EconPapers    
Economics at your fingertips  
 

Get rich or die trying… finding revenue model fit using machine learning and multiple cases

Ron Tidhar and Kathleen M. Eisenhardt

Strategic Management Journal, 2020, vol. 41, issue 7, 1245-1273

Abstract: Research Summary While revenue models are strategically important, research is incomplete. Thus, we ask: “What is the optimal choice of revenue model?” Using a novel theory‐building method combining machine learning and multi‐case theory building, we unpack optimal revenue model choice for a wide range of products on the App Store. Our primary theoretical contribution is a framework of high‐performing revenue model‐activity system configurations. Our core insight is the fit between value capture (revenue models) and value creation (activities) at the heart of successful business models. Contrastingly, low‐performing products avoid complex value capture (i.e., freemium) and misunderstand value creation (e.g., overweight effort). Overall, we contribute a theoretically accurate and empirically grounded view of successful business models using a pioneering method for theory building using large, quantitative data sets. Managerial Summary Revenue models are critical for product performance. Yet, the high‐performing choice is often unclear. We combine machine learning with multiple‐case deep‐dives to unpack optimal revenue model choice for a wide range of products on the App Store, a significant setting in the digital economy. Our primary insight is that high‐performing products fit value capture (revenue models) and value creation (activity systems) to form coherent business models. Contrastingly, low‐performing products avoid complex value capture (i.e., freemium) and misunderstand value creation (e.g., overweight effort and price). We also identify the importance of user resources, marketing, offline brand, and product complexity for specific revenue models. Overall, we contribute a framework for the optimal choice of revenue model and spotlight the revenue model‐activity system configurations of successful business models.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1002/smj.3142

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:stratm:v:41:y:2020:i:7:p:1245-1273

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0143-2095

Access Statistics for this article

More articles in Strategic Management Journal from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2021-01-02
Handle: RePEc:bla:stratm:v:41:y:2020:i:7:p:1245-1273