A Behavioral view of business modeling

This chapter introduces the concept of business modeling defined as the managerial deliberate continuous involvement in the process of developing and adjusting a business model for their firm. This conceptualization (1) bridges the business model literature with the strategic leadership and managerial dynamic capabilities; and (2) pronounces the inseparable link between managerial agency and the business model of the firm as a unit of analysis in the micro-foundations of strategy and competitiveness. To develop this model, insights from the behavioral perspective have been used. This chapter posits that the business model of the firm follows an evolutionary path that is set and managed by executives. The current business model acts as a reference point for executives and shapes their aspiration and business modeling goals. These goals in conjunction with the performance of the firm, perceived capacities and subjective evaluation of proximate and distant opponunities govern executives business modeling in the form of minor adjustments or major changes (transformation, reinvention, even dismissal and adoption of a new business model) to the business model or the firm. Therefore, business modeling is a path-dependent activity and its trajectory is determined by the dynamic interactions between executives' perception of goal attainment discrepancies through historical and social comparisons attributed to the current business model and environmental demands.