?).
Therefore, by identifying what activities the company is focused on, the business
model defines the relevance of the different activities and consequently determines
the span of the value chain. The primary business model decision refers to the
broadness of the activities the company carries out. Notionally, every company has
a value chain, i.e. a process of interconnected value-adding activities on the basis of
which it may derive its source of competitive advantage: for instance, basic
research, applied research, manufacturing, sales, and so on. It is important to single
out that the value-adding activity list is strictly firm-specific. It changes not only

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Internationalization, innovation and entrepreneurship 361

from business to business, but also from firm by firm and thus it has to be identified
case by case. Unlike Porter’s value chain model (1985), which was conceived in an
environmental context where there was more clarity, both as regards the
identification of activities which generate value internally, and in the identification
of the boundaries of the company itself, it is more difficult today to find a universal
taxonomy of a company’s activities. In the last two decades, the classification of
activities using Porter’s model has become difficult to apply not only in the case of a
manufacturing company, but even more so for service providers, such as
knowledge-based companies or intensive research-based companies. Within the
literature, the static and mechanical concept of value chain has been replaced by
terms such as ‘‘value system’’, ‘‘value network’’ or ‘‘value web’’ (Finger and
Aronica 2001; Allee 2000; Andrews and Hahn 1998), with these terms being used to
communicate, in terms of reciprocal relations (the so called ‘‘complex adaptive
systems’’), a group of activities (which cannot always be ascribed to Porter’s
functional categories) and a group of internal-external relations with various degrees
of intensity and control.
Locus decisions refer to where the different activities of the company are located.
At the business model level it has to be decided in which geographical areas or
industrial clusters individual activities are carried out. This decision has to be made
for each activity the company has chosen to focus. A multi-localization approach is
possible for both different activities, as well as for the same activity (i.e. basic
research could be located in a different place than manufacturing and the same
company could have research labs in more than one country). Thus, the business
model determines the geographical configuration of the value chain.
The ‘‘modus’’ decisions of the business model designs the way a company
operates in selecting the management methods for each activity. More specifically,
the business model defines which activities to manage in-house and which ones to
outsource. For activities performed in-house, the business model defines how the
company should approach these activities from among the different options
available. An activity can be alternatively performed in terms of intensive capital
technology or labor, and, in the latter case, the quality and skills of the work force is
another key decision. For activities that have been outsourced, the vendor has to be
selected and also the level of company involvement in the relationship has to be
defined (should there be a long term collaborative agreement with stable partners or
a short term market-transaction? What kind of involvement should the company
have in this business relationship?). In internationalization, the terms business
mode, cross-border mode or foreign market entry mode are used to define the
operational attributes of the way the company does business across borders. All
those are business model decisions.
On the basis of these choices, the level of company integration (as regards
decisions of make-buy-make-together), its internal ‘‘production’’ structure (labour-
capital-technology-brain based), and its external network architecture (its network
approach) shall be determined as a result of the business model decisions. It is worth
singling out that through the business model the company spans its boundaries (Zott
and Amit 2007) and structures, as Hamel (2000) argues, its ‘‘value network’’, which
includes customers, suppliers, partners, distribution channels that extend the

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company’s own resources. The business model defines also the role a company
chooses to play within its network. Such decisions may be able to create unique
relationships with any of these parties with an obvious impact on company’s
strategic position.
As it appears from the discussion above, the business model defines the unique
way the company delivers its own strategy/value proposition to customers. A
company has multiple alternative options for locating the different activities as well
as plenty of ways of executing them. Additionally firms can focus on different
activities. Hence they may develop core competencies and capabilities, which are
different from those of competitors that have chosen different resource allocations.
All these decisions are not neutral on company operations and performance, and
bring with them different financial implications and managerial issues that are
required to be addressed in a comprehensive way.
We can conclude that, since the company value chain consists of different
activities and the decisions of focus, locus and modus apply to each of them,
multiple (potentially infinite) decisions and business models can emerge. Then the
output of the business model decisions characterizes the company in a unique way
and allows a firm to stand out among competitors. Different business model
combinations make companies diverse from each other, even if they are operating in
the same target market. Business model decisions are likely to result in companies
executing the same strategy in different ways, and in some instances, business
model decisions may trigger strategy change or innovation.
This is particularly true for new technology based firms that typically are:
• multi-location organizations with strong international precocity (Oviatt and
McDougall 2005; Zucchella et al. 2007; Presutti et al. 2008; Onetti et al. 2010);
• focused companies that often play as ‘‘technology brokers’’ (Stuart et al. 1997)
for specific technologies;
• network-based firms that manage multiple relationships (upstream, downstream
and laterally) and partner in different ways following multiple organizational
schemes.
As a result, business model decisions strongly influence and characterize the way
new technology based firms operate and the strategy they put in place. In order to
better understand these phenomena, further analysis on business models is required,
both quantitative and through business cases. This Special Issue aims at contributing
to fill this gap, stimulating research about business models for new technology based
firms.

4 Conclusions

The contribution of this our paper proposes a perspective and a managerial

approach, which has general validity, but may prove particularly helpful to new
technology-based firms challenged by the complexity of markets, industries and
technologies. In this context, entrepreneurship, innovation and internationalization
are deeply interconnected, do occur contemporarily and need to find fast execution,

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Internationalization, innovation and entrepreneurship 363

according to an environment dominated by continual and rapid changes. These

phenomena are particularly evident in technology-based industries and more
generally in all the sectors which are affected—and even created—by the advent of
a new technological platform. These changes trigger product and process
innovations and require new strategic approaches, which can leverage the
opportunities arising from the intersection of early and fast internationalization
and innovation. The mentioned approaches aim at supporting effective and efficient
entrepreneurial processes and permit the new venture to design a sustainable growth
path.
Being a new venture in a new technology-based sector nowadays involves
strategizing processes which are substantially different than those described by the
traditional strategic management literature and where time and space, in terms of
geographies, play a dominant role. The survival and success of a new venture
depends on effective business model design, where decisions about core activities
and where to focus investments are interconnected to decisions about location of
activities, and about inward and outward relationships with other players. For
internationally oriented new ventures the boundary spanning design refers to both
the network of partners and the network of locations where different activities are
placed.
The combination of the three dimensions (focus, modus, and locus) along the
different business activities provides a framework for strategic design, which is
particularly important for entrepreneurial start-ups, operating in complex environ-
ments and facing the challenges/opportunities of global markets and cross-boundary
relationships. This combination is idiosyncratic and supports a unique strategic
positioning and business modeling.
We do not intend to provide either a business model format or guidelines for
business modeling, but we want to contribute to the identification and discussion
about critical variables for strategic design. The perspective discussed in this
contribution may have important managerial implications, because the topic in itself
represents a bridge between academic research and managerial/entrepreneurial
practice, which have lately grown as two worlds apart (Schmid 2009). At the same
time, we aim at bridging different fields of academic research. The emergent
characteristics of strategic and business design in international new ventures—and
more generally in firms which face many of the same challenges and opportuni-
ties—requires integration of relevant strategic management, international entrepre-
neurship and internationalization literature.
In fact, the traditional corporate strategy literature has virtually ignored the
location decisions and the role of relationships in the prescriptive managerial
models. On the other hand, while these dimensions are at the heart of much of the
international entrepreneurship literature, the international entrepreneurship scholars
have not yet created business modeling approaches for internationally-oriented
entrepreneurial processes. Focus, modus and locus are common issues across
internationalization theory, as well as innovation and strategy theories, and in the
business model serve as constructs that bridge the different foci of those three
theoretical imperatives.

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364 A. Onetti et al.

This paper aims to open a debate on the forthcoming challenges for international
entrepreneurship scholars around the development of frameworks, approaches and
models for guiding in a sustainable way the entrepreneurial process from the
exploration to the exploitation of global opportunities. Finally, an effective forward
looking business model is also a way for the firm to interact with geographies and
partners in order to access new knowledge (Kuemmerle 1999) and thus enhance its
resource base, feed innovation and expand its ability to discover and exploit new
opportunities.

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Author Biographies

Alberto Onetti is Professor of Corporate Strategy and Management of Innovation at the Department of
Economics, Insubria State University, Varese (Italy). He is also Head of the Research Centre for Health
Care Management and Innovation (CrESIT) and Chairman of Mind the Bridge Foundation (California,
US). He is author of an extensive list of conference contributions, books and articles in the fields of
internationalization, innovation, and strategic management.

Antonella Zucchella is Professor of Marketing and International Entrepreneurship at the University of

Pavia (Italy). She is also President of the Centre for Research in International Business, CIBIE, of the
University of Pavia and Vice-Dean of the Faculty of Economics. She is author of many national and
international publications in the fields of international entrepreneurship and international strategic
management and marketing.

Marian V. Jones is Professor of Internationalization and Entrepreneurship and Director of the Centre for
Internationalization and Enterprise (CIER) in the Business School, University of Glasgow. She has
published extensively in books and journals including the Journal of World Business, Journal of
International Business Studies, Journal of Business Venturing and Journal of International Marketing.

Patricia P. McDougall is the William L. Haeberle Professor of Entrepreneurship at Indiana University’s

Kelley School of Business. Her path breaking research on born global firms pioneered the growing field
of international entrepreneurship. She and her co-author, Benjamin Oviatt, were presented the JIBS
Decade Award for their 1994 article on the early internationalization of new ventures. The award is given
to the article that has had the most significant impact on international business research during the past
decade. McDougall has been an active developer and presenter of executive programs for companies as
well as has consulted on strategy with multinationals, entrepreneurial firms and not-for-profit
organizations.

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